Apparel manufacturers such as Nike and Adidas plan to increase the output of speed factories in the US and Germany, and they make sure that the data generated in its Far East sites also help to further optimise future design and production processes, a report has shown.
The Adidas factory in Germany can produce a pair of shoes in five hours which is the speed of light considering producing the same pair of shoes in Asia and shipping them to Europe will take over a month, a new report by Deutsche Bank has shown.
Nike and other apparel companies employ similar types of robotic setups in their factories; the pursuit of lower manufacturing costs has been, according to the report, a crucial part of textile and footwear manufacturing since at least the first industrial revolution.
“The nature of cost reduction is changing, though. In the past decade, most cost optimisation took the form of geographic relocation as firms moved production to China and then Vietnam as they sought lower-wage workers.
“But despite the rise in labour costs in these countries, a migration to new lower-wage nations is unlikely. It is true that a lot of noise has been made about reshoring to developed countries, particularly the US.
“Adidas has opened a partially automated factory in Atlanta, while Under Armour has discussed plans to open a manufacturing centre in Baltimore”, the report states.
So far, the large apparel groups have not done this en masse, but Adidas has said it wishes to increase the output of its Speedfactories in Ansbach and Atlanta to 1 million pairs of shoes each year by 2020. But this is equivalent to just one day’s requirement, according to Deutsche Bank.
Even though, the ‘real’ investment by Adidas in its Speedfactory programme has already taken place in Vietnam, which is over $200m each year recently to automate production lines, the ultimate goal within the industry’s eventual transition to automation is to track data throughout a consumer good’s lifecycle: from design, to manufacture, to retail.
This has become increasingly important as internet shopping has made customers more used to a greater array of designs, and thus there has been a structural increase in demand for variety. Successful stores are those that quickly bring to market new designs. In this regard, the potential is already starting to be seen.
Nike’s Flyknit shoes are made with a highly automated process, as the knitting machines, located in China, feedback production data to help designers and engineers located in the US.
This allows more rapid upgrades and changes to be made to the product. The data generated also helps Nike further optimise future design and production processes.
In the end, customers are as much the winners as are the manufacturers. Automation allows for new and different products to come to market far quicker than in the past.
Meanwhile, manufacturers are likely to stop migrating to ever-lower cost countries. As they consolidate in the developing countries in which they currently sit, they will benefit from and will increase the standards of environmental, social, and governance policies.