Shareholders of Adidas look at shoes during the company's annual general meeting in the northern Bavarian town of Fuerth near Nuremberg, Germany, in this May 7, 2015 file photo. REUTERS/Michaela Rehle/Files

By Emma Thomasson

HERZOGENAURACH, Germany (Reuters) - A German factory operated largely by robots will make its first 500 pairs of running shoes for Adidas early next year as the sportswear company seeks to cut labor costs and speed up delivery to fashion-conscious consumers.

Founded by German cobbler Adi Dassler in 1949, Adidas has shifted most of its production from Europe to Asia and now relies on more than 1 million workers in contract factories, particularly in China and Vietnam.

But Adidas now wants to bring production back closer to its major markets to meet demands for faster delivery of new styles and to counter rising wages in Asia and higher shipping costs.

The new "Speedfactory" in the southern town of Ansbach near its Bavarian headquarters will start production in the first half of 2016 of a robot-made running shoe that combines a machine-knitted upper and springy "Boost" sole made from a bubble-filled polyurethane foam developed by BASF.

"An automated, decentralized and flexible manufacturing process... opens doors for us to be much closer to the market and to where our consumer is," said Chief Executive Herbert Hainer.

Larger rival Nike is also investing heavily in new manufacturing methods. But it has not yet put a date on when it expects that to result in more U.S.-based production.

Adidas plans high volume production in the near future and will establish a global network of similar factories, although it expects them to complement existing suppliers rather than replace them as it seeks to keep growing fast.

"This is on top. It is a separate business model," Gerd Manz, head of technology innovation at Adidas, told journalists.

Adidas currently makes about 600 million pairs of shoes and items of clothing and accessories a year. It plans to grow sales by almost half again by 2020.

The new factory will still use humans for parts of the assembly process, around 10 people will be on the ground for testing purposes during the pilot phase, but Adidas is working towards full automation.

DEMANDING CUSTOMERS

Manz said 74 percent of Adidas sales currently come from products newer than one year old and that figure is rising.

"Our consumers become more challenging and demanding," he said. "Customization to markets and individuals will become the norm."

The ultimate objective would be to get replicas of red shoes worn by rapper-turned-designer Kanye West at a concert into the store the following morning, he said.

The next stage of the project will be to develop machines that can produce custom-made shoes in its stores with the same kind of attention to personal requirements as Adidas currently offers top athletes like soccer player Lionel Messi.

Manz said Adidas is not trying to replicate existing models, but to create new products as it experiments with technologies to color its shoes and new methods to join sole to upper.

Adidas is also seeking to find ways to remove machine tools from the manufacturing process as they can take weeks to prepare. It has already used 3-D printing to create futuristic-looking soles made from webs of criss-crossed fibers.

Adidas signed a deal in October with German engineering group Manz to develop new automated production technology and work on full digitalization, from design to manufacturing.

Adidas's other partners in the project include Johnson Controls, robotic assembly expert KSL Keilmann and scientists from the Technical University of Munich and the University of Aachen.

(Reporting by Emma Thomasson)