The Daily Update - Run Forest run

It’s been 20 years since German sportswear giant Adidas manufactured sportshoes in its homeland, however that all changed earlier this year when Adidas opened its new ‘Speedfactory’; a 4,600-square-metre highly-automated plant in Ansbach, southern Germany, where it will start to manufacture shoes by robots. Indeed, by 1993 Adidas had closed all but one of its 10 shoe factories in Germany. With the new German factory, plus another one to be built in the US, Adidas hopes to be making and selling around 1mln pairs of sports shoes to developed markets customers within the next 5 years. As the former chief executive of Adidas Herbert Hainer said, ‘When I started at Adidas in 1987, the process of closing factories in Germany and moving them to China was just beginning, however now it’s coming back. I find it almost uncanny how things have come full circle’. Due to the new factories automation, just 160 staff will produce over 500,000 sports shoes annually. As it stands at the moment, the million pairs of shoes that the two new factories will produce are a drop in the ocean against the 300mln pairs that Adidas currently makes, however with advances in robotics and automation, more production can be brought back, increasing faster delivery of new styles and reducing lengthy shipping times and costs.

Adidas is not alone in bringing production back from the Far East due to the growth in automation, and at the moment production lines in Europe and the US are only a very small percentage of what may be possible, however the warning signs may be there, especially for the ultra-low cost Asian countries. According to a study carried out by the International Labour Organization (ILO), a massive 56% of all salaried workers in Vietnam, Thailand, the Philippines, Indonesia and Cambodia could be displaced by robots, automation and other advanced technologies in the coming decades. The jobs most at risk are seen as simple manual tasks, such as cutting fabric, which can be easily automated, in footwear, clothing and textiles. In these 3 industries alone, 64% of workers in Indonesia could be replaced by automation, however those figures rise to a mind boggling 86% in Vietnam, and 88% in Cambodia.

One country that is working hard to catch up (no pun intended !!) when it comes to automation is China. In 2014, President Xi Jinping called for a ‘robot revolution’ boldly stating, ‘Our country will be the biggest market for robots’. Since then, China has bought more industrial robots each year than any other country since then, including high-tech manufacturing giants such as Japan, Germany and South Korea. According to the industry lobby group, International Federation of Robotics (IFR), at the end of last year China overtook Japan to be the world’s biggest operator of industrial robots, buying 27% of the world's industrial robots. However, China still has a long way to go before it even gets close to the aforementioned 3 countries in its automation transformation. As of the beginning of this year Germany had 292 robots per 10,000 manufacturing jobs, with Japan having 314 and South Korea leading the way with 478. China has just 36. With the Guangdong Province alone investing USD150bln in 2015, it will not take long for the Chinese to overtake the field.

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