Adidas announced on Wednesday that it will open up a production site in Cherokee County next year. The “Speedfactory”, the second of its kind in the world after Germany, will allow adidas to create product more quickly and closer to customers in the U.S. The 74,000 plus square foot factory will be fully functional by late next year, with the aim of producing 50,000 pairs of shoes by the end of the year.
The factory is a boon for Cherokee County but for a factory of its size and output, the 160 jobs that will be accompanying it is low. The difference will be made up by “cutting-edge manufacturing technologies”, mainly advanced, automated robotics. Adidas is among the many companies that are seeking to shorten the supply chain and take advantage of technology that allows factories to open up back in the U.S., cutting a very expensive – and environmentally questionable – shipping trip across the Pacific Ocean, and with the added benefit of increased customization and production more closely related to real-time consumer demand.
Governor Nathan Deal was pleased by the announcement. “Georgia offers industry leaders such as Adidas the necessary resources to compete worldwide,” said Deal. “Our state is emerging as a sports corridor for Southeastern U.S., and our business-friendly climate will be a match for Adidas’ new operation. We look forward to working with our partners in Cherokee County and the Metro Atlanta Chamber to support Adidas in future growth.”
The move may be part of the beginning of a shift in world manufacturing as companies in the west look to relocate production closer to their end-use locations, commonly called “reshoring”. Decades ago, as manufacturing in the U.S. and Europe got more expensive, those jobs were hemorrhaging to Asia, which offered an endless supply of workers at low wages. WalMart, Mattel and numerous other companies took advantage of the moving markets and were able to produce a near endless amount of product at low cost. Now, as wages in China and other parts of Asia are beginning to rise and regulations around labor continue to increase, companies finding it less profitable to locate there. These factors, combined with unprecedented improvements in automated manufacturing and the immense cost of shipping products halfway around the world, are making it less cost-efficient to continue producing in Asia. According to the Reshoring Initiative, a manufacturing trade group, 265,000 jobs have been created since January of 2010 thanks to reshoring.
Watchers of the Olympics and other programming this summer may have noticed a commercial from WalMart about sourcing an additional $250 billion in products made, assembled or grown in the U.S. This is largely possible thanks to these improvements in manufacturing. So, the manufacturing may be coming back, but what about the jobs? It is not likely that the U.S. will ever recover the direct manufacturing jobs lost over the past few decades. The 160 jobs that will come with the Adidas factory would likely have been much more than that without the aid of the cutting-edge technology. But those 160 jobs do not tell the whole story. There will be new trucks and trains hauling product out of Cherokee County. There will be suppliers for the factory and possibly lower costs for American shoe buyers. U.S. consumers and workers should be encouraged by this manufacturing trend. Asia may soon be facing a more difficult problem.
