Fashion Food Chain

Fashion Food Chain

Sweatshops are part of a complex global system of manufacturing and retailing. Garments can be cut in one country, assembled in another, finished in a third, and sold around the world.

Clothing production is a major portion of many nations economies. In 1996, global production of apparel exceeded $200 billion in retail value. About $125 billion is exported between countries, and $75 billion is consumed in the country of origin. The United States produced $49.3 billion (or 25%) of the world total and imported $36.4 billion worth of apparel.

Some argue that overseas production lowers manufacturing costs, which ultimately reduces prices to consumers and strengthens the U.S. economy. Others counter that competing with unregulated manufacturing in poor countries costs Americans jobs, depresses U.S. wages and working standards, and exploits workers overseas.

How Do Sweatshops Fit into Global Production?

U.S. sweatshops produce garments — primarily those that require short delivery times — for the domestic market. Sweatshop operators obtain work as subcontractors on other contractors' large orders or on reorders of popular garments that were originally produced elsewhere. These clothes are often indistinguishable from garments produced in legal shops and can be found in stores ranging from discount houses to fashionable boutiques.

A Consumer's Dilemma

It is impossible for shoppers to know the conditions under which their garments were made. Certain types of clothing, such as sportswear, are more often produced in sweatshops than other classes of apparel, such as suits. But every type of garment has been made in sweatshops.

There is no agreement as to the amount of garments sold in the United States today that are produced in sweatshops. Some people estimate that more than 75% of production could be considered sweatshop-produced. Others suggest the actual occurrence of sweatshops represents an insignificant portion of the industry. These estimates vary depending on the perspectives and agendas of those involved.

Today, concerned consumers need to rely on the reputation and statements of manufacturers and retailers to help them assess the origins of their garments.

Maquiladoras—These Mexican and South American factories in free-trade zones produce clothing and other goods exclusively for export. They are based on mass-production principles (i.e., lengthy runs of standardized items that are sold throughout the year, with plant operations designed to accommodate a low-skilled, high turn-over work force). Maquiladoras assemble mostly basic, commodity-like garments (blue jeans, underwear, and work clothes) in direct competition with U.S. plants that face much higher sewing costs.

Trade Barriers—Government policy makers use trade barriers to raise revenue and protect domestic industries. Tariffs are taxes assessed by governments on imported goods. Quotas are numerical limits on the number of items in specific categories that can be imported to a country.

Exemptions—Manufacturers often seek relief from trade barriers through exemptions. Most Favored Nation (MFN) status and treaties like the North American Free Trade Agreement of 1994 (NAFTA) and the Multi-Fiber Agreement of 1974 (MFA) influence manufacturers' decisions to source production overseas.

Ad from Bobbin magazine

Ad from Bobbin magazine

9802—One of the most important exemptions for the American apparel industry is Item 9802 (formerly 807) under the 1989 Harmonized Tariff Schedule of the United States. This U.S. government regulation allows manufacturers to lower production costs by avoiding most tariff taxes while still taking advantage of foreign low-wage production. Under 9802 rules, fabric is cut in the United States, and the pieces are shipped abroad to be assembled.

Top Apparel Exporters to the United States
  $USD in Billions Average Hourly Wage
Hong Kong $3.9 $ 4.51
China $3.8 $ 0.28
Mexico $3.6 $ 1.08
Taiwan $2.0 $ 5.10
Dominican Republic $1.8 $1.62
Philippines $1.5 $ 0.62
South Korea $1.4 $ 4.18
Indonesia $1.3 $ 0.34
Honduras $1.2 $1.31
India $1.2 $0.36
Bangladsh $1.1 $ 0.31
Italy $1.1 $14.32
Thailand $1.0 $ 1.06
Sri Lanka $1.0 $0.41
Canada $0.9 $9.88


Advantages and Disadvantages of Domestic and Off-Shore Production

    Trade barriers not a concern

    Supported by consumers who desire products “Made in the U.S.A.”
    Labor costs higher than in some other countries

    Labor costs lower than in the United States

    Can take advantage of 9802 (807) production
    Differences in cultural norms and language

    Possible trade barriers
From The Business of Fashion: Designing, Manufacturing, and Marketing by Leslie Davis Burns and Nancy O. Bryant, 1997

Advantages and Disadvantages of Owner-Facility and Contractor Production

    Quality control

    Greater control over production timing
    Financial requirements associated with equipment and personnel

    Need to assure continuous production

    Higher labor costs

    Foreign ownership creates additional financial risks

    Greater flexibility to changing equipment or production needs

    No investment in factories, equipment, or training needed
    Less control over quality or production timing
From The Business of Fashion: Designing, Manufacturing, and Marketing by Leslie Davis Burns and Nancy O. Bryant, 1997
Flow Chart of Production

Flow Chart of Production

From The Business of Fashion: Designing, Manufacturing, and Marketing by Leslie Davis Burns and Nancy O. Bryant, 1997