Chapter 10 Ch.10: Fabricating Fashion: The Textiles and Garment Industries - PowerPoint PPT Presentation


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Chapter 10 Ch.10: Fabricating Fashion: The Textiles and Garment Industries


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Title: Chapter 10 Ch.10: Fabricating Fashion: The Textiles and Garment Industries

Chapter 10 Ch.10 Fabric-ating Fashion The
Textiles and Garment Industries
  • Presentation by Erin Friio, Clark Platt and Lisa

Historical background
  • Original industry of 1st Industrial revolution of
    18th and 19th centuries in Britain.
  • Lancashire - dark, satanic mills and sweatshops
  • Manchester Cottonopolis
  • Focused on simple technologies and low-skill
  • First manufacturing industry to take a global
    dimension, most geographically dispersed
  • Ex. NICs 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 Buyer-driven

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

Global Shifts - Production
  • Employment is used to measure 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
  • 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

Production Contd.
  • Textiles
  • China (gt 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?
  • 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
    placed on the purchasing policies of major
    retailing chains
  • Wal-Mart, Sears, JC Penney, K-Mart, etc.
  • Retailing Revolution in US and UK since 1960s.
  • Result Specialized garment retailers targeting
    niche markets according to age, income, etc.
  • Purchasing power of chains gives considerable
    leverage over textiles and garments

Growing Power of Retailing Chains contd
  • Chains do not typically manufacture, but
  • 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 (stock-keeping
    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.

  • 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

Characteristics of the labour force and
conditions of work
  • 80 in garment industry, 50 in textiles are
  • 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 1990s 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. (whats 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

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
  • 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
  • Most important technological innovation is
    open-ended 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 re-bundling work

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
  • 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
    man-made 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
  • 2 basic points in the development of strategy in
    these industries
  • Globalization of the textile and garments
    industries cannot be explained simply by
    relocation of production from developed to
    undeveloped countries
  • When firms internationalize they use a number of
    methods, mostly international subcontracting and

Textiles Industry
  • A industry of large firms 30 of which lead the
    pack and include Burlington (USA), Toray
    (Japan), Coats (UK) and the Marzotto Group
  • Textile firms pursue one of three strategies
  • Produce standardized goods for large markets
    using economies of scale.
  • Supply large markets on the basis of utilizing
    low-cost labour in offshore locations
  • 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
    production-driven firm to a market driven

American and European Strategy Cont.
  • Coats adopted a two-pronged strategy
  • Shifting low value added activities, such as
    un-dyed thread manufacture, to low cost countries
    in eastern and southern Europe periphery and Asia
  • Locating dye factories, which are less labour
    intensive, closer to its main markets

Corporate Strategies in the Garments Industry
  • The garments industry is the most fragmented and
    less dominated by large firms.
  • 3 strategies
  • Production of basic goods for large markets
    utilizing economies of scale
  • Operation of small workshops (sweatshops)
  • Production of short orders to fill manufacturers
    production gaps (specific segments)

Corporate Strategies in the Garments Industry
  • 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
  • International subcontracting, licensing and other
    forms of non-equity investments are very

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 Japans domestic market

US and European Garment Markets
  • US firms increased level of offshore processing
    using suppliers in developing countries
  • Levis- 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

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
  • 1990s- focus on United States, Mexico and the

Regional restructuring of the Asian
textiles-garments 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
  • Simple assembly of basic garments for export
  • Subcontract manufacturing to design specified by
    the buyer with the product sold under their brand
  • Development of own brand manufacturing OBM

Triangle Manufacturing
Offshore Factories
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.

Major issue of Textiles and Garment Industry
  • Sweatshops