Adidas moves high-tech Speedfactory to Asia, closing factories in US, Germany

Dive Brief:

Adidas will move its high-tech Speedfactory technology to Asian factories by the end of the year, closing factories in Germany and Atlanta (where the technology is currently employed) by April 2020, according to a press release.
"The company expects this to result in better utilization of existing production capacity and more flexibility in product design," the release said. The company's facilities in Ansbach, Germany, and Atlanta were home to robotic production and 3D printing enabled by motion capture technology.
The technology firms that had partnered with Adidas on the German and U.S. Speedfactories will no longer be involved after the move to Asia. Adidas will continue to work with German tech firm Oeschler on 4D printing projects, according to the release. Carbon, a 3D printing technology company that partnered with Adidas on the Futurecraft 4D shoe, was not mentioned in Adidas' announcement.

Dive Insight:

Adidas is not eschewing the 3D printing technology it has lauded as a superior way to produce shoes, but it is demonstrating that location for this tech still matters to the bottom line.

At the beginning of the Speedfactory project in 2017, Adidas envisioned this automated method of manufacturing would increase speed-to-market by not only shortening product development and manufacturing lead times, but also shortening the physical journey to the customer by doing so profitably in target markets.

With the production move, Adidas suggests the business case is still better in Asia, even with advanced technology and despite the distance from target consumers.

"Through shortened development and production lead times, we’ve provided select customers with hyper-relevant product for moments that matter. This was our goal from the start. We are now able to couple these learnings with other advancements made with our suppliers, leveraging the totality of these technologies to be more flexible and economic while simultaneously expanding the range of products available," Martin Shankland, Adidas' executive board member responsible for operations, said in a statement.

The company further said the technology will be able to expand beyond the footwear category in its new location.

Supply chain disruptions have weighed heavily on Adidas this year, which may be contributing to the company's decreased inclination to pay for facilities and labor in expensive markets like Germany and the U.S. The company announced in March that "supply chain shortages" would stifle sales for the whole of 2019. The shortages are mainly in apparel where the Speedfactory technology does not yet apply.

Recovery from the shortfalls is bound to be expensive. The company has already increased use of air freight to catch up, said Adidas CEO Kasper Rorsted in May, warning the cost for the next two quarters would be "substantial."