Made in America? Shoe Companies Already Tried That.

Summary

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"

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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.

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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]).

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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]).

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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]).

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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]).

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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]).

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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]).

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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])

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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.

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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.

Transcript

[Annie Minoff]

Americans love their sneakers. These are blue Adidas campus O's. I'm literally obsessed with. Let me grab the 740 V2s and.

[Tom Fletcher]

The 1130 and we can. This is a pair of Nike Air Mags.

[John Emont]

I just want some good looking Jordan 11s. High tops.

[Unknown Speaker]

I don't want low tops.

[Annie Minoff]

Most of those shoes are made in Asia in three countries. Vietnam, Indonesia and China.

[John Emont]

And it's been this way for now about 20 years.

[Annie Minoff]

That's my colleague John Emont.

[John Emont]

Whether it's Adidas or Nike or Under Armour, they're making their shoes in these three countries and they're kind of the Goldilocks countries for shoes.

[Annie Minoff]

That's the way most modern shoemaking is done. Shoes are crafted in factories in Asia by tens of thousands of laborers making relatively low wages. And those shoes are then shipped and sold all over the world. But President Trump would like to change that.

[John Emont]

Donald Trump has introduced tariffs on Asian countries, including the three Asian shoemakers we discussed Vietnam, Indonesia and China. And the stated purpose of that is to bring back manufacturing to the United States.

[Annie Minoff]

Though some of Trump's tariffs have been paused, shoe companies are still facing pressure to move production back home. But actually making shoes in North America would be incredibly tough to pull off. And shoemakers know that from experience.

[John Emont]

It's interesting to know that Nike, as well as other big shoemakers like Adidas, like Under Armour, have actually tried this recently and they all failed.

[Annie Minoff]

Welcome to the Journal. Our show about money, business and power. I'm Annie Minoff. Thursday, May 8th. Coming up on the show, what happened when Nike tried to make shoes closer to home?

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[Annie Minoff]

My colleague John is not what you would call a sneakerhead.

[John Emont]

I mainly my wife found a sale and there's a hole in the shoes. So we really have to get that sorted out. Guy. I suppose that's really how I am.

[Annie Minoff]

My wife found a sale. Guy. Nice. But ever since John moved to Singapore, he's been learning more about the business side of the sneaker game.

[John Emont]

Since I've lived out in Asia, I've Been really interested in shoe production. You know, all our shoes are made here.

[Annie Minoff]

Why is that?

[John Emont]

Couple of things. These sneakers there, it's not like garment making. It's not like making a T shirt. To make a T shirt, you just need sewing machines and you need people who are skilled enough to sort of make the T shirts. And actually you can find that just about everywhere. So your T shirt could be made in one of 40 countries, probably. With shoes, it's different.

[Annie Minoff]

That's because shoes are complicated. A single shoe can incorporate a range of materials from squishy foams to flexible plastics.

[John Emont]

And critically, it's also labor intensive. So there are only a couple of countries where you have this cheap labor force that's willing to do a lot of the manual work and it is skilled labor. So you do need to be trained and you do need to be willing to do it and you do need to be sort of dexterous and things.

[Annie Minoff]

For years, shoemakers thrived in Asia. But about a decade ago, several sneaker companies, Adidas, Under Armour and Nike, all tried to make shoes in a new place and in a new way. All three shoe companies decided to bring some production to North America.

[John Emont]

Could we just rethink how shoes are made? Just because they've always been made this way, do they have to be one.

[Annie Minoff]

Reason to try something different? Wages were rising in Asia.

[John Emont]

The idea that, you know, you could just rely on cheap labor from these countries, you know, forever, was starting to come into question. And then there was all these new advances in automation.

[Annie Minoff]

For a long time, setting up factories in North America was cost prohibitive.

[John Emont]

Labor is just more expensive in North America and it's also not as readily available as in East Asia. So if you're goal is to make shoes in North America and make them be price competitive with the shoes you're producing out of Asia, then you really need to automate it. And that means robots.

[Annie Minoff]

Of all the shoe companies, Nike's automation effort was the biggest. In 2015, the company set up a factory, not in the United States, but close by in Guadalajara, Mexico. Wages in Mexico are higher than in most of Southeast Asia, but they're lower than in the us plus it would be faster to ship shoes from Mexico to Nike's American customers. And what was Nike's goal like? How much manufacturing did they want to shift back to North America?

[John Emont]

They wanted tens of millions of shoes produced there by the year 2023.

[Annie Minoff]

That's ambitious.

[John Emont]

Yeah, it was definitely ambitious.

[Annie Minoff]

According to John's reporting, some within Nike hoped that the Mexican factory would serve As a stepping stone, many of the.

[John Emont]

People involved in the project did hope that once they got this solved, once they figured out how to make a heavily automated shoe, that then some production could be moved into the United States proper.

[Annie Minoff]

To help them set up that Guadalajara factory, Nike partnered with a company called Flex.

[John Emont]

Flex is a contract manufacturer. So they make things for other companies, and what they're mainly known for making is electronics. So one of their biggest projects ahead of the Nike project was working with Apple to make MacBook Pros. In Austin, Texas.

[Annie Minoff]

One of the people who worked on that Apple project was Tom Fletcher.

[Tom Fletcher]

My name is Tom Fletcher. I was responsible for the strategic business unit inside Flex.

[Annie Minoff]

Tom would go on to work on the Nike factory. So you'd built complicated stuff in North America before.

[Tom Fletcher]

We had built complicated stuff in North America. Complicated stuff that pushed us to create process, to create automation, to solve problems differently.

[Annie Minoff]

And so going into this project of trying to build shoes in North America, how are you feeling? Did it seem doable?

[Tom Fletcher]

We were incredibly excited. We were excited to learn. We were excited for the challenge.

[Annie Minoff]

Tough but possible.

[Tom Fletcher]

Absolutely. Tough but possible. If we can survive Apple, we can figure out Nike for sure. Candidly speaking, I had probably a little bit of arrogance going in, knowing the kind of problems we'd solved before thinking, we'll go over here, we'll take a look, we'll figure out how to automate, we'll do our thing.

[Annie Minoff]

Tom's main challenge was to figure out how to replace humans with robots. His goal was to have fewer than 3,000 workers. To start, he flew to China, Indonesia, and Vietnam to tour Nike's factories there. And he saw firsthand the scale of the human labor that Nike was used to.

[Tom Fletcher]

One of the first things I noticed when I went into the factories in Asia is the number of toothbrushes they use specifically to glue the shoes.

[Annie Minoff]

Huh. Like you'd put glue on the toothbrush and kind of.

[Tom Fletcher]

Yeah, and you swab it all around and you stick it together and you press that thing down and boom, the shoe goes down the line.

[Annie Minoff]

All right.

[Tom Fletcher]

My whole mantra to the team was, we're getting rid of all the toothbrushes.

[Annie Minoff]

But getting rid of all those toothbrushes and all those workers wasn't as simple as Tom imagined. That's after the break.

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[Annie Minoff]

By 2016, Nike and Flex had set up a sneaker factory in Guadalajara, Mexico. But it didn't take long for the project to run into problems.

[John Emont]

It became clear how challenging this effort was going to be pretty soon after they started.

[Annie Minoff]

That's our colleague, John.

[John Emont]

Again, you know, there are all sorts of challenges to automating shoe production. All the materials you're dealing with are squishy and they sort of change dimensions with the temperature, with the humidity. And these are things that humans are, you know, very adept at quickly dealing with. But machines need precision. And if the sole of the shoe is a little different from the last sole of the shoe, well, a machine might just put the glue in the wrong place. Whereas a human worker would just quickly adapt. And stuff like that just took a while to sort out.

[Annie Minoff]

The project's success hinged on Nike's ability to cut costs, including by replacing humans with machines. But that was turning out to be easier said than done. For example, an early challenge was getting robots to attach the Nike swoosh to the side of the shoe. Here's Tom from Flex.

[Tom Fletcher]

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. When we talk about electronic manufacturing, manufacturing is pick and place. Robot picks it up, robot puts it down, robot puts it in place, we move along.

[Annie Minoff]

It took Tom and his team eight months to figure out an automated way to add the Nike swoosh to one specific shoe model.

[Tom Fletcher]

Challenge was they were about to change the way they were going to build that shoe. And the next generation of that shoe had a painted on swoosh. It didn't have a cut in place swoosh. So everything we had just done didn't count for the new version.

[John Emont]

And suddenly they had to figure it all out again. You know, Nike's producing tons of different new types of shoes all the time. So again, a human workforce is pretty adaptable. Okay, we're now doing things this way.

[Annie Minoff]

Okay, now the swoosh is slightly to the right.

[John Emont]

Fine, exactly. But these things can be tricky. And the other thing you have to remember about shoes is that they come in more than a dozen sizes. They often come in different colors, and they're often little distinctions. So you need machines that can sort of adapt to all of that. And that's tricky. You can't fail. Right? It has to work every single time.

[Annie Minoff]

Another problem was fashion. At Nike, design was king, and the company didn't want to be limited by what robots could handle.

[John Emont]

One of the chief challenges of the project was that you had a company that was in certain ways spoiled. Like a lot of American companies, they're very design oriented. They're trying to push boundaries. And so what they're used to doing is, is having these very creative designers say, we want this shoe. You know, it has these properties, it uses these materials, it is different from other shoes in these ways. And then they tell their extremely skilled Asian shoe manufacturing partners make this shoe, and they can do it.

[Annie Minoff]

Robots are a lot less accommodating. All of these challenges added up. So in 2019, Nike packed up from the Mexico facility and went back to focusing on making shoes in Asia. According to Tom, the factory never hit its targets. The company produced fewer than 200,000 pairs of shoes in its Mexico factory and never reduced the workforce there below 3,000 people.

[Tom Fletcher]

It was just one of those decisions where it was costing everybody too much money.

[Annie Minoff]

They also never achieved Tom's goal of automating all those toothbrushes out of the production line. Was it a surprise that robots weren't better at shoemaking?

[Tom Fletcher]

I think robots can make shoes, first of all. I think the challenge is that balance between manufacturability and design. 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.

[Annie Minoff]

Nike wasn't the only shoe company to throw in the towel. Adidas and Under Armour had set up similar projects around the same time, and they actually did set them up in the U.S. adidas in Atlanta and Under Armour in Baltimore. Under Armour called their effort Project Glory. Did they have better luck?

[John Emont]

Not really. The Adidas speed factory, which is what they called it, they shipped the equipment to Asia, so the technology was moved to Asia. And with the Project Glory with Under Armour, that's the one that there is least information about. They just stopped mentioning it. So they mentioned it in 2015, Project Glory, and proudly to investors, and haven't heard about it since. And now they make the vast bulk of their shoes in these Asian countries.

[Annie Minoff]

Adidas, Under Armour and Nike declined to comment on their past reshoring efforts. All three companies refocused on Asia, and that might have been the end of the story, except tariff, tariff, tariff.

[John Emont]

I am a tariff man. To me, the most beautiful word in the dictionary is tariff.

[Annie Minoff]

Tom from Flex said that when he first heard about the tariffs, including on Vietnam, Indonesia and China, he had to laugh.

[Tom Fletcher]

Oh, it was funny because I heard it and I reached out to my counterpart on the Nike site and I just texted him, I said, wouldn't it be nice to have a near shore capability right now? And he texted. And I tell you, five seconds after I texted him, he said, I am thinking the exact same thing.

[Annie Minoff]

So a big goal of these tariffs according to Trump, is to bring manufacturing back to America. How hard is that gonna be? Like, what's that gonna take to happen?

[Tom Fletcher]

Well, I've done it twice, right? I brought an Apple product into Austin, Texas. I tried to get Nike back into Guadalajara, Mexico. It takes a long time and it takes deep pockets.

[Annie Minoff]

Representatives from Nike and Under Armour said that the companies are working out responses to tariffs. John says we shouldn't expect North American made sneakers to become the norm anytime soon.

[John Emont]

It's really hard to imagine a quick shift out of Asia. In fact, it's pretty impossible. I think with the Nike example. The clearest thing, what it shows you is that actually robots can't make everything so that you will need a lot of laborers, you will need a lot of skilled laborers. And good luck finding them in the United States. Right? You know, you can find them, but you're going to have to pay them, you know, pretty well. And that's definitely going to be expensive and very, very difficult.

[Annie Minoff]

That's all for today. Thursday, May 8. The Journal is a co production of Spotify and the Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.