C&B Notes

Well, That Didn’t Work…

In April 2017, we ran a note about a strategic effort by Adidas to add “Speedfactories” to diversify its global supply chain.  It evidently didn’t work, which leads to some interesting questions about the inevitability of automation to kill lower-wage jobs.  [An Adidas video from the initial PR rollout, which was embedded in our previous note and is now marked private by Adidas, did not even survive the effort.]

Adidas AG plans to close its only sneaker factories in the U.S. and Germany, shifting cutting-edge automated footwear production to Asia and reversing an effort to make products closer to shoppers in the West.  The German company, the world’s second-largest athletic gear maker by revenue after Nike, Inc., said Monday it would move technology developed at its so-called “Speedfactories” to two suppliers in Vietnam and China.  The closure of the facilities in Ansbach, Germany, and suburban Atlanta — both opened within the past three year — raises questions about the feasibility of bringing manufacturing jobs back to developed markets.  Adidas said the move would result in the “better utilization of existing production capacity and more flexibility in product design.”

The Atlanta facility was announced in 2016 and began production in late 2017.  It was touted as part of a broader effort to be closer to U.S. consumers, while innovating production processes meant to cut time to market and competing with fast-fashion retail.  Earlier this year, Adidas promoted limited-edition shoes made at the Georgia factory for the Atlanta-hosted Super Bowl.  Like industry leader Nike, Adidas sources the vast majority of its footwear production from contracted manufacturers in Asia. Each of the big three sportswear makers  — Nike, Adidas and Under Armour, Inc — have invested in or begun testing automated production technology for footwear in recent years to diversify their manufacturing strategy.  Nike doesn’t manufacture footwear in the U.S., according to its manufacturing map. Under Armour in 2016 opened a facility for automated and 3-D product prototyping near its headquarters in Baltimore.

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