Nike lost tens of millions of dollars on the way to a simple insight — robots aren't always capable of replacing humans.
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As early as 2015, Nike recognized that manufacturing in Asia was creating significant operational challenges.
At the same time, producing goods with American workers on U.S. soil was simply out of the question.
Labor costs were too high, and shoe prices would have gone through the roof.
To tackle the challenge, Nike signed an agreement with a company called FLEX, which built a massive production facility in Mexico on Nike's behalf, with the ambition of replicating the model in the United States afterward.
The facility was equipped with complex, expensive robotic arms designed to manufacture Nike shoes without any human touch — quickly and cheaply.
FLEX was chosen for its extensive experience in robotic manufacturing.
One of its success stories was the robotic assembly of MacBook laptops in the United States for Apple — a process that had proven highly successful.
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In 2018, the two companies announced the dissolution of their partnership.
FLEX demanded $30 million for equipment depreciation and wear, and Nike was left licking its wounds with its manual workforce back in the East.
So what went wrong?
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Robotic manufacturing processes work well when it comes to MacBooks.
The number of models to be assembled is very limited, and every unit of the same model is completely identical — even when you're talking about millions of them.
A shoe, by contrast, is made from flexible materials, in a wide variety of sizes and shapes.
The mere touch of a robotic arm is enough to cause the shoe to shift its shape and position in ways that make completing the operation impractical.
On top of that, Nike's design team works at full speed, constantly rolling out new models, making it nearly impossible to adapt the production line to such a diverse product range.
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Unfortunately, success in this venture would have solved Nike an enormous headache during this period — the tariffs on imported goods imposed by the Trump administration.
Some consolation can be found in the fact that at certain stages of the manufacturing process, as well as in the company's sorting and distribution centers, robots still deliver significant value and continue to streamline operations.
(Video: image from ChatGPT, animated using Runway)