ADS Adidas AG

By Sara Germano 

BERLIN -- Adidas AG plans to close its only sneaker factories in the U.S. and Germany, shifting cutting-edge automated footwear production to Asia and reversing an effort to make products closer to shoppers in the West.

The German company, the world's second-largest athletic gear maker by revenue after Nike Inc., said Monday it would move technology developed at its so-called "Speedfactories" to two suppliers in Vietnam and China.

The closure of the facilities in Ansbach, Germany, and suburban Atlanta -- both opened within the past three years -- raises questions about the feasibility of bringing manufacturing jobs back to developed markets.

Adidas said the move would result in the "better utilization of existing production capacity and more flexibility in product design." A spokeswoman said the decision wasn't related to the continuing trade dispute between the U.S. and China.

The closure of the two factories, which will cease production by April, will together affect some 200 jobs.

The decision marks an abrupt shift in strategy for Adidas, which has been gaining market share in the U.S. and has reported lagging sales in its home market of Western Europe in recent months.

The Atlanta facility was announced in 2016 and began production in late 2017. It was touted as part of a broader effort to be closer to U.S. consumers, while innovating production processes meant to cut time to market and competing with fast-fashion retail. Earlier this year, Adidas promoted limited-edition shoes made at the Georgia factory for the Atlanta-hosted Super Bowl.

Like industry leader Nike, Adidas sources the vast majority of its footwear production from contracted manufacturers in Asia. Each of the big three sportswear makers -- Nike, Adidas and Under Armour Inc. -- have invested in or begun testing automated production technology for footwear in recent years to diversify their manufacturing strategy. Nike doesn't manufacture footwear in the U.S., according to its manufacturing map. Under Armour in 2016 opened a facility for automated and 3-D product prototyping near its headquarters in Baltimore.

Still, the volume of footwear produced at the Ansbach and Atlanta factories was expected to be just a fraction of Adidas's annual output. In 2016, the company anticipated some 500,000 pairs of shoes would be made annually in Ansbach, and some 50,000 pairs in Atlanta, each less than 1% of its 300 million pairs produced overall.

Write to Sara Germano at sara.germano@wsj.com

(END) Dow Jones Newswires

November 11, 2019 10:32 ET (15:32 GMT)

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