The Trump administration’s latest wave of tariffs on goods from Vietnam, Indonesia, and China is designed to pressure American firms like Nike to bring manufacturing back to the United States. With tariffs on Chinese goods peaking at 145%, the strategy reflects a broader aim: reshoring American jobs by reducing dependence on low-cost overseas production. However, as Nike’s experience reveals, such a transition is easier said than done.

Nike’s effort to automate and localise its manufacturing illustrates the harsh economic and technical realities that many companies face when attempting to reshore.

Nike’s Ambitious Bet on Automation

Back in 2015, Nike partnered with Flex Ltd., a major US electronics manufacturer, to build an automated sneaker factory in Guadalajara, Mexico. The goal was transformative—to mass produce sneakers with minimal labour input. Nike wanted to build tens of millions of shoes by 2023, cutting its reliance on Asian factories.

Flex, known for assembling Apple's Mac Pros in Texas, seemed like a strong fit. With its background in precision electronics, Flex brought in tech-heavy machinery and engineering expertise. However, they quickly ran into challenges unique to footwear.

Why Footwear is Hard to Automate

Footwear production, unlike electronics, involves soft, flexible, and irregular materials. While machines can easily manipulate standardised hard parts, they struggled with temperature-sensitive glues, fabric textures, and inconsistent sole shapes. Even minor variations in climate or material tension led to defective shoes that couldn’t pass Nike’s quality tests.

“You’re trying to do something very precise,” said Tom Fletcher, Flex’s automation lead. “But then it gets a little colder or warmer, and the material changes on you.” The result? Machines couldn’t maintain consistent quality, and the project required twice the number of workers than planned—5,000 instead of 2,500—at a higher cost than a Vietnamese factory.

Design Complexity vs Automation

Another key obstacle was Nike’s design philosophy. The brand thrives on constant innovation, with frequent model changes and complex materials. This variety made automation nearly impossible. Machines would spend months mastering a technique—like affixing the Nike swoosh—only to see it made obsolete by a new design.

According to Michael Newton, Nike’s former automation lead, this conflict between design innovation and manufacturing automation was a major barrier. “Consumers demand diversity in products,” he explained, “but automation requires consistency.”

Fallout and Failures Across the Industry

Nike wasn’t alone. Adidas and Under Armour also ventured into automated manufacturing. Adidas built speedfactories in Atlanta and Germany, and Under Armour launched Project Glory in Baltimore. But all three projects ended similarly.

Nike and Flex quietly dissolved their partnership in 2019. Under Armour abandoned its project, and Adidas shut down its speedfactories, moving whatever technology remained to Asia-based suppliers. The conclusion was clear: automation in sneaker manufacturing is not yet ready for widespread implementation.

Pandemic Disruptions and Continued Offshore Dependence

The COVID-19 pandemic brought major supply chain disruptions and reignited calls to reduce dependence on Asia. However, when the dust settled, companies like Nike, Adidas, and Under Armour simply returned to their Asian production bases.

Even now, as tariffs increase, the economic advantage of Asian factories remains too strong to ignore. Despite the political pressure, these firms are reluctant to bet again on reshoring—at least not without more advanced automation technology.

Commerce Secretary Howard Lutnick’s vision of “millions and millions of people screwing in little, little screws to make iPhones” rings hollow in light of the complex challenges companies face on the ground.

Lessons from Nike’s Automation Attempt

Nike’s experiment offered some hard-learned lessons:

• Automation isn’t always cheaper, especially when dealing with non-uniform materials.

• Skilled labour is still essential, even in advanced setups.

• Design changes hurt production stability, making it hard for machines to adapt quickly.

Moreover, investor confidence took a hit. Flex’s stakeholders began to question why a high-tech firm was spending millions on shoe manufacturing—a sector known for its slim margins and high labour dependency.

Is Reshoring Still a Viable Dream?

Despite the setbacks, industry veterans like Newton and Fletcher believe reshoring is possible—but only with:

• Significant financial investment

• Long-term planning

• Patience for technological development

“You need to have some deep pockets and some patience,” said Fletcher. “The previous experience was humbling, for sure.”

For now, the vision of US-based sneaker factories remains a long-term aspiration, not an immediate reality. Until automation evolves and labour costs balance out, Asian factories will continue to dominate footwear production.

Conclusion: An Aspirational but Distant Goal

Nike’s failed automation effort highlights the gulf between political ambition and industrial feasibility. While tariffs and trade tensions will continue to shape strategy, companies are not ready to rely entirely on US-based production.

The dream of reshoring—building Made-in-USA sneakers at scale—may still come true. But until automation can meet the demands of design complexity, quality, and cost, American brands will likely remain tethered to their Asian roots.

The Upcoming IPOs in this week and coming weeks are Tankup Engineers.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.