By Jon Emont

President Trump is betting that the threat of stiff tariffs on low-cost countries in Asia and elsewhere will pressure American companies to bring manufacturing -- and jobs -- back to the U.S.

But high U.S. labor costs mean companies would have to find ways to replace human workers with machines. For some industries, that has proved surprisingly difficult.

Indeed, a yearslong effort by Nike to shift part of its manufacturing from China, Indonesia and Vietnam to North America illustrates how tough it is for U.S. brands to wean themselves off the flexible, low-cost contract manufacturers that use armies of laborers to churn out an array of products for American consumers.

Starting in 2015, Nike poured millions into an ambitious effort to partly automate what has always been a highly labor-intensive industry. At the time, rising labor costs in China and advances in manufacturing techniques such as 3-D printing opened the possibility of finding a new way to make shoes that would rely on fewer workers.

The shoe giant turned to Flex, an American manufacturer that had helped Apple set up a complex factory in Texas to make Mac Pros. The goal: Make tens of millions of Nike sneakers at a new high-tech manufacturing site in Guadalajara, Mexico, by 2023.

The plant would still include thousands of workers, but far fewer than are needed in Asia to make the same number of sneakers. If successful, the project could be a model for production in the U.S., according to some involved in the effort.

Nike's competitors also sensed an opportunity to rethink a manufacturing model built around massive Asian factories where armies of cheap, skilled laborers stitch fabrics and glue soles to shoes by hand.

"It feels less modern and more like a Ford Model T production line combined with a Middle Ages cobbler's bench," said Kevin Haley, then the executive vice president of innovation at clothing maker Under Armour, in 2015. He pledged to use automation to make shoes in Baltimore, a project he called "Project Glory."

Around the same time, Adidas launched "speedfactories" in Atlanta and Ansbach, Germany, with high-tech machinery that quickly spit out shoes, heralding "a new era in footwear creation."

"If they want to move out of China and Vietnam, they have to have technology to do that differently," said Mike Dennison, Flex's then president, in 2016.

Nike's effort was the boldest. The company aimed for large-scale automated production in under a decade, which it said would save on labor costs and allow it to deliver new models of shoes to Americans faster.

Tom Fletcher, who oversaw the project for Flex, came into the effort feeling confident, having just built a highly complex Mac Pro factory for Apple in Austin, Texas. At the time, Apple had been looking to bring some manufacturing home. Flex pushed to rejigger production lines and use automation, trying to find as many ways as possible to minimize human interaction. That experience came in handy.

Nike and Flex established new production lines that used machines commonly seen in electronics manufacturing -- but rarely shoemaking -- such as a "pick and place" machine that is known for mounting components onto circuit boards. The machines were supposed to build the upper part of a shoe, knit fabric, add logos and glue the sole.

The effort quickly ran into trouble.

The robots struggled to handle the soft, squishy and stretchy parts that are integral to shoemaking. Shoe fabrics also expand and contract depending on the temperature, while in shoemaking no two soles are exactly alike.

Human workers can adapt to such challenges, but it proved difficult for machines.

"You're trying to do something very precise and then it gets a little colder or warmer, and the material changes on you," said Fletcher. "We did not anticipate that."

As a result, factory production never became as automated as envisioned. As shoe production increased, the factory personnel swelled to 5,000, about twice as many as originally planned and costing more than a similar workforce in Vietnam. Task after task proved challenging to automate, like the delicate work of gluing soles to the upper part of the shoe.

"If you didn't lay it the right way, there would be a noticeable twisting of the shoe, a misalignment that aesthetically means it would fail quality tests," said Fletcher.

A central problem was also the huge variety of shoes Nike produces. For decades, American consumer companies have given designers nearly unlimited freedom to dream up the coolest products and relied on Asian manufacturers to deliver them. And unlike cars or iPhones, shoe models are changing all the time.

But automating manufacturing means designing simple products that machines can undertake over and over again. Electronics manufacturing uses hard, standardized materials, allowing machines to replicate the same step millions of times.

"You have to make sacrifices from how to design to the complexity of the materials and models you'll work with," said Michael Newton, the former Nike executive who oversaw the project. "That goes against what the consumer wants. They want incredible diversity of product."

At one point, it took the Flex team eight months to figure out how to automate a way to put the Nike swish on a shoe, only for Nike to move onto a new shoe line for which the method Flex developed no longer worked.

Newton said it would have been easier to mass-produce uncomplicated shoes, such as ones with a machine-knit upper part and matched with simple molded bottoms. But Nike was unwilling to put limits on its designs and expected manufacturers to produce whatever new shoes their teams dreamed up. "Manufacturing, in a lot of ways, did not have an equal seat at the table," Fletcher said.

By 2017, Flex's investors were balking at rising costs at the company, with some questioning why an outfit that makes electronics was involved in shoe production.

Flex and Nike wound up the project by early 2019. By then, Under Armour had stopped mentioning to investors its "Project Glory" mission to make shoes in the U.S. That year Adidas, which had also faced challenges producing complex shoes with robots, said it would close down production in Atlanta and Germany. It shipped its "speedfactory" technology to suppliers in Asia.

The three shoemakers stuck with their original offshore locations -- Vietnam, China, and Indonesia -- even after pandemic-era factory shutdowns showed the risk of having such a concentrated node of production.

Adidas, Under Armour and Nike declined to comment on their past reshoring efforts. Representatives for Nike and Under Armour said the companies are working out responses to tariffs.

Now, China, Vietnam and Indonesia are in Trump's sights. Earlier this month, he placed tariffs of 46% and 32% on Vietnam and Indonesia, respectively, before lowering them to 10% and granting them a 90-day reprieve. The U.S. raised tariffs on imports from China to 145%.

Commerce Secretary Howard Lutnick has said the administration wants labor-intensive industries to return to the U.S.

There will be an "army of millions and millions of people screwing in little, little screws to make iPhones," he said in a recent interview with CBS.

Apple makes virtually all of its iPhones in low-cost countries such as China and India.

The threat of new tariffs is pushing some to ask whether Nike and others will ultimately have to reconsider efforts to automate manufacturing and bring shoe production back to the U.S. Newton and Fletcher think it still could be done, although it wouldn't be easy.

"You need to have some deep pockets and some patience because it's not going to happen fast," said Fletcher. The previous experience "was humbling, for sure."

Write to Jon Emont at jonathan.emont@wsj.com

(END) Dow Jones Newswires

April 21, 2025 03:04 ET (07:04 GMT)

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