As a professional marathon runner, Knox Robinson wears dozens of different sports shoes for a year. But at the time of the game, he had only one choice: Nike's Flyknit Racer.
For many athletes, this particular design can provide a seamless and comfortable experience that is not a feature of other brands. Since Nike FlyknitRacer debuted in 2012, this type of sports shoes has been regarded as a technological breakthrough. It is produced through a special knitting machine and uses less artificial labor and less material than most other sports shoes. Now, this technology has become the basis for the production of more "radical" manufacturing technology experiments. It may even subvert the entire sports and leisure apparel industry and become a means of accelerating the globalization trend.
Since 2015, Nike has started working with Flex, a factory of high-tech companies such as Fitbit and Lenovo, and hopes to use more automation elements in the production of labor-intensive sports shoes.
Mexico's Flex plant has become one of Nike's most important plants in the world. The factory is not only responsible for the production of products, but also is responsible for testing a series of innovations of Nike, such as laser cutting and automatic bonding technology.
For Nike, the deeper level of automation means two great attractions, further pressures to lower costs, can significantly increase profitability. At the same time, it can also allow the company to respond to fashion design changes more flexibly and quickly, and provide new design styles faster. For example, Roshe sneakers that do not use Flyknit technology are priced at $75, while sports shoes that use Flyknit technology can be increased to $130.
“Now we are modernizing the footwear industry. This is a long-term plan that needs to consume billions of dollars, not just the results that can be measured with years or decades of influence.†Chief Nike Finance Officer Chris Collier said.
Collaboration with Flex will also have wider impact. In the past 20 years, Nike has been one of the representative companies for the outsourcing of production tasks to factories in developing countries, but it has also been criticized by the outside world for the use of child labor or abuse of labor.
But now, many laborers in these developing countries are beginning to worry that robotics technology will deprive them of job opportunities. If Nike strives to achieve a greater degree of automation, it will put itself in another vortex of controversy.
Nike said that growing sales allows it to use more automation technology while maintaining the current number of employees. Currently, Nike is one of the world's largest multinational companies. Only footwear products have employed more than 493,000 workers in 15 countries for production. In the production process of all Nike products, it has covered more than 1.02 million workers in 42 countries.
Sridhar Tayur, professor of operations management at Tepper School of Business at Carnegie Mellon University, said that Nike's use of automation technology will determine the development of the entire industry.
“Unless you choose Africa or other places, the labor cost in Asia is no longer as low as it used to be. For a long time, Nike will face tremendous pressure, either shifting factories to places where labor costs are lower, or choosing Use more automated elements," he said.
Nike’s sales in fiscal year 2017 were 34.4 billion U.S. dollars, and Nike still needs to continue its efforts to achieve the target of 50 billion sales in 2020. This is the goal set by the company’s CEO Mark Parker in 2015. Although the company’s business is continuously growing, it still faces fierce competition from Germany’s Adidas.
For a deeper level of automation, Nike actually has a huge potential advantage. Citibank analysts JimSuva and KateMcShane said that the production of AirMax sports shoes through the Flex factory can reduce labor costs by 50% and material costs by 20%, which is equivalent to an increase of 12.5% ​​in gross margins and a direct increase to 55.5%. .
Further estimates, if the Flex factory's production can afford 30% of sales in North America, then Nike can save 400 million US dollars of labor and raw material costs each year, equivalent to a 5% increase in earnings per share.
“We believe that the entire apparel industry is paying close attention to this issue. If Nike is successful, more companies will begin to transition,†said Suva.
More use of automation technology can not only reduce costs, but also more flexible to keep up with market changes. In the apparel industry, successful people are often those companies that can continuously introduce new products and can quickly meet consumer tastes and shopping habits. However, some companies are often unable to take action when they adapt to the fast-changing trend of so-called fashion. The main reason is that the manufacturing process is too complicated and the response speed is slow.
The manufacture of a pair of sports shoes using conventional techniques requires a total of more than 200 parts in 10 sizes and also requires manual engagement and bonding. The Flex factory's new manufacturing process automates two processes, namely automatic bonding and laser cutting.
Before the completion of the design, development and manufacture of a pair of sports shoes, it often takes several months. With the help of the Flex factory, the process of customizing a pair of sports shoes now only takes 3 to 4 weeks.
According to statistics from ILO, in countries such as Cambodia, Indonesia, the Philippines, Thailand, and Vietnam, 56% of job opportunities will be replaced by automation in 10 or 20 years, of which the apparel and footwear manufacturing industries will suffer the most serious.
However, Nike said that if sales continue to increase, workers in the supply chain will not lose their jobs, but they will not stop making more automation innovations in product manufacturing. “We will not avoid the impact of this change on the labor market. We also need more manufacturing jobs based on existing resources,†said Eric Sprunk, Nike’s executive vice president and chief operating officer.
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