Arizona governor yanks state money for Nike plant after company pulls "Betsy Ross flag" sneakers

The blowback to Nike's decision to pull Betsy Ross American flag sneakers didn't take long. Arizona Gov. Doug Ducey on Tuesday said he's rescinding financial incentives recently offered to the maker of athletic shoes to build a $185 million plant and bring 500 jobs to the state.

The governor, a Republican, made his move a day after the Goodyear City Council unanimously approved Nike's plan to build its third U.S. manufacturing plant, making Nike Air shoes in the suburb of Phoenix. The city agreed to waive nearly $1 million in plan-review and permit fees and reimburse Nike another $1 million for the jobs created, according to local media reports.

As the deal was approved, Nike separately decided against releasing the Air Max 1 Quick Strike Fourth of July, "as it featured the old version of the American flag," the company told CBS News in a statement.

The shoe's design included a depiction of the "Betsy Ross flag," which features 13 red and white stripes and 13 stars to represent the original U.S. colonies. The Wall Street Journal reported Monday that former NFL star and current Nike endorser Colin Kaepernick objected to the flag's use during slavery. Kaepernick has not commented publicly on the report.

Ducey in a tweet called Nike's decision a "shameful retreat," saying "American businesses should be proud of our country's history, not abandoning it." Ducey, the former CEO of Cold Stone Creamery, said he'd "ordered the Arizona Commerce Authority to withdraw all financial incentive dollars under their discretion that the state was providing for the company to locate here."

Nike refuted the idea that it was unpatriotic, and signaled that it intended to continue with its plan to open another manufacturing plant, although whether it would be located in Arizona was not clear.

"We regularly make business decisions to withdraw initiatives, products and services. Nike made the decision to halt distribution of the Air Max 1 Quick Strike Fourth of July based on concerns that it could unintentionally offend and detract from the nation's patriotic holiday," the company said in a statement.

"Nike is a company proud of its American heritage and our continuing engagement supporting thousands of American athletes including the US Olympic team and US Soccer teams. We already employ 35,000 people in the U.S. and remain committed to creating jobs in the U.S., including a significant investment in an additional manufacturing center which will create 500 new jobs," the company added.

The shoe company was also bashed by U.S. Sen. Josh Halwey, a Republican from Missouri, a state where Nike already has two manufacturing plants. The lawmaker in a tweet decried Nike as "anti-American, pure and simple."

Hawley made no mention of Nike's presence in his state: The company reportedly employs 400 people at two locations, one in St. Charles and the other in Wentzville.

Nike in 2015 opened a distribution center in Memphis, Tennessee, a state that has given the company nearly $73 million in financial incentives, according to Good Jobs First, which tracks public subsidies awarded to companies. Nike also has a manufacturing plant near its corporate headquarters in Portland, Oregon. The company has received nearly $2.1 billion worth of subsidies from Oregon, according to the Good Jobs First data, which go back to 2007.

Betsy Ross flag a symbol of "exclusion and hate"?

Nike is also facing the wrath of U.S. Sen. Ted Cruz, R-Texas, who took to social media to say that he's giving  up the brand after wearing Nikes since childhood. "Can anyone recommend a good sneaker co that's not so woke?" Cruz asked in a tweet.

In recent years, right-wing groups reportedly have tried to appropriate the Betsy Ross flag. Supporters of then-candidate Donald Trump in 2016 showed it along with "Make America Great" banners at a high school football game, prompting an apology from a Michigan school superintendent, who called it a symbol of "exclusion and hate" for some. 

New York Gov. Andrew Cuomo last summer ordered state police to investigate a recruitment effort by the Ku Klux Klan after candy and fliers showing the Confederate flag and the Betsy Ross flag were distributed in several upstate counties. Similar images were reportedly included in a letter to a college newspaper in Washington the prior year.

Nike last week pulled a line of limited edition shoes from China after the Japanese designer behind them voiced support of protests in Hong Kong against a proposed extradition bill, according to a report in the Financial Times.

Nike also faced criticism last year over over its controversial advertising campaign featuring Kaepernick, which angered some customers and sparked calls for boycotts but ultimately burnished the iconic brand's appeal to many investors. Kaepernick in 2016 started kneeling during the national anthem before NFL games to protest racial injustice.

Correction: This story's headline was updated with the correct spelling of Colin Kaepernick's last name.

In:
• Colin Kaepernick
• Ted Cruz
• Racism