Posted By Jeff Moad, September 12, 2016 at 2:07 PM, in Category: Redefining the Supply Chain
We often hear manufacturers based in the U.S. and Europe say that, even if they wanted to bring production back from Asia and other low-cost locations, they couldn’t because the very specialized supplier networks that they would need have atrophied or disappeared in their home markets.
Apparel giant Nike, Inc., recently announced a unique partnership with a large private equity company designed to address this challenge and allow it to enhance what it calls “regional manufacturing capabilities” while allowing for quicker delivery of customized products to consumers and improving sustainability through reshoring.
Under the partnership, the investment company Apollo Global Management, will acquire existing apparel suppliers in North and Central America and work with them to enhance “their manufacturing operations and expertise to produce innovative, technical and customized apparel,” according to a statement issued by the company.
These investments are intended to “create a more vertically-integrated apparel ecosystem – from materials suppliers and apparel manufacturers, to final embellishment, warehousing and logistics,” Apollo said.
The partnership represents an interesting attempt by Nike to—at least indirectly—stimulate new investment in a supply base that could help it—and perhaps other manufacturers—relocate some production closer to customers. Essentially, Nike gets an enhanced network of suppliers on North and Central America, while Apollo Global Management and its growing network of suppliers gets a built-in customer in Nike with annual sales of $32 billion.
Nike and Apollo Global Management did not reveal the specific structure of the partnership or how much capital will be invested. Apollo has an estimated $186 billion in assets under management.
Already, the partnership has acquired two existing companies, New Holland, a Pennsylvania-based apparel maker, and ArtFX, a textile screen printing and logistics operator in Virginia. Apollo said it plans to make more such acquisitions.
Nike isn’t the only large apparel manufacturer seeking to increase production in the U.S. in order to improve service to customers and operate in a more sustainable fashion. Competitor Adidas recently said it will open its first U.S.-based factory near Atlanta in 2017. And Under Armour is working on a plan to enable production closer to U.S. customers by leveraging a variety of Manufacturing 4.0 technologies.
Written by Jeff Moad
Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit