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Thursday, August 28, 2008

Super-size? No thanks

I receive, and respond to, a steady stream of calls for help from people. They are ready to bring out their creativity on 1) a pattern, 2) make some samples, 3) produce their product, then, 4) bring it to market. The first two steps can be, and are performed by themselves, often. The third step, finding a manufacturer is perhaps their earliest and truest test. Actually, finding a manufacturer, rare as they may be, is not as tough as finding the desired quality at a price that won’t crush the budding enterprise before it even launches. I wish I could say I knew how they did finding a manufacturer, but that is not feedback information I have been provided. One individual had existing connections with a manufacturer she had used in China. She was ready to end that long distance arrangement in favor of a US manufacturer to produce her apparel line. Those oversize apparel producers are the same who have gave birth to the consumer’s adage on apparel choices on the rack: One size fits none.

The information I have copy-pasted below provides some simple, clear arithmetic. This information is nothing new, but I hope it may help some of you appreciate what a local IE-Network is and can do for your business. The US apparel industry has (or did) for many years relied on major big-time manufacturers to produce its apparel. The pressures of cost and price resulted in most, and at this point maybe all, those major manufacturers to go abroad.

However, equally as much a part of the US apparel industry and maybe even bigger than those major manufactures were the thousands of small establishments which contributed to apparel manufacturing. The overwhelming majority of these small establishments employed four or fewer employees. These small establishments were successful and vital to the apparel industry for the immense (and inexpensive) talent they brought to the design and production process.
My question(s):

How many times do you need to multiply by 4 before you have an IE-Network capable of producing your apparel line?

Those 4 workers in small establishments are no less skilled than the hundreds employed by an overseas major apparel manufacturers?

Why then should a local IE-Network be viewed any differently?

What the information below reveals is the apparel industry has long relied on the many, small operations for the bulk of their production. This is not McDonald’s. You may want to super-size your apparel producer, but a small one will work wonders, too. There are, according to the Home Sewing Association, over 40 million people in America who sew at home. The HSA cannot say what the breakdown is between sewing for leisure and sewing for profit.

My take on this as a profitable opportunity for Independent Contractors and Independent Retailer/resellers: It can’t be all that tough to build IE-Networks locally, regionally, statewide and nationwide; beginning in Round Rock Texas. (check out the free burrito!)

The following are clips taken from the article. I have added the red highlights.

The U.S. apparel and fabricated textile products industry is highly fragmented and quite labor-intensive. Of the approximately 24,000 establishments that produce both apparel and fabricated textile products, nearly two-fifths are establishments with four or fewer employees. More than half these establishments have fewer than 100 but more than 4 employees.
The apparel manufacturing segment is experiencing an ongoing retrenchment. As emerging market countries continue to take on the workload of manufacturing, it is likely this will continue to be an American industry on the decline. The number of establishments engaged in cut and sew apparel manufacturing decreased from over 13,000 to less than 11,000.

Not surprisingly with the continued trend to outsourced jobs outside the U.S., the number of workers engaged in the industry took a very significant decrease in only 5 years. The drop of over 50%, however, is unusually large it appears employment in the industry is now around a quarter million, down from over a half million workers.

This is not an industry with a high concentration at the top. As indicated above, there are still many establishments that employ 5 or fewer workers. The four largest players account for less than 20% of industry revenues while the top 50 represent slightly over 40% of all industry revenues.
Concentration of Revenue by number of firms in the industry is as follows:

Total Number of firms Revenue as % of all firms in the industry

4 largest 18.8%
8 largest 23.8%
20 largest 32.6%
50 largest 43.9%

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