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


1
Chapter 10 Ch.10 Fabric-ating Fashion The
Textiles and Garment Industries
  • Presentation by Erin Friio, Clark Platt and Lisa
    Ziebart

2
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
    labour
  • First manufacturing industry to take a global
    dimension, most geographically dispersed
  • Ex. NICs of the 19th century

3
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

4
Garments vs. Textile
  • More organizationally fragmented
  • Less sophisticated technologically
  • International subcontracting
  • Role of the retailer is growing Buyer-driven
    economy

5
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

6
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
    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.

7
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

8
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

9
Textiles Imports and Exports
  • Take note of
  • Imports
  • US
  • Italy
  • China
  • Korea
  • Taiwan
  • Exports
  • China

10
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)

11
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

12
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
    manufacturers.

13
Growing Power of Retailing Chains contd
  • 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 (stock-keeping
    units) generate weekly shipments

14
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.

15
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)

16
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.

17
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.

18
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.

19
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
    income

20
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.

21
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.

22
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
    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)

23
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
    pieces.

24
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

25
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.

26
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.

27
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.

28
Corporate Strategies in the Textile and Garments
Industries
  • 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
    licensing.

29
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
    (Italy).
  • 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

30
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
    firm.

31
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

32
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)

33
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.

34
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

35
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

36
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

37
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
    Caribbean

38
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

39
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

40
Triangle Manufacturing
USA
NIES
Offshore Factories
41
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.

42
Game!!!
43
Major issue of Textiles and Garment Industry
  • Sweatshops
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