Adidas Will Move Its Manufacturing Business Back To Europe

Adidas AG (ADSG.DE)

Group chief executive officer Herbert Hainer Herbert Haina talked again about the plan to move manufacturing business back to Europe in an interview earlier this month.

Herbert Hainer said that Asia's production advantage is weakening, and its robot production is currently being tested. If local (developed countries) production is to be realized, it will greatly accelerate the operation speed and shorten the product cycle. "The time of consumption will be shortened from the current 6 weeks to 24 hours."

If the mode of "local production and local consumption" can be realized in the future, it will shorten the delivery time, flexibly respond to consumer demand, reduce waste and achieve a small amount of production, and it can also respond quickly to changes in the trend of fashion.

In fact, in May, we reported and predicted the supply chain pfer plan of Adidas AG Adidas group.

Adidas AG, chief executive officer of Adidas group Herbert Hainer

At the end of 2015, the German sporting goods giant Adidas AG AG group launched Speed Factory, which aims to build a new factory in Germany based on artificial intelligence, and the factory is considered an attempt for the future of Adidas AG Adidas group. By the end of May this year, Adidas AG Adidas group has proposed to promote automatic mechanical production on a global scale. The plan will be implemented in Germany in the second half of 2017 and implemented in 2018 in the United States.

According to Herbert Hainer, robot manufacturing and 3D printing will become the main production mode of Adidas AG Adidas shoes.

In addition, Herbert Hainer revealed that even in Germany, where labor costs are relatively high, robots can be implemented in less than 24 hours without interruption.

He predicts that in the future, the production of robots can be increased by 45 million pairs per year on the basis of the existing 300 million pairs of batches.

For the group's fourth largest market, the Japanese market, Herbert Hainer said it could start production in Japan before 2020.

The main reason for the Adidas AG Adidas group's capacity pfer plan is the sharp rise in the cost of China's manufacturing industry. China is the largest supplier of the group's products.

On Sunday July 25th, we again focused on China's manufacturing industry, and released the survey article "Is China Stealing Jobs? It May Be Losing Them, Instead China snatched the work of Americans. Now the situation is reversed".

According to statistics quoted by Japan External Trade Organization, Japan's trade promotion agency, the average monthly wage of Chinese manufacturing workers is 424 dollars, which is more than 29% higher than that of three years ago, while workers in Vietnamese factories earn less than half of Chinese workers, and wages in Bangladesh and other countries are less than 1/4 of Chinese workers.

According to the research group Boston Consulting Group (referred to as BCG) Boston Consulting Group long-term tracking of manufacturing cost data show that China's manufacturing industry wages in the past 10 years increased two times, from about 4.35 U. S. dollars in 2004 to 12.47 in 2014, and by 2015, labor costs in China's manufacturing industry accounted for 12% of the total cost, which is very close to Poland 14% in Europe, while the labor cost in the United States is 18% of total cost. Meanwhile, the cost of manufacturing in the United States increased by less than 30% to 22.32 dollars per hour in the 10 years of 2004.

According to BCG estimates, the average US $1 production in the US now costs 96 cents in China.

The above situation has caused a lot of impact, the most important of which is that supply chain factories have been shut down in China and pferred to countries such as Bangladesh, Kampuchea and Vietnam, which are cheaper in labor cost.

In early 2016, the closure of Dongguan Xing ang Shoes Co., Ltd. became one of the landmark events in China's supply chain recession. About 2000 workers lost their jobs, and the pfer of production capacity once held up China.

Industry exports 75% share of the Pearl River Delta manufacturing industry glory no longer.

A report published in March this year by Fung Business Intelligence Centre, a think-tank in Feng's group, was released in 2000, showing that China exported to the United States last year.

The share of the market has declined, while the share of Vietnam and Bangladesh has increased.

This is a research firm based in Hongkong, focusing on research in the supply chain and procurement field.