 |
| adidasdesignstudios© |
Adidas
needs world-class designers, brand experts and technical whizzkids to
improve its image against U.S. rival Nike, but persuading them to move
to its headquarters in rural
Germany is difficult.
Adidas has been losing
market share to the world's biggest sportswear brand Nike, which is
seen as far cooler in consumer surveys and is based near the hip U.S.
city of Portland, Oregon.
Adidas acknowledges it is hard to recruit at its headquarters near the
Bavarian town of Herzogenaurach, particularly for design,
marketing
and digital roles, and admits it missed trends in the U.S. market,
where Under Armour has just overtaken it as No. 2 behind Nike. Nike's
better than expected
earnings on Sept. 25 underscored its ascendancy.
Adidas
is responding by locating some key design roles in the United States at
the same time as investing heavily in new facilities at its home base
near the historic Bavarian town where Adidas was founded by shoe maker
Adi Dassler in 1949.
"We need a lot of that top talent that is cutting edge. Ideally, they are working in the tech industry, in
marketing
organisations or are coming from top competitors. We need an
environment that appeals to them," said Steve Fogarty, who is
responsible for employer branding and digital recruiting
"Designers
tend to gravitate to very large, international cities like Berlin,
Amsterdam, London and it is a bit harder to convince them to move to the
centre of
Germany."
Eric
Liedtke, the American who took over as Adidas head of global brands in
March, has promoted Paul Gaudio to the role of global creative director
and moved him from Herzo to the firm's U.S. base in Portland in a bid to
turn around its fortunes in the world's biggest market for sporting
goods. Close to 1,000 Adidas staff are based in Portland, compared with
Nike's 8,500-strong workforce in the area.
Gaudio
announced on Wednesday that Adidas will open a small creative studio in
New York's Brooklyn district in 2015 to be led by three young
footwear designers he has poached from Nike with a mission to explore design direction for the brand.
That
will complement existing creative centres in Shanghai, Tokyo and Rio,
but the vast majority of the company's hundreds of designers for
football, outdoor, Originals fashion, training and running products
remain based in Herzo.
Adidas
shares are down more than a third this year, most recently suffering
from a third profit warning in a year in July that the firm blamed in
part on a disappointing performance in North America, particularly from
its golf
business.
Adidas trades at 17 times expected
earnings, at a discount to Nike's 22.5 times and fast-growing Under Armour's 58 times.
Despite
the new designers in the United States, long-serving Adidas Chief
Executive Herbert Hainer, himself a native of Bavaria, remains committed
to the company's base in a region proud of its strong
economy and companies including BMW, Siemens, Audi, Munich Re and Allianz.
About
3,900 of the total Adidas staff of 52,500 work in and around Herzo,
about a third of them from outside Germany, and Hainer said last month
the company planned to add 100-150 new staff at its headquarters every
year.
GLOBAL FOOTWEAR HUB
While
Bavaria has a reputation for beer festivals, lederhosen and
conservative politics, Nike's home town of Portland is a city of 600,000
that prides itself on its liberal values and environmental awareness,
as well as a proliferation of trendy eateries and microbreweries.
Based
on a campus in Beaverton, seven miles (11 km) outside Portland, Nike's
location in the American northwest also raised questions in its early
days in the 1960s, with founder and Oregon native Phil Knight saying
everybody originally thought it should be located in New England or the
South.
But Portland has
since become a magnet for the global footwear industry, helped by the
relatively short hop to Asian production hubs and a youthful talent
pool, prompting Adidas to move its North America headquarters there from
New Jersey in 1993, and drawing U.S. brands like Columbia Sportwear and
Keen.
Herzo, by contrast,
is a town of just 24,000 people set in rolling fields, though many
Adidas staff commute from the nearby university town of Erlangen or the
city of Nuremberg, known for its walled old town, gingerbread and
sausages but not for the most vibrant nightlife or fashion scene.
Nuremberg
has an airport with direct flights to many cities in Europe but not
further afield and there is no train link to Herzo from Nuremberg or
Erlangen, meaning most staff have to commute by car.
Herzo's
biggest employer is family-owned Schaeffler, which has 9,000 staff in
the town, mostly in technical roles producing precision products for the
auto and aerospace industry. It is also home to rival sportswear firm
Puma.
Conscious that it
was not the best location for a big global consumer brand, Adidas
considered leaving Herzo in the 1990s when the company was trying to
rebuild its fortunes after flirting with
bankruptcy following the death of founder Dassler in 1978 and then his son Horst in 1987.
But
when the departure of U.S. troops from Germany at the end of the Cold
War freed up the military base outside Herzo, local authorities
persuaded Adidas to stay. It moved its headquarters to the base in 1998
from an overcrowded office in downtown Herzo and has been expanding the
campus ever since.
SAFE BUT DULL
Herzogenaurach
mayor German Hacker said surveys showed that foreign inhabitants
particularly value the high quality of life and security that the town
offers.
"Herzogenaurach
is a sheltered and manageable town. That is its charm, but you can get
to big towns in 10-15 minutes if you want," he said.
One
former employee, who declined to be named because they still work on a
contract basis for Adidas, said they left the company because they found
living in Bavaria too boring. "It is so odd that this company is in the
middle of farmland. It doesn't have anything to do with style," the
person said.
Adidas
recruiting expert Fogarty, who spent three years working in Herzo but
moved back to Portland last year, says the vast majority of staff
describe working in Germany as an amazing experience once they arrive.
He
set up a website to extol the virtues of Herzo, featuring employees
from around the world praising the rural running tracks near the office,
local beer festivals and the proximity to Alpine ski slopes. (
herzo.adidas-group.com/)
Fogarty,
who often has to get up at the crack of dawn in Portland to speak to
colleagues nine hours ahead in Herzo, said Adidas does not lose staff
due to the location of its base as it is flexible about where people
work.
"While our
headquarters is technically in Herzo, the opportunity to work in many
locations is already here, so why invest in moving the headquarters?" he
said.
However, the experience of Puma, founded by Adi Dassler's brother Rudolf after the two split a joint
business, shows the pitfalls of dispersing key staff.
Puma
had based its product management and design team for its lifestyle
range in London to be closer to fashion trends, but decided last year to
move the division to Herzo as it sought to centralise functions as part
of a restructuring programme.
Puma
is in the process of trying to reaffirm its sporting roots after sales
tumbled in recent years. Puma had lost its reputation for sports
performance gear by moving too far into the fashion business.
Despite investing in fashion brands like NEO and Originals, Adidas has so far stayed true to its sporting heritage.
Adidas
recently announced plans to build two new buildings - with a capacity
for 3,600 staff - at its "World of Sports" campus outside Herzo and is
about to open a 16-metre-high climbing wall in the grounds.
The
Adidas campus already features sports fields and stylish buildings
including a futuristic low-rise "brand centre" clad in black glass that
opened in 2006 and a marketing and operations office called "Laces" that
opened in 2011 and features criss-crossing walkways above a
light-filled atrium.
"You
can work in a dull office in the middle of Munich or an awesome office
two hours north of Munich," said Christian Dzieia, Adidas director of
property development.
An
on-site fitness centre with daily yoga and aerobics classes opened last
year as well as a bilingual kindergarten for 110 children and a campus
canteen revamped with input from German celebrity chef Holger Stromberg.
"We're hiring a lot of
people with a huge passion for sport whose eyes light up when they walk
around the campus," said Fogarty.
"You
have the best of both worlds, where you can walk onto this
international campus with a lot of high-tech facilities and then go have
lunch in a thousand-year-old Bavarian village."
Source
Reuters By
Emma Thomasson editing by Anna Willard and Janet McBride ©
