An avid marathon runner, Knox Robinson can wear through a dozen pairs of trainers a year. Yet when it comes to racing, he has one go-to shoe — the Nike Flyknit Racer.
For many athletes, the specially designed knitted upper section creates a more seamless, form-fitting shoe, something few other brands have matched.
"I loved it when it came out. I thought it had such an elegant construction," says Mr Robinson, before a running club meet-up in Manhattan's Lower East Side. It reminded him of the running shoes his father once wore, "the kind of classic Nike shoe you see in photos".
Since its debut in 2012, the Flyknit Racer has been considered a technological breakthrough. Produced with a special knitting machine, it uses less labour and fewer materials than most running shoes. But now the same material has become the basis for an even more radical experiment that has the potential to both upend the sports and leisurewear industry and accelerate an important trend in globalisation.
Since 2015, Nike has been working with Flex, the high-tech manufacturing company better known for producing Fitbit activity trackers and Lenovo servers, to introduce greater automation into the otherwise labour-intensive process of making a shoe.
Flex's facility in Mexico has become one of Nike's most important factories, responsible not just for a growing slice of the company's production but also for a string of innovations to be rolled out across Nike's supplier base, such as laser-cutting and automated gluing.
For Nike, the shift to greater automation has two huge attractions. By driving down costs, it could lead to a dramatic improvement in profit margins. It would also allow the company to deliver new designs more quickly to fickle, fashion-conscious customers at a premium. A pair of Nike Roshe shoes costs $75 without Flyknit uppers, compared to as much as $130 with Flyknit.
"Together, we are modernising the footwear industry," Chris Collier, Flex chief financial officer, said earlier this year about the company's relationship with Nike. "This is a long-term, multibillion-dollar relationship for us, and it is not measured in the scope of years but decades."
The tie-up with Flex also has a much broader resonance. Over the past two decades, Nike has been one of the pioneers in outsourcing production to the developing world, where it has been the subject of accusations of using child labour and other workforce abuses.
Yet many of those countries now fear that robots will deprive them of their shot at industrialisation. If Nike pushes through with a move to greater automation and ends up cutting production in Asia, the company could find itself at the forefront of a different political controversy.
Nike says growing sales will allow it to embrace more automation while maintaining its present workforce. But the company is one of the biggest multinational employers, with more than 493,000 line workers — in 15 countries — involved in the production of Nike footwear. For all the group's products, its contracted factories employ 1.02m workers in 42 countries.
Sridhar Tayur, a professor of operations management at Carnegie Mellon's Tepper School of Business, says the decisions made by Nike about how far to use automation would be a significant milestone in the industry.
"The very-low labour costs in Asia are no longer that low unless you go to Africa or somewhere else . . . The pressure has been mounting for a long time to either move to a super low-cost place or automate more," he says. "That has come to a point where people are more seriously looking to automation."
Nike has made efforts to rebrand itself as an ethical and sustainable business, he says, but any deviation from that narrative could spur a backlash. "The consumer in the US has become much more sophisticated in their understanding of injustices," Mr Tayur says. "Nike has taken the position that they are not going to be doing the minimum effort", which has placed the group under higher scrutiny. "Imagine the backlash, if the promise isn't met," he adds.
Nike is in need of a boost. At $34.4bn in sales for the 2017 fiscal year, the group has a long way to go in reaching its ambitious $50bn revenue goal for 2020. Mark Parker, chief executive, had set the goal in 2015, at a time when Nike appeared poised to lead the "athleisure" trend of wearing workout gear outside the gym. However, the company has since struggled to boost growth in the face of heated competition and a resurgence by Germany's Adidas in North America.
The potential upside for Nike of greater automation is immense. Analysts at Citibank estimate that by using the Flex manufacturing process to produce Nike's 2017 Air Max shoes, one of its top-selling lines, the cost of labour would decrease 50 per cent and materials costs would fall 20 per cent. That would equate to a 12.5 percentage point increase in gross margins to 55.5 per cent, according to analysts Jim Suva and Kate McShane.
If Flex were to produce 30 per cent of Nike's North American footwear sales, Nike could save $400m in labour and material costs, representing a 5 per cent benefit to earnings per share, according to Citibank estimates.
"We believe the apparel industry is likely to watch this closely. And if it's successful, we could see more room [for automation] to come," says Mr Suva.
The impetus to use automation is not just about costs: it is also trying to keep up with consumers. Across the board, the most successful retailers are now those with a constant stream of new products to meet rapidly changing tastes and shopping habits. Yet companies have been slow to adapt footwear, with its more complicated manufacturing process, to so-called fast fashion trends — at least until now.
With more than 1m pairs of Nike shoes produced at its facilities in Guadalajara, Mike Dennison, another senior Flex executive, says it is "completely reinventing" the industry "with a significantly smaller workforce than what you'd find in Asia".
Traditional shoe production has required as many as 200 different pieces across 10 sizes, often cut and glued together by hand. The new manufacturing process being developed by Flex has introduced two ideas once thought impossible: the gluing process has been automated and lasers are used to cut the Flyknit material.
Lead times in the shoe industry once ran to several months: Flex has promised to help Nike speed up lead times, which can be three to four weeks for a customised pair of sneakers.
Moving production closer to its key markets will help satisfy some of that demand. However, for companies such as Nike, it opens up new political issues in the countries where it has been operating for the past two decades. The company risks being attacked for depriving jobs to its Asian workers — the same ones it was once accused of mistreating.
Nike became a lightning rod for criticism about shoddy practices by multinationals in the mid-1990s and early 2000s when it was accused by non-governmental organisations such as Oxfam and Global Exchange of tolerating sweatshops and child labour in its factories and among its suppliers in several Asian countries.
Although the group has taken considerable strides since then to change its labour practices, it has continued to come under criticism. Last year, students at Georgetown University in Washington pushed it end a contract with Nike over a dispute with an NGO called Worker Rights Consortium.
An independent investigator, WRC has criticised Nike within the past two years for not doing enough to address problems at one of its supplier's factories, Hansae Vietnam, which had included unjust firings, uncompensated work and unsafe working conditions. Nike says every contract factory is held to a rigorous set of standards and is regularly audited to assess compliance efforts. Georgetown eventually renewed the contract once a new monitoring agreement had been put in place.
Nike has reduced its supply chain by nearly 200 factories in the past five years to focus on fewer "quality, long-term partnerships". However, the process of closing a factory, including those with compliance issues, can be a long and costly process for "brand sensitive companies like Nike" to mitigate the disruption to local economies, says Tara Rangarajan, a global operations manager at BetterWork, a partnership between the UN's International Labour Organisation and the World Bank's International Finance Corporation, which focuses on working conditions in the garment industry.
She says companies such as Nike "engage very deeply in the countries they operate", working alongside government officials, factory owners and union representatives.
The ILO estimates about 56 per cent of employment in Cambodia, Indonesia, the Philippines, Thailand and Vietnam is at a high risk of being automated over the next decade or two, with clothing and footwear manufacturing jobs among the hardest hit. More than 75 per cent of footwear line workers for Nike work in Vietnam, Indonesia and China.
Nike says that if sales continue to grow, it will not lose jobs in its supply chain. "We are definitely on a mission to bring more automation and innovation into the way we manufacture our products," says Eric Sprunk, Nike executive vice-president and chief operating officer.
"We don't hide from the fact it affects the labour base," he says. "But we don't expect there to be any displaced workers. We are going to need just as many manufacturing jobs in our source base.
However as the company intends to pursue greater regional manufacturing, bringing its production closer to its key customers in North America, "certain countries will see a change in the labour base," Mr Sprunk says. "We'll need to be more agile in our manufacturing base."
Jae-Hee Chang, co-author of an ILO report on Asian employment, says that if the changes are slow and communicated clearly and if factories are given the opportunity to implement changes, the job losses from automation will not be as severe as they otherwise could be.
Ms Chang says she would be watching to see how brands such as Nike prepare their supply chain for changes. The ILO has been in discussions with employers and governments to discuss how advanced training and early adoption of new technologies can blunt the impact of greater automation on the workforce.
"There will be jobs, but they will be available to people who can maintain, troubleshoot and work alongside robots," Ms Chang says. "There's going to be people possibly displaced and they will not automatically have jobs in that sector unless they acquire new training. Those are the people that are going to be most affected."
Scott Nova, executive director of the Worker Rights Consortium, added that it did not make sense to oppose automation, as increases in productivity should help everyone.
"When the benefits of increased automation accrue to a tiny portion of the population, then that's a problem," he says. "Over the past couple [of] decades, most of the monetary benefits of increased productivity have accrued to the owners of stock and senior executives of a company, not to the whole of the population."