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Nike's 1 million 20 thousand workers, then they just a breakdown
From: Da Dong Resin/Gushi Xin Rui Chemicals Trade Co.,Ltd Post date: 2017-11-04


Since the debut of Nike Flyknit Racer in 2012, this sneaker has been seen as a technological breakthrough. It's produced by a special kind of knitting machine, which uses less labor and less material than most other sports shoes.

Now, this technology has become the basis to create a more "radical" manufacturing technology test, there may even subvert the entire sports and leisure clothing industry, as a means of accelerating the trend of globalization.

Since 2015, Nike has started working with Flex, a foundry company for high-tech companies like Fitbit and Lenovo, hoping to use more automation elements in labor-intensive products such as sports shoes.

The Flex factory has become one of the most important global company factory, the factory is not only responsible for the production, but also responsible for a series of innovative Nikes test, such as laser cutting and automatic bonding technology.

For Nike, a deeper degree of automation means two great attractions, and further lower costs can dramatically increase margins. It also allows companies to respond more quickly and flexibly to fashion design changes and provide new design styles faster. For example, Roshe sneakers that do not use Flyknit technology are priced at $75, and sports shoes using Flyknit technology can be priced at $130.

"We are now on the footwear industry modernization, this is a long-term, need to consume billions of dollars, not only a few years or even decades of influence can be measured results." Nike chief financial officer Chris Collier said.

Through a partnership with Flex, will also have a broader impact. In the past 20 years, Nike has been one of the representative companies that outsource production tasks to developing countries, but it has also been accused of the use of child labor or abuse of labor.

But now, many of the workforce in these developing countries are beginning to worry that robotic technology will deprive them of jobs. If Nike tries to reach a greater degree of automation, it will get itself into another vortex of debate.

Nike says growing sales will allow more automation technology to be used while maintaining the number of employees. At present, Nike is one of the world's largest multinational companies, only footwear products have been employed in more than 493 thousand workers in 15 countries. In the production process of all types of Nike's products, it has covered more than 1 million 20 thousand workers in 42 countries.

Sridhar Tayur, a professor of operations management at the Tepper School of business at Carnegie Mellon University, said that the degree of use of automation by Nike will determine the development process of the industry as a whole.

"Unless the choice of Africa or elsewhere in Asia now, labor costs have not so low. For a long time, Nike will face enormous pressure, either to transfer factories to lower labor costs, or choose to use more automation elements." He expresses.

The degree of automation for more in-depth, Nike actually has a huge potential advantage. Citibank analyst Jim Suva and Kate McShane, to produce Air Max sports shoes by Flex factory, can make the labor cost is reduced by 50%, the material cost savings of 20%, which is equivalent to a 12.5% increase in gross margin, directly to the 55.5%.

Further estimates, if the Flex plant yields 30% of the sales in North America, Nike can save $400 million per year in labor and raw material costs, equivalent to a 5% increase in earnings per share.

"We think the whole garment industry is paying close attention to this problem, and if Nike succeeds, then more companies will start to transform." Suva representation.

Some enterprises are often unable to take action when they adapt to the rapid changing trend of the so-called fashion. The main reason is that the manufacturing process is too complex, resulting in slow response.

Making a pair of sports shoes by traditional technology requires 10 dimensions, more than 200 components, and needs to be manually aligned and bonded. And the new manufacturing process of Flex plant has realized the automation of two processes, that is automatic bonding and laser cutting.

It takes months to design, develop and manufacture a pair of sneakers. And with the help of the Flex factory, it's only 3 to 4 weeks now to complete a custom pair of sneakers.

According to ILO statistics show that in Kampuchea, Indonesia, Philippines, Thailand and Vietnam and other countries, the future 56% jobs will be 10 or 20 years after being replaced by automation, including clothing and footwear manufacturing industry by the impact of the worst.

But Nike says that if sales continue to grow, the workers in the supply chain will not lose their jobs, but they will not stop making more automation innovations in the product manufacturing sector.

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