PHOENIX (3TV/CBS 5/CNN)-- Arizona Gov. Doug Ducey announced Tuesday that he is ordering the Arizona Commerce Authority to withdraw all financial incentives for Nike, who wants to build a manufacturing plant in Goodyear

[WATCH: Mixed reaction to Ducey pulling tax incentives for Nike due to flag controversy]

[VIDEO: Nike deal in Goodyear now in doubt after Gov. Ducey's announcement]

The Arizona governor made the announcement in a series of tweets following a Wall Street Journal report that said former NFL player Colin Kaepernick urged Nike to pull a USA-themed sneaker, which featured a Betsy Ross flag. According to the report, Kaepernick and others found the shoe offensive.

"Nike has chosen not to release the Air Max 1 Quick Strike Fourth of July as it featured an old version of the American flag," Nike said in a statement to CNN Business Monday evening

[PREVIOUS STORY: Nike cancels American flag sneaker after complaint from Colin Kaepernick, report says]

Ducey tweeted that "today was supposed to be a good day in Arizona, with the announcement of a major Nike investment in Goodyear, AZ."

"And then this news broke yesterday afternoon. Words cannot express my disappointment at this terrible decision. I am embarrassed for Nike," Ducey added.  "Nike is an iconic American brand and American company. This country, our system of government and free enterprise have allowed them to prosper and flourish. Instead of celebrating American history the week of our nation’s independence, Nike has apparently decided that Betsy Ross is unworthy, and has bowed to the current onslaught of political correctness and historical revisionism."

[RELATED: Nike wants to create manufacturing facility in Goodyear]

Ducey tweeted that "It is a shameful retreat for the company. American businesses should be proud of our country’s history, not abandoning it." 

"Nike has made its decision, and now we’re making ours. I’ve 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"

[WATCH: Goodyear mayor, residents weigh in on controversy]

A spokesperson for the Arizona Commerce Authority released the following statement to Arizona's Family: 

"At the Governor’s direction, we are withdrawing an up to $1 million grant from the Arizona Commerce Authority’ Competes Fund. Unlike other programs in statute that are eligible to any and all companies, including Nike — this is purely discretionary."

Gov. Ducey stated the state's economy is doing "just fine" without Nike and added Arizona doesn't need to "suck up to companies that that consciously denigrate our nation’s history."

[VIDEO: Gov. Ducey to pull Nike plant incentives over Betsy Ross shoe controversy]

"And finally, it shouldn’t take a controversy over a shoe for our kids to know who Betsy Ross is. A founding mother. Her story should be taught in all American schools. In the meantime, it’s worth googling her." 

Roy Tatem, president of the East Valley NAACP, said Gov. Ducey jumped the gun.

"I believe Gov. Ducey is paying attention to the wrong things. At this point in time, he should be paying attention to bringing jobs to the Valley, not getting caught up in the opinions of Colin Kaepernick."

The controversy was sparked late Monday after it said it would not release the Air Max 1 Quick Strike Fourth of July because it "featured an old version of the American flag."

"We regularly make business decisions to withdraw initiatives, products and services," Nike spokesman Greg Rossiter said Tuesday afternoon in an email to KPTV, a sister station of Arizona's Family. "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 Wall Street Journal reported that Nike delivered the sneakers to retailers, but asked stores to return them to Nike after the company received a complaint from former NFL star Colin Kaepernick. The newspaper indicated Kaepernick said he and others found the shoe offensive because of its ties to America's era of slavery.

Tatem said he doesn't think the old version of the flag has racial ties.

"There is nothing in my history or nothing I've learned to suggest that Betsy Ross tailored this flag in a racist manner, a racial manner. I believe she was doing her best to be patriotic in supporting the establishment of America," said Tatem.

He said some states were trying to get rid of slavery when the United States was founded.

"In 1777, we know that states like Vermont were abolishing slavery, passing laws to abolish slavery," said Tatem. "So if we're going to tell this story, let's tell the whole story."

This news comes just after the Goodyear City Council unanimously approved the shoemaker's plan to open a multi-million dollar manufacturing facility during a meeting on Monday night.

Goodyear's mayor said the City is going stick with its deal with Nike.

"This deal is expected to bring more than 500 jobs and a significant investment to the city," said Goodyear Mayor Georgia Lord. "We will honor the commitment we made in our agreement.

Full statement from Lord is below.

“The City of Goodyear has found itself in the middle of a difficult situation. Today, much has unfolded. I can appreciate the emotion and discussion that I’ve heard on this important topic.

Last night, the Goodyear City Council unanimously approved a job creation agreement with Nike. This deal is expected to bring more than 500 jobs and a significant investment to our city.

We will honor the commitment we made in our agreement.

It has been a focus of the Goodyear City Council to build a strong economy for years to come and we will continue to work hard to bring the kind of high quality jobs that our residents deserve.”


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