Footwear manufacturing giant Adidas produces around 258 million pairs of shoes each year by employing low cost labour in Asia. However, the company is aiming to resort to manufacturing by robots which will make the process of manufacturing cheaper, faster, and more flexible. This will also lead to speeding up the delivery and reducing freight costs. The company is talking to the German government as well as to the robotic firms to find out new technologies to manufacture its products.
The move can be seen as Adidas’ efforts to catch up with its arch rival Nike which has emerged as the biggest global sportswear firm in the past few years. Nike’s emergence as the leading sportswear firm has been due to its innovative products such as “Flyknit” shoes made up of machine-knitted fibre. According to Herbert Hainer, the Chief Executive of Adidas, the company wants to bring production back to the main markets. Adidas is expected to start a store in Berlin next year, where custom-made running shoes will be manufactured.
However, this is expected to cut millions of jobs in Asia, especially in countries such as Indonesia and China. According to an association of Portuguese footwear manufacturers, APICCAPS, which tracks global industry figures, Asia accounts for 87% of overall footwear manufacturing, with China as the biggest manufacturer. Both Adidas and Nike depend on more than 1 million contract workers across the globe to manufacture their products. Automation along with local manufacturing will increase the operating margins for the footwear manufacturing companies and will speed up production. However, industry analysts mention that the smart robotic machines will not be able to completely remove the human labour involved and the companies will be depending on manual labour up to some extent.