Swiss sportswear brand On has launched a highly automated footwear factory in Busan, South Korea, marking a decisive step toward reshaping how premium running shoes are manufactured and delivered. The facility, powered by industrial robots and advanced material-spraying technology, represents more than a production upgrade—it signals a structural pivot in response to supply chain volatility, rising tariffs and tightening labor markets.

As global trade dynamics grow more unpredictable, brands that once relied almost exclusively on large-scale manufacturing hubs in Southeast Asia are reassessing risk exposure. On’s expansion into robotic, regionally positioned production illustrates how automation is emerging as a strategic hedge against geopolitical and economic uncertainty.

The Busan factory is part of a broader plan that includes additional automated sites in the United States and Europe, underscoring a long-term bet on nearshoring and advanced manufacturing.

Supply Chain Vulnerability Drives Manufacturing Shift

For decades, the footwear industry has depended heavily on contract manufacturing in countries such as Vietnam, China and Indonesia, where labor-intensive processes have historically kept production costs competitive. On itself sources the vast majority of its shoes from Vietnam, with smaller volumes from Indonesia.

However, escalating tariff measures, pandemic-era disruptions and geopolitical tensions have exposed the fragility of globalized supply chains. Extended shipping times, fluctuating freight costs and policy shifts have complicated inventory planning and compressed margins.

Tariff volatility has been particularly destabilizing. Higher import duties on footwear manufactured in Asia have forced brands to absorb additional costs or pass them on to consumers. Even legal challenges to tariff frameworks have introduced further uncertainty, making long-term planning difficult.

Against this backdrop, automation offers a structural solution. By shifting portions of production closer to key consumer markets, companies can reduce shipping dependencies, shorten delivery times and mitigate tariff exposure.

On’s co-founder has framed the move as both pragmatic and forward-looking: automation allows for faster time-to-market, lower environmental impact and reduced reliance on low-cost labor—a resource that is becoming scarcer globally.

The LightSpray Model and Process Compression

Central to On’s automation strategy is its LightSpray technology, first showcased during a major global sporting event. Unlike traditional footwear production, which can involve hundreds of manual assembly steps across multiple facilities, LightSpray condenses the upper construction process into a single robotic operation.

A robotic arm sprays advanced filament material onto a mold, creating a seamless, sock-like upper without stitching or layering. The method eliminates the need for cutting, sewing and transporting semi-finished components between factories.

In Busan, 32 robots now operate within the facility, a significant expansion from the company’s earlier pilot site in Zurich. The new factory can produce approximately 1,000 pairs of shoes per day, demonstrating scalability beyond prototype volumes.

The technological shift redefines the cost structure of production. While capital expenditure on robotics is substantial upfront, long-term operational efficiency and process simplification may offset labor and logistics costs. Furthermore, the reduction of manufacturing steps lowers material waste and energy consumption, aligning with sustainability objectives.

Nearshoring as a Competitive Strategy

Nearshoring—bringing manufacturing closer to end markets—has gained traction across industries ranging from electronics to apparel. For footwear brands, it represents a departure from decades of centralized, labor-intensive production in Asia.

By situating automated factories in South Korea, and potentially in the United States and Europe, On aims to create a distributed production network. Such a network enhances resilience: if one region experiences policy shifts or disruptions, output can be balanced elsewhere.

In the U.S., domestic or regional manufacturing could reduce exposure to import duties and shorten delivery cycles. For premium performance footwear, where speed-to-market can influence brand momentum and seasonal sales, agility matters.

Additionally, consumers increasingly scrutinize environmental impact. Reducing transcontinental shipping distances lowers carbon emissions associated with freight. Automated processes that minimize material waste further strengthen sustainability credentials.

The Busan facility therefore functions as both an operational asset and a branding statement—positioning On as technologically advanced and environmentally conscious.

Industry Context and Competitive Pressures

On operates within a fiercely competitive performance footwear market dominated by global giants. Innovation cycles are rapid, and differentiation often hinges on marginal gains in weight, cushioning and energy return.

The LightSpray shoe has been marketed as exceptionally lightweight, targeting elite marathon runners and serious amateurs alike. Athlete endorsements amplify its technological narrative, reinforcing the link between innovation and competitive performance.

Automation may provide additional competitive advantages. Faster prototyping cycles enable quicker design iterations and athlete feedback integration. Instead of waiting months for overseas sample production and shipping, local robotic facilities can accelerate development timelines.

Meanwhile, larger rivals are also investing in automation and regional manufacturing, though at varying speeds. The footwear industry is gradually shifting from pure labor arbitrage to technology-driven efficiency.

Economic and Labor Realities

Beyond tariffs and geopolitics, demographic trends are reshaping global labor markets. In several traditional manufacturing hubs, wages have risen and labor pools have tightened. Younger workforces increasingly pursue service-sector opportunities, reducing the availability of low-cost industrial labor.

Automation mitigates these pressures by substituting capital for labor in repetitive production tasks. While this transition raises broader questions about employment patterns, for companies it represents a predictable and controllable cost model.

On’s leadership has pointed to the diminishing availability of inexpensive labor as a catalyst for its strategy. The calculus is clear: as wage differentials narrow and supply chain risks mount, investing in robotics becomes economically rational.

Strategic Timing Amid Trade Uncertainty

The launch of the Busan factory coincides with ongoing debate over global trade frameworks. Even as legal rulings challenge tariff policies, retailers and manufacturers face a landscape defined by flux rather than stability.

For On, proactive restructuring reduces reliance on external policy outcomes. Rather than waiting for tariff clarity or supply chain normalization, the company is embedding flexibility into its production model.

By pairing robotic manufacturing with regional diversification, On is attempting to future-proof its supply chain against shocks—whether economic, political or logistical.

The Busan facility thus represents more than a new factory. It marks a strategic inflection point in how premium footwear brands reconcile innovation, sustainability and resilience in a world where global trade assumptions can no longer be taken for granted.

(Adapted from EconomicTimes.com)

Categories: Creativity, Economy & Finance, Regulations & Legal, Strategy