Episode Summary: "Made in America? Shoe Companies Already Tried That"

Podcast Information:

• Title: The Journal
• Hosts: Ryan Knutson and Jessica Mendoza
• Co-produced by: Spotify and The Wall Street Journal
• Release Date: May 8, 2025
• Episode Title: "Made in America? Shoe Companies Already Tried That"

Introduction

In this episode of The Journal, hosts Annie Minoff and John Emont delve into the ambitious yet ultimately unsuccessful attempts by major American shoe companies—Nike, Adidas, and Under Armour—to relocate their manufacturing operations back to North America. Motivated by rising labor costs in Asia and the imposition of tariffs under the Trump administration, these companies faced significant challenges in reshoring production. The discussion highlights the complexities of modern shoemaking, the limitations of automation, and the enduring advantages of established Asian manufacturing hubs.

The Global Landscape of Shoe Manufacturing

Dominance of Asian Manufacturing: Annie Minoff opens the conversation by emphasizing the dominance of Asian countries—Vietnam, Indonesia, and China—in the global shoe manufacturing industry. She states, “Most of those shoes are made in Asia in three countries. Vietnam, Indonesia and China” ([00:20]).

Goldilocks Countries for Shoemaking: John Emont elaborates on why these specific countries have become the hubs for shoemaking, referring to them as the “Goldilocks countries for shoes” due to their combination of skilled labor and relatively low wages ([00:32]-[00:41]).

Impact of Tariffs and Trump's Manufacturing Policies

Introduction of Tariffs: The episode discusses how President Donald Trump's administration introduced tariffs on Asian countries with the aim of bringing manufacturing back to the United States. John Emont explains, “Donald Trump has introduced tariffs on Asian countries... And the stated purpose of that is to bring back manufacturing to the United States” ([01:01]).

Ongoing Pressure Despite Paused Tariffs: Even though some tariffs have been paused, shoe companies continue to feel pressure to shift production domestically. Annie Minoff notes, “Though some of Trump's tariffs have been paused, shoe companies are still facing pressure to move production back home” ([01:18]).

Attempting to Reshore: Nike’s Ambitious Project

Establishing the Guadalajara Factory: In response to rising labor costs in Asia and the new tariffs, Nike embarked on a bold project to automate shoe production in Guadalajara, Mexico. John Emont highlights the scale of this endeavor: “They wanted tens of millions of shoes produced there by the year 2023” ([05:45]-[05:49]).

Partnership with Flex: Nike partnered with Flex, a contract manufacturer renowned for its work with electronics giant Apple, to set up the Guadalajara factory. Annie Minoff shares insights from Tom Fletcher of Flex, who felt confident based on past successes: “If we can survive Apple, we can figure out Nike for sure” ([07:15]-[07:32]).

Challenges in Automation and Manufacturing

Complexity of Shoemaking: John Emont explains that unlike simpler manufacturing processes, shoemaking involves a variety of materials and requires precision and adaptability. “Shoes are complicated... a single shoe can incorporate a range of materials from squishy foams to flexible plastics” ([03:42]-[03:50]).

Automation Hurdles: Tom Fletcher discusses the difficulty in replacing human labor with robots, particularly in tasks that require dexterity and adaptability. He recounts the challenge of automating the gluing process: “We spent a lot of time trying to create a process where we could much more easily adhere the swoosh to the side of the shoe” ([09:55]-[10:11]).

Design Flexibility vs. Manufacturing Rigidness: John Emont points out that Nike’s focus on innovative and ever-evolving designs made it hard for automated systems to keep up. “Nike's producing tons of different new types of shoes all the time... the next generation of that shoe had a painted on swoosh” ([10:32]-[10:44]).

Outcome: Failure to Reshore Production

Underperformance of the Guadalajara Factory: By 2019, Nike had to abandon its Guadalajara factory as it failed to meet production targets. The factory produced fewer than 200,000 pairs of shoes and couldn’t reduce its workforce below 3,000 employees. Tom Fletcher summarized the outcome: “It was just one of those decisions where it was costing everybody too much money” ([12:15]-[12:19]).

Repeated Failures by Other Companies: Adidas and Under Armour also attempted similar reshoring projects but ultimately moved their operations back to Asia. Adidas shipped its Speedfactories back, while Under Armour quietly discontinued its Project Glory after initial announcements ([12:54]-[13:43]).

Lessons Learned and Future Prospects

Limitations of Automation: Tom Fletcher reflects on the balance between manufacturability and design, emphasizing that without collaboration between design and technology, automation struggles to keep pace with creative demands. “If design is lead dog and there's no even intent to collaborate at all, I think that's a very challenging environment for technology to keep up with” ([12:30]-[12:54]).

Skepticism About Reshoring: John Emont remains pessimistic about the feasibility of a swift shift back to North America, citing the high costs and complex logistics involved. “It's really hard to imagine a quick shift out of Asia... you'll need to pay them, you know, pretty well” ([15:03]-[15:38]).

Impact of Continued Tariffs: Despite the failure of reshoring efforts, tariffs continue to influence the industry. However, companies like Nike and Under Armour are primarily focusing on optimizing their existing operations in Asia rather than moving manufacturing back to North America ([13:56]-[14:51]).

Notable Quotes with Attributions:

• Annie Minoff: “Most of those shoes are made in Asia in three countries. Vietnam, Indonesia and China.” ([00:20])
• John Emont: “Donald Trump has introduced tariffs on Asian countries... And the stated purpose of that is to bring back manufacturing to the United States.” ([01:01])
• Tom Fletcher: “We were incredibly excited... tough but possible.” ([07:09]-[07:15])
• John Emont: “It's really hard to imagine a quick shift out of Asia... you'll need to pay them, you know, pretty well.” ([15:03]-[15:38])
• Tom Fletcher: “I think robots can make shoes, first of all... balance between manufacturability and design.” ([12:30])

Conclusion

The episode illustrates the significant hurdles American shoe companies face in attempting to reshore manufacturing operations. Despite ambitious projects and advancements in automation, the intricate and labor-intensive nature of shoemaking, coupled with the adaptability and cost advantages of Asian manufacturers, have rendered reshoring efforts largely unfeasible. As tariffs continue to shape the global trade environment, companies remain focused on refining their existing supply chains in Asia, making it unlikely that North American-made sneakers will become mainstream in the near future.

Listen to the full episode of "Made in America? Shoe Companies Already Tried That" on Spotify or your preferred podcast platform to gain deeper insights into the intricacies of global manufacturing and the challenges of reshoring production.