What's Happening?
Swiss performance brand On has inaugurated a new automated footwear factory near Busan, South Korea, as part of its strategy to nearshore production and mitigate tariff exposure. This facility, equipped with 32 robots, follows the launch of On's first
robotic production site in Zurich. The expansion aims to increase On's global capacity significantly by 2026, addressing the challenges posed by U.S. tariff hikes and geopolitical instability. On currently sources most of its footwear from Vietnam and Indonesia, but the new factory is expected to enhance speed, efficiency, and environmental performance by producing closer to key consumer markets. The Busan facility is also intended as a model for future production sites in the Americas and Europe.
Why It's Important?
The opening of On's robot-centric factory in South Korea is a significant move in the context of global supply chain disruptions and tariff uncertainties. By shifting production closer to major markets, On aims to reduce dependency on traditional manufacturing hubs in Southeast Asia, which are subject to U.S. tariffs and geopolitical risks. This strategy not only enhances supply chain resilience but also positions On competitively against industry giants like Nike and Adidas. The focus on automation and nearshoring reflects broader industry trends towards sustainable and efficient manufacturing practices, potentially setting a precedent for other brands facing similar challenges.
What's Next?
On plans to replicate the Busan factory model across other continents, with potential sites in the Americas and Europe. This expansion could further reduce tariff exposure and enhance supply chain flexibility. The company's approach may prompt reactions from competitors and influence industry standards, particularly in the context of ongoing trade tensions and labor market constraints. As On continues to innovate in both product and operational strategies, its success could drive further investment in automated and regionalized manufacturing within the sportswear industry.
