Ch.10: ‘Fabric-ating Fashion’:
The Textiles and Garment
Industries
Presentation by Erin Friio, Clark
Platt and Lisa Ziebart
Historical background
 Original industry of 1st Industrial
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revolution of 18th and 19th centuries
in Britain.
Lancashire - “dark, satanic mills”
and sweatshops
Manchester – “Cottonopolis”
Focused on simple technologies
and low-skill labour
First manufacturing industry to take
a global dimension, most
geographically dispersed
Ex. “NIC’s” of the 19th century
Textiles vs. Garments
 Textiles (process based)
 consists of two major operations: the
preparation of yarn (spinning) and the
manufacture of fabric (weaving/knitting,
finishing)
 Garments (finished product based)
 Designs, preparations, production
Garments vs. Textile
 More organizationally
fragmented
 Less sophisticated
technologically
 International
subcontracting
 Role of the retailer is
growing = Buyerdriven economy
Textiles-Garment Production Chain
 Each stage has specific
technological,
organizational and
geographical
characteristics.
 Stages performed by
firms of all sizes, but
larger firms have
increasing importance
due to capital intensive
textile industry
 Textile industry has 3
outputs, most important:
Garments
Global Shifts - Production
 Employment is used to measure
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global production of textiles and
garments.
Today ~20 million workers employed
worldwide (countless remain
unregistered)
Becoming more important to the
developing and less-developed
countries vs. older industrialized
economies
Developed: Employs the “sensitive”
segments of the labour force: women
and ethnic minorities
Developing: Employs young females
in conditions similar to the
sweatshops and mills of the 19th
century.
Production Cont’d.
 Textiles:
 China (> 6 million)
and India (1.5
million) VS.
 US (800,000) and
Japan (600,000)
 Garments:
 China (1.6 million)
 US, Russian
Federation and
Japan far behind
Global Shifts - Trade
 General trends…
 Decline of developed country producers and
shift of production to East Asia, Mexico, the
Caribbean, Eastern Europe and the
Mediterranean
 More in the garments than textile industry
 Taking a closer look…
Textiles Imports and Exports
Take note of:
Imports:
 US
 Italy
 China
 Korea
 Taiwan
Exports:
 China
Garments Imports and Exports
Take note of:
Imports:
 US (1/3rd)
 Japan growth
Exports:
 Less concentration vs.
textiles (63.1)
 China
 Mexico (NAFTA)
 South Korea and Taiwan
 Indonesia and Thailand
 Developed countries
(excluding US & Italy)
The Dynamics of the Market
What influences the size, organization and location
of the textiles and garment industry? Demand
 ~50% of all textiles production goes to the
garment industry
 3 major types of garments:
 Basic, Fashion-basic and Fashion
 Beyond basic, what determines demand?
Affluence
 Demand stimulated from fashion change and
higher-margin fashion related garments such as
‘designer labels’
Growing Power of Retailing Chains
 In the garments industry more emphasis is being
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placed on the purchasing policies of major
retailing chains
Wal-Mart, Sears, JC Penney, K-Mart, etc.
‘Retailing Revolution’ in US and UK since
1960’s.
Result = Specialized garment retailers targeting
“niche markets” according to age, income, etc.
Purchasing power of chains gives considerable
leverage over textiles and garments
manufacturers.
Growing Power of Retailing Chains
cont’d
 Chains do not typically manufacture, but
sub-contract
 No longer mass market, manufacturers
must respond more rapidly to demands.
Time importance, not just cost.
 Now ‘lean’ manufacturer-retailer system
 Frequent shipments, ongoing orders
 Real-time sales tracking via SKU (stockkeeping units) generate weekly shipments
Production costs and
technology
 Production characteristics vary
considerably depending on where
the production takes place.
ex. A process that is relatively
capital intensive in one country
maybe be relatively labour
intensive in another.
Labour
 For textile and garments manufacturing
– Labour costs are the most significant
production factor.
 Textiles and Garments are the most
Labour intensive industries.
 Labour costs are the most geographical
variable in the production cost. (Figure
10.12)
Hourly Labour Costs in
the Garments Industry,
1998
 Figure 10.12 shows the
huge labour cost gap
between different countries.
EXAMPLE: over $10.00/hr
in the USA and $0.22/hr in
Vietnam.
Labour Cont.
 USA is in the best position of “unit labour
costs” = Levels of productivity. But… even
with productivity differences, developing
countries have enormous labour cost
advantage over developed market economies.
 Low Labour cost producers have a profit
advantage because they produce
“standardized items”.
Characteristics of the labour force and
conditions of work
 80% in garment industry, 50% in textiles are
female
 Huge portion of labour force is relatively
unskilled or semi-skilled with no easily
transferable skills.
 Socio-culture role of women, in particular
their family and domestic responsibilities
makes them immobile geographically.
 Large number of the workforce tend to be
immigrants or members of ethnic minority
groups.
Characteristics of the labour force and
conditions of work Cont.
Mid 1990’s – garments establishments in San
Francisco and Oakland, more than 50% in
violation of minimum wage standards.
 Employment in these industries tend to fluctuate
due to variations in demand. (what’s popular)
Workers have no protection over working
conditions or job security. (there is never a
shortage of workers)
 Factory employment is preferable than the
alternative – no job!
 Factory work provides otherwise unattainable
income
Characteristics of the labour force and
conditions of work Cont.
Pressure from family for young daughters
to work in factories to provide money for the
family.
 Oxfam – Popular pressure group for the
protection of child labour and illegal
practices.
Technological Change
 cost of production and speed of response to
changes in demand are greatly influenced by
technology
 Technological innovation can increase levels of
output with same size or smaller workforce.
 New labour saving technologies have
increased – especially in developed countries.
Technological Change Cont.
 Two advantages of technological change are
increased speed and the replacement of manual
labour with mechanized and automated operations.
 Technological change has been more extensive
in the textiles manufacturing sector than garments
manufacture.
 Most important technological innovation is “openended spinning” - spinning of yarn. (increased the
production 400% and labour was reduced 40%).
 Garments industry remains manual- has not
changed in the last 100 years. (Exceptions:
Grading, laying out and cutting material)
Technological Change Cont.
 Current technological developments of
the manufacturing of garments:
 Increased flexibility of machines. Robots to
recognize oddly shaped pieces, lay out
material….
 Sequential operations: less stages in the
production line.
 Develop a unit production system to save
time. 60% of time is unbundling and rebundling work pieces.
The role of the state and the
Multi-Fibre Arrangement (MFA)
 MFA is an international regulatory
framework in which the industries have
operated under for 3 decades.
 Most of the world trade in textiles and
garments is covered by this agreement.
 MFA has been a major factor in changing
the global pattern of production and trade.
 Introduced by developed countries to
protect their countries producers. USA- UK
MFA Cont.
 High inflow of low price imports from
Japan, Hong Kong and other parts of Asian
producers were restricted by the USA and
the UK.
 1962 restrictions turned into the Long
Term Arrangement. (LTA)
 LTA regulated trade in cotton made
textiles.
 LTA set up to protect developed
countries domestic market.
MFA Cont.
 LTA allowed a 5% annual increase of
exports
 Lasted for 11 years.
 During LTA time… World map became
more complex.
First, massive growth in man-made fibers not
covered by the LTA were introduced.
Second, developing countries became
important exporters in textiles and garments.
MFA Cont.
 1973- MFA implemented
 more strict vs. LTA
 included cotton textiles, non-cotton and manmade fibres.
 Introduced to create order in trade for
developed and developing countries… but
has greatly restricted the growth rate of
exports from developing countries.
Corporate Strategies in the Textile and
Garments Industries
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2 basic points in the development of strategy in
these industries:
1. Globalization of the textile and garments
industries cannot be explained simply by
relocation of production from developed to
undeveloped countries
2. When firms internationalize they use a number
of methods, mostly international
subcontracting and licensing.
Textiles Industry
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A industry of large firms 30 of which lead the
pack and include: Burlington (USA), Toray
(Japan), Coats (UK) and the Marzotto Group
(Italy).
 Textile firms pursue one of three strategies:
1. Produce standardized goods for large markets
using economies of scale.
2. Supply large markets on the basis of utilizing
low-cost labour in offshore locations
3. Produce small quantities of specialized goods
for specific market niches
American and European Strategy
 The United States’ strategy has been to increase
domestic concentration through acquisitions and
mergers and increase productivity though heavy
investment in new technology.
 Europe has used similar strategies
 Coats- transformed itself from a ‘productiondriven firm’ to a ‘market driven firm’.
American and European Strategy Cont.
Coats adopted a two-pronged strategy:
A. Shifting low value added activities, such
as un-dyed thread manufacture, to low
cost countries in eastern and southern
Europe periphery and Asia
B. Locating dye factories, which are less
labour intensive, closer to its main
markets
Corporate Strategies in the Garments
Industry
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The garments industry is the most fragmented
and less dominated by large firms.
 3 strategies:
1. Production of basic goods for large markets
utilizing economies of scale
2. Operation of small workshops (sweatshops)
3. Production of short orders to fill manufacturers’
production gaps (specific segments)
Corporate Strategies in the
Garments Industry cont.
Additional organizational component to
garments production: ‘factory-less’ firms
organize entire systems of garment
production-major international retail chains
and buying groups have large purchasing
power and leverage over garments
manufacturers.
 International subcontracting, licensing and
other forms of non-equity investments are
very influential.
Japanese Strategies
 Japanese garments industries are far less
internationalized than its textiles industries
 Established subcontracting arrangements
in Hong Kong, Taiwan, South Korea and
Singapore.
 Production was mostly exported to the
United States and not Japan’s domestic
market
US and European Garment Markets
 US firms increased level of offshore processing
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using suppliers in developing countries
Levi’s- developed its own branch factories in both
Western and Eastern Europe, Latin America, Asia
together with licensing agreements.
German and British heavily involved in
international subcontracting
More than 80% of all German garments imports
come from East Germany, Poland, Hungary,
Romania, Bulgaria and the former Yugoslavia
Hugo Boss
The exception?
 Italian firms have pursued a strategy of
product specialization and fashion orientation
with the aim of avoiding dependence upon
goods affected by low cost competition
 Area trademark
 Benetton- 80% of garments still manufactured
in Europe, mainly Italy.
 500 subcontractors, 90% located in the Veneto
region
Regionalizing production networks in the
Textile and Garments industry
 Regional shifts:
1950-60s- from North America and Western
Europe to Japan
1970-80s- from Japan to Hong Kong, Taiwan and
South Korea
Late 1980-90s- from Hong Kong, Taiwan and
South Korea to China, South East Asia and Sri
Lanka
1990’s- focus on United States, Mexico and the
Caribbean
Regional restructuring of the Asian textilesgarments network
 Firms from Hong Kong, South Korea and
Taiwan have shifted production offshore
 China, Malaysia, Thailand, Indonesia and
Vietnam and Cambodia, newer wave of
Asian producers
 Transformation can be conceptualized as
a process of industrial upgrading
Asian Upgrading Process
Upgrading process consists of 3 sequential
phases:
 Simple assembly of basic garments for
export trade
 Subcontract manufacturing to design
specified by the buyer with the product
sold under their brand name
 Development of own brand manufacturing
OBM capability
Triangle Manufacturing
USA
Offshore
Factories
NIE’S
United States focused regional production
networks in the Americas
 NAFTA has allowed for all tariffs on textiles and
garments to be phased out.
 Maquiladora Production: simple sewing of
garments made from imported fabrics and using
extremely cheap labour
 Full Package Production: local manufacturers
receive detailed specifications for garments from
a buyer and the supplier is responsible for
acquiring the inputs and coordinating all parts of
production.
Game!!!
labour
What company has been
What percentage of
the exception to the trend of employees are female in
moving production to lowboth textiles and
garments?
cost countries?
How many people
worldwide are said to be
employed in the textiles and
garment sector?
What was the major
regional shift in the textile
and garments industry in
the late 1980’s-90’s?
What is Oxfam?
What influences the size,
organization and location of
the textiles and garment
What are the 3 strategies
used in the garments
industry?
What is the most
important technological
innovation of textiles?
What are the 3 strategies
used in the textiles
industry?
What is the role of the
Name 2 prominent
characteristics of industrial
industry?
Describe the main
difference between the
textiles and garment
industries
MFA?
Major issue of Textiles and
Garment Industry:
Sweatshops