Professional Documents
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tudy/garments_.htm
HISTORICAL OVERVIEW
The Filipinos had shown their talent in weaving and garment making even in
the pre-Spanish era. Although crude weaving materials were used, but even then,
garments were bartered for other goods with other Asian countries, particularly with
China. When the Spaniards came, better weaving materials such as needles for fine
embroidery were introduced. The Americans took cognizance of the economic
potentials of the local garments industry which resulted in the industry’s preferential
treatment in the U.S. market in the early 1920’s.
It was only in the early 60’s that the industry started to flourish with the
imposition of the foreign exchange and import control. The passage of RA 3137
( otherwise known as the Embroidery Law) in 1961 brought about tax-free
importation of raw materials and capital goods and attracted more garment
producers to venture into the export market. This was further enhanced by the
government incentives granted under the Export Incentives Act (RA 6135) of 1970
and the creation of the Export Processing Zone Authority (PD66).
Table 1.
At the same time, over-all growth rate in gross value added (GVA) for
footwear and wearing apparel pegged at 8.1% in 1994 declined to –8.8% in 1996
and rebounded to a positive growth in 1997 at the rate of 2.2 percent.
Table 2.
Table 3 shows that during the year, 2000, there was a notable increase in
imports from United Kingdom, France and Australia, especially of cotton shirt and
blouses. Although there had been an influx of cheap apparel from neighboring
ASEAN countries such as Malaysia, Indonesia and Thailand, there were no official
figures to be obtained as these entered the Philippine market through untraditional
channels.
Table 3.
1.2.2 Exports
Table 4.
The U.S. remained the country’s biggest export market accounting for 62% of
total garment exports in the same period. As seen in Table 5, the Philippines was
among the top suppliers of garments to the U.S from 1990 to 1996. In terms of
value of apparel exports, it ranked 5th in 1990 to 1991 but ranked 6th in 1992 and
1993 and 7th in 1994 and 1995. In 1996, it rebounded and climbed up to the 6th
ranking with its exports of US1.293 billion.
The country assumed almost the same ranking in terms of volume of apparel
exports, except in 1996 when it ranked only 8th, ahead of just two countries,
Indonesia and India. Despite the lower volume, however, it managed to stay in 6th
place presumably because of the higher value garments that the country was
producing for the U.S. market.
Table 6.
FOB Value of Exports to the U.S. and E.U Markets as of December 31,1997
(in US$ million)
While Philippine garment export has grown faster than the world average, its
growth is slower than those from other ASEAN and South Asian countries. Relative
to other subcontractor countries in Asia, wages in the Philippines have gone up and
continue to rise. The gradual phase-out of the Multifiber Agreement (MFA) until 2005
will erode whatever comparative advantage the Philippines has established vis-à-vis
its competitors. The future of the garment industry will depend mainly on quality
and value upgrading.
Growth of exports
Apparel exports rose by 12.07 percent to $2.351 billion in the first 11 months
in 2000 from $2.097 billion in 1999. Non-apparel exports climbed by 14.35 percent
to $481.571 million in the first 11 months in 2000 from $421.123 million a year
ago. Textile exports fell 7.18 percent to $84.098 million in the first 11 months from
$90.065 million in 1999. Philippine garment exporters shipped out $2.171 billion to
the U.S, in the first 11 months this year, up by 10.88 percent from $1.958 billion in
1999. Shipments to Canada climbed by 28.31 percent to $63.38 million in the first
11 months this year from $49.395 million during the same period last year.
Based on the NCSO data, there were 1,865 small and large establishments of
which 1,612 were ready-made clothing manufacturers. There were 1,307 exporters
and 300 local manufacturers. At the micro level, some 3,000 tailoring and dress
shop operators served the made-to-order market.
Four hierarchies exist in the industry value chain. Level 1 consists of textile
mills that provide the fabrics and trimmings. These are available in open stock
inventories or made to order specifications. Level 2 refers to apparel manufacturing
which performs the marketing, merchandising and production of garments. Two
structures exist: integrated manufacturing and contracting of services. Level 3 or
the retail level consists of traditional retailers and integrated manufacturers. The
wholesale channel is created if the manufacturer or retailer is not vertically
integrated. Level 4 or the consumers define the needs and wants to be satisfied in
the marketplace.
Table 7.
Number and Gross Revenues of Large Wearing Apparel Firms by
Gender
Market Segment and Product Destination (1995-1996)
In 1996, some 218 garment companies made it to the top 7,000 corporations
of the Philippines with gross revenues totaling P29.763 million and total assets of
P14.103 million. Firms engaged in the manufacture of ready-made clothing
generated the biggest revenue equivalent to 49.2% of the total reported for the 218
large garment companies. Likewise, this group of companies registered the biggest
assets representing 41% of the total. Gross revenues increased by 16.9% in 1996
while total assets increased by 14.2% (Table 8).
Table 8.
Number, Gross Revenue and Total Assets of Garment Firms in the Top
7000 Corporations
Table 9.
2.4.1 Suppliers
Spinning, textile mills and finishing houses are the materials suppliers of the
industry. The Philippine textile and spinning sector faces numerous challenges due to
high cost of interest, energy and labor. Moreover, low tariff rates on finished fabrics
have made importation attractive to the apparel makers. However, new players
continue to come in as can be seen from the increase in the number of listed firms
which grew from 210 in early 1989 to 260 as of April 1995. There are 102 large
suppliers in the industry producing P19.0 billion in revenues in 1996 and P17billion in
1995.
2.4.2 Buyers
Table 10.
Gross Revenues and Net Income of Domestic and Wholesale and Retail
Outlets: 1995-1996
2.4.3 Labor
The industry is highly labor intensive due to the difficulty of handling soft
goods. It employed 148,000 workers in 1995 or 20% of the Philippine total
employed labor force. Sourcing of labor is not difficult. Workers are highly trainable
and flexible in skills. The Philippine labor force totaled 900,000 as of 1995, half of
which were in the NCR. The Philippines is still considered an inexpensive source of
labor, with skilled labor contracted by foreign firms. However, low productivity due to
lack of technological investment and competition from labor-rich neighboring
countries threatens this competitive advantage of the Philippine apparel industry.
Banks, trade supplier and internally generated funds normally finance apparel
firms. Customer check rediscounting and advance payments offer alternative
sources. Restricted credit access especially to small and medium players poses as a
major concern for expansion. Lack of working capital had led business stoppage,
incapacity to expand and invest in fixed assets.
Government agencies assigned to monitor and assist the industry are the
Garments Trade Export Board (GTEB) and the Department of Trade and Industry
(DTI). GTEB, together with the Bureau of Customs and Bureau of Investments
(BOI) oversees the operation of bonded manufacturing warehouses, regulates raw
material importation and monitor s textile export clearances (TEC). The Department
of Trade and Industry (DTI) oversees local activities through its agencies, Bureau of
Product Standards and Bureau of Patents and Trademark.
Upon receipt of the sample product sent by the buyer/importer, the head
office usually located abroad prepares its price quotation which are generally
based on the following:
Material costs (including sewing, packing
and other accessories) 40%
Labor costs 25%
Overhead costs 35%
Awarding of bids are generally based on price, quality and track record of the
garment manufacturer.
In most cases, however, material costs are not included in determining the
price since buyers supply the raw materials for production or even specify the
suppliers where garment accessories can be sourced out. Since transactions are
done at the head offices, prices are already agreed on at their level. Companies in
the Philippines will just have to ensure that their production costs are within the price
agreed upon by the buyer and the head office.
Garment exporters in the Philippines who make their own designs and deal
directly with foreign buyers follow the same pattern in determining the price. On the
other hand, garment sub-contractors performing sewing, embroidery, hemstitching,
or smocking jobs depend on the prices quoted by their mother companies.
Garment exports usually flows through the following channels before they
reach the customers:
a. Traders
b. Garment Manufacturers
c. Manufacturing Sub-contractors
d. Small Subcontractors or Satellites
e. Wholesalers/Buyers’ Outlets
f. Retailers
The finished products are delivered to the buyers either by air or sea.
3.2.3 Sources of Financing
Backward linkage with the textiles industry. Due to the weak backward
linkage with the textiles industry, the garment manufacturers are forced to import
raw materials. On the average, the garments industry imports up to three quarters
of their input requirements. The need to import raw materials leads to longer
turnaround time. The average turnaround time for the Philippines is from 120 to 145
days. Since fashion has a short cycle, like six to ten months, a long turnaround time
makes one uncompetitive. In order to compete in the higher end market that is
very fast paced, turnaround time should be faster.
The weak backward linkage with the textiles industry can be traced to the
uncompetitiveness of the textile industry in terms of price and quality. The industry
has had a long period of protection from the government. The Philippines is
uncompetitive in materials costs in yarn production because of the high cost of
cotton which is mostly imported. Protection drives prices up. To reduce costs,
producers source their input requirements from the illegal market. This explains the
lack of incentive for the garment industry to integrate backward. It is estimated that
a quarter of the total domestic demand for textiles is supplied by smuggled fabrics;
either through technical or direct smuggling.
Improved labor relations. The rising wage rates in the Philippines makes the
garments industry vulnerable to fierce competition from lower wage countries. This
has driven the Philippines to go up to the higher end market. Over time, wages were
rising at a faster rate than productivity, making Philippine wage rates uncompetitive.
Contributing factors to the decline of labor productivity during the latter part
of the 1980s were problems concerning labor relations. The period was marked by
much labor unrest in the industry so that there seemed to be a tradeoff between
minimizing labor costs on one hand and improving labor productivity on the other.
Table 14 shows the labor productivity statistics in Asean countries.
Labor productivity is positively affected by high level of skills which in turn are
negatively affected by slow turnover rates, security of tenure and high employment
morale. But slow turn-over rates are practiced to reduce labor costs which include
the minimum wage and other benefits. Contractual hiring also keeps the labor force
from being unionized, diminishing the possibility of strikes. Industry experts cited
that labor productivity in the garments industry was low because of apathy, conflict,
confusion, disorganization and inaction.
Table14.
Industry-wide competitiveness and the value chain. Much of the raw material
inputs used in the Philippine garments industry are imported on consignment basis.If
67% of total costs in garments production are intermediate inputs and at least 70%
are imported on consignments, then it implies that firms have no direct control, of
at least, 46% of their costs.
Financial costs. Amidst the financial reforms during the last half of the 1980s,
the financial infrastructure environment was characterized by greater concentration
with wider bank spreads and increasing profitability. This led to higher financial costs
finally resulting in decline in competitiveness.
Technology. Going to the upper end market necessitates the feel for the
changes in fashion. In order to do this, the structure of production should be flexible
and fast enough. Production flexibility, in turn, is heavily dependent on highly skilled
workers, specialized equipment and revolutions in management practices.
In the short and medium term, wage costs will still be the most important
competitive advantage in garment production in the low-end market. The equipment
most suitable would be the basic, inexpensive reliable equipment that is easy to
maintain. However, higher quality fashion and designs clothing demand production
flexibility, semi-skilled and highly skilled workers, managers, and experts.
Technological innovations enhance the possibility for the Philippines to move into the
higher quality market segment.
Output factors. While it is price competition that drives the lower value-added
segment of the garments market, it is product differentiation or market niching that
characterizes the higher end segment. However, as more and more countries move
up the higher value segments of the market, innovative designs and quality are given
premiums. What is necessary is to be attuned to the latest styles in fashion and the
possible direction it would be heading, if the ability to influence it does not exist. This
requires information, foresight, flexibility in production and ability to respond quickly
to short fashion cycles. A competitive and reliable source of raw materials is also
imperative.
Service reliability reflected in timely delivery with very minimal rejection rate
translates to a competitive company image which is desired in any market segment.
A customer should not only be satisfied with the products of garments
manufacturers, in terms of price and quality, but also with the services provided for
by manufacturers.
4.2 Analysis of the Competitive Advantage of the
Industry
Using Porter’s first model (Figure 6), the Philippine garment industry is
characterized as follows:
4.3.1 Threats of New Entrants
The industry is relatively easy to penetrate for the following reasons:
• Economies of scale do not deter new entrants;
• Preference of customers for quality overcomes business
loyalties;
• Capital requirements are not very large;
• Absence of proprietary technology;
• Non-exclusive distribution channels; and
• Provision of attractive incentives by the government
4.3.2 Bargaining Power of Suppliers
Although Philippine-made garments are import dependent, the bargaining
power of suppliers is relatively low. This is attributed to the fact that manufacturers
do not have difficulties in sourcing out their raw materials such as fabrics/textiles and
garment accessories. These are either imported directly by garment producers,
consigned to producers by their mother companies or sourced out from local
suppliers. Threads and packaging materials can be purchased also from local
suppliers.
The power of suppliers come only from the fact that raw materials comprise
around 40 percent of the total product cost.
4.3.3 Bargaining Power of Institutional Buyers
The bargaining power of institutional buyers is not very high for two
significant reasons. First, the industry is composed of many institutional buyers
located in 103 countries. Due to the industry’s capability to supply high quality
products, they source their high-end apparel requirements from the Philippines while
low-end products are given to low-cost producing countries. Second, pricing of
products is determined through bidding or negotiations between the head
office/mother company and the buyers.
4.3.4 Threat of Substitute Products or Services
The threat of substitute products or services is both low and high. The threat
is high when it comes to the manufacture of low-end garment products. The threat
comes from competitor countries due to their lower labor cost. However, when it
comes to high-end garments, the Philippines is very competitive. It also has an
advantage when it comes to designs with intricate patterns. In this case, the threat
of substitute products is low.
4.4.1 Strategy
The Philippine garment industry has to brace itself for the impact of the
current liberalization of apparel quotas or the dismantling of the Multi Fiber
Agreement (MFA). The move to liberalize import quotas which will be implemented in
three (3) stages over the 10-year transition period (1995-2005), will involve two(2)
processes. First, the gradual phase out of quotas; and second, the accelerated quota
growth for those remaining under quota in each of the phase out (NEDA Industry
Situationer, 1997).
4.4.2 Structure
The number of firms with foreign equity is minimal compared to the Filipino
owned one. However, the foreign-owned firms lead in terms of investment and
exports having the capital, technology and market advantages (The Philippine
Garment Export Industry, GTEB, 1997).
Most large manufacturing firms have one or more satellite companies which
allow them to specialize. For instance, company X will distribute garment style a,b,c
to Satellite A, B, and C or in some cases, each satellite will only be supplying orders
of customers A, B, and C.
5.1.1 Labor
5.1.3 Technology
Filipino’s flair for dressing may be the single most important factor behind the
evolution of Philippine garment manufacturing into an industry with world bearing
potential. Our people, lower-income individuals included, have a penchant for high
style dresses and grooming. Total family expenditure for clothing, footwear and
related products grew at annual rate of 20.82 percent from 1994 to 1997. It grew at
an average rate of 22.56 percent (Table 12).
Garment import averaged $20.6 M per year which is only about 0.10 percent
of the country’s total imports during the period. Imports grew by an annual average
of 41.3 percent. Major sources were Hongkong and Taiwan with an annual average
share of 33.5 percent and 16.8 percent respectively.
The world demand for garment and textile is estimated at US$200 billion.
However, total Philippine garments and textile exports to the world was US$2.957
billion in 1997 which only represents a mere 1 percent share.
Men’s, women’s, as well as children’s and infant’s wear constitute the bulk of
apparel demands accounting for an annual average of 17.3 percent, 19.6 percent
and 17.9 percent, respectively, of the total garments exports.
Figure 6.
The industry has to hurdle raw material cost constraints, a low capital to labor
ratio of 0.08 in 1990 compared to 0.16 in 1980, lack of technical personnel,
restricted access to financing, stiff competition from low labor cost of other Asian
countries, notably China, Vietnam, Bangladesh, Sri Lanka and Indonesia and lastly,
rampant technical smuggling that hampers the growth of the textile industry. These
issues should be addressed by forming international joint ventures to improve our
technical knowledge, focusing on high-value added items and profiting from the
liberalization moves of the banking sector. A strategic shift to medium and high-end
cost is deemed possible with the inherent skills of our workers, fluency in the English
language and the positioning of local designers in the international market.
A total of P7.8 billion in project cost for yarns and fabrics from equity of local
sources has already been approved by the board with project cost for garments at
onlyP715.0 million, A P36.4 billion investment in fabric dyeing, printing and finishing
is planned to boost garment production by 1997. This hopes to increase the supply
of locally processed fabrics, lower production cost and shorten procurement time
from 120 days to 60 days.
The garments sector is one of the sectors identified as the potential sources of
incremental growth to achieve the US$50 billion export target for 2001. Its potential
for achieving higher growth is based on the following:
Upgrading of plant facilities and skills. Both DTI and the industry shall
promote the upgrading of plant facilities and skills to improve quality and
productivity. This shall be accompanied by assistance in sourcing funds. The thrust
of upgrading the industry and establishing more sustainable bases for
competitiveness will be a strategy to attract investors and keep them beyond the
MFA.
Table 15.
US$34 Billion Target for 1999 and Projections for 2000 and 2001
The University of Asia and the Pacific (UAP) confirmed that footwear and
wearing apparel were considered as fast-growth industries, posting a 24.6% growth
in value from January to September 1998. During the same period, footwear and
wearing apparel increased by 10.9% in volume. As a whole, the industry chalked up
a 6.5% growth in 1998 and was expected to maintain a 5.2% growth in 1999. The
projected decline in the industry’s growth could be attributed to the very tight net
margins and higher costs of imported materials. Garments had 43% import content,
resulting in a 22.8% increase in costs of the finished products. Improvement in the
consumer market will boost the sector’s growth in 1999. The following table
illustrates the industry’s performance as compared to other industries based on
selected economic indicators:
Future prospects look promising for the industry. The industry is set to expand with the
introduction of advanced technology by new players, improvement of export market
conditions, and tariff reductions. The phase-out of the Multi-Fiber agreement which
administered quota agreements between countries for 20 years started in July 1995. The
World Trade Organization shall implement a three-stage reduction on quota restrictions
within 10 years. Although quota phase out remains apprehensive, the move has given
local manufacturers opportunities to explore more profitable and opportunities and
expand sales to non-quota categories.
Table 16.
Number of Garment Mfg. Establishments ,
Southern Tagalog Region: 1990-1994
6.2 Profile of Small, Medium and Large Enterprises
In terms of employment size, small firms employing less than 100 workers
numbered 299 and accounted for almost 78%. Large and medium firms numbered
almost equally at 45 and 42, respectively. Medium sized firms with employment
level of 100 to 199 workers were mostly engaged in the manufacture of ready-made
clothing except for seven establishments which were into the manufacture of
miscellaneous wearing apparel located in Batangas, Cavite and Laguna and two
embroidery firms operating in Batangas and Cavite.
The largest firm was Capital Garment Corporation located in Taytay, Rizal
which had 2,000 or more workers. The firm was into production of ready made
clothing. The second largest firm was Grandos Philippines Industries, Inc. located in
Bauan, Batangas with more than 1,000 workers. Other large firms with employment
size of 200 and more but less than 1,000 were Quality Hats and Bags Mfg. Corp. in
Carmona, Cavite; G&B Export Corporation in Imus, Cavite; and Les Grants Phils.
Inc. in Dasmarinas, Cavite. These four firms were engaged in the manufacture of
various items of wearing apparel, not elsewhere classified.
The concentration of large firms was in Cavite which had a total of 26 large
firms, followed by Laguna and Rizal with 10 each. Batangas had only two large firms
operating in the area.
Table 16.
Based on the data presented in the same table above, some P1.603 billion
in compensation were received by garment workers and employees in 1994. This
figure represented 11.8% of the total compensation received by workers in all
manufacturing establishments in the region amounting to P13.563 billion. The
bulk (53%) of the compensation amount for garment workers went to the
women’s, girl’s and babies garment manufacturing division and the ready made
clothing workers (24%). Average compensation, however, appeared to be higher
among employees in the manufacture of men’s and boy’s garments at P55,000 a
year or an average of P4,583 a month. The second biggest compensation
average was reported by those engaged in the production of hats, gloves,
handkerchiefs, etc. at P49,000 , followed by those in the manufacture of
women’s, girl’s and babies wear at P47,000. Workers in the embroidery sub-
sector received the smallest average compensation of P19,000 a year owing to
the highly seasonal nature of the work (Table 17).
Table 17.
Employment and Compensation for Garment
Manufacturing Establishments
with Average Total Employment of 10 or More : 1994 ( Value in P'000)
1994
Table 19.
Production Workers for Garment Mfg. Est. with Average Total Empl. of 10 or
More, by Industry Group:1994
Table 20.
Number of Establishments & Value of Products Sold by Mode of Sale for Mfg.
Table 21.
Table 22.
No. of Establishments & Total Empl. By Type of Worker for Garment Mfg.
Est. w/ Aver. Total Empl. of Less than 10, by Industry & Sub-Group:1994
A big majority of workers in the apparel sector were women. Table 23-shows
that almost 64% of the total employment in the micro-establishments were female.
The female workers in this sector made up a third of the women workers in the total
female employment in other manufacturing sectors in the region. Paid female
workers accounted for 63% while unpaid female workers made up 37%.
Table 23.
No. of Establishments & Female Empl. By Type of Worker for Garment Mfg.
In 1996, the bigger portion (81%) of the 2,005 wearing apparel firms
consisting of 1,620 establishments were micro-enterprises with less than 10
workers. Custom tailoring and dressmaking dominated the micro sector with 81% of
the total belonging to this category. Laguna had the biggest concentration of custom
tailoring and dressmaking shops with Quezon, Cavite and Batangas ranking second
to fourth in this category. Rizal, on the other hand, lorded it over in the ready-made
clothing segment with 168 firms.
Embroidery work was mainly confined to Laguna and Batangas with Rizal and
Cavite having only three firms each in this category. Laguna also had dominance
over the manufacture of other wearing apparel not elsewhere classified with its 174
micro-enterprises.
6.3.4 Compensation
Table 24.
No. of Establishments & Comp. By Type of Empl. for Garment Mfg. Est.
Table 25.
Number of Garment Exporters by Province and
By Year
In 1997, some 17 garment exporters in the region ranked among the top 100
garment exporters in the Philippines with four of them classified among the top 20
garment exporters. Thirteen of the top garment exporters in the region were in
Cavite City, three were from Rizal and one was from Batangas. Refer to Table 26- for
the listing of the top garment manufacturers in Region IV.
Table 26.
Table 28.
a. Fabric Testing
Imported fabrics from Hongkong and Thailand are inspected using the
Inspection Machine. The Inspector normally notifies the QA head or the Warehouse
Supervisor whenever major defects are arise such as smash, penmark, thin filling,
cotton slub, pick-out mark, hole, dye, bulky thread, colored thread, thick yarn, fuzzy,
missing yarn and stain. In this case, the buyer and the supplier are also notified in
order to make necessary adjustments. However, the inspector always sees to it that
a consistent grading standard is maintained.
This is the checking of the actual quantity of raw materials against the
supplier’s deliveries and buyer’s and buyer’s requirement. The raw materials directly
used in the manufacture of ready to wear garments include the following.
a) Rolls of Cloth
b) Embroidery Thread
c) Sewing Thread
d) Hang tags
e) Buttons
c. Fabric Issuing
The warehouse clerk issue the roles of fabrics continuously to Cutting Section
per purchase order, per style and chronologically according to the shipment schedule.
By this time, the Production Manager had issued the Cutting Note Sheets where
information on purchase order number, style, colorways, quantities per size and
cutting batch are indicated. These Cutting Note Sheets are the reference for the
preparation of the bundles tickets. The bundle ticket is are attached to each bundle
of cut goods where style, quantity size, purchase order, cutting batch number and
sometimes even the destination are indicated for shipment purposes.
d. Fabric Measurement
After inspection and measurement, fabrics are laid out/spread out in a long
and wide table. The roll of fabric is first placed on a bar suspended at the end of the
table, spreading the whole roll layer by layer. In the layers of the fabrics, tissue
paper are inserted to serve as separators for reference purpose.
a. Marking
When all the required fabrics have been laid out, the marking process begin.
The markers are placed on top of the layers of the fabrics. These markers are
computerized which means that adjustments have already been made. Pins, weight
and clamps are used as fasteners and fasten the layers of fabrics in order to avoid
fabric movement while cutting.
b. Cutting
After the markers have been pinned down, the cutters cut the fabric using an
Eastman Cutter for big parts of the shirts. A baned Knife Machine is used for the
collars and yokes. The cutters always see to it that they cut along the allowance
lines.
c. Bundling
After cutting all the garment parts, bundling takes place. The bundlers tie and
bundle together all parts as they are laid out to avoid mismatching of the color
shades or size. A corresponding bundle ticket is assigned to the part / bundle.
a. Preparatory Stage
b. Sewing
The Sewing Division is composed of two production lines which use the latest
high speed single and double wing types of sewing machines, button holing machines
and button sewing machines. The sewing operation includes pocket preparation,
front preparation, back preparation, sleeves preparation, cuffs and collar preparation
and assembly parts.
c. Quality Control Inspection
As the sewing operation is in process, the supervisor or the line leader, with
the help of the roving inspector always see to it that each operation is properly done.
They check on seam allowances, proper labels/pocket/button placement, color
matching, stripes matching, number of stitches and such other details while they are
still being done to avoid further damage or numerous rejects and fixing. Soon after
the garments are finished or an output has been made, the line inspectors are
assisted by trimmers who trim unnecessary or excess threads on seem and
hemlines.
a. Pressing
b. Packing
In 1996, the Development Academy of the Philippines came out with a study
on the profitability measures of the garment industry in the Philippines. The study
covered the period from 1992 to 1994.
The study presents financial data on two large firms, All Asia and A Grade,
two medium enterprises, Kay Lee Fashion and Andrew Apparel and two small
enterprises, KBK Garments and MVL Apparel Corporation. Profile of the firms are
presented in Table 29.
There is no pattern that can be discerned that can be directly attributed to the
size of the firms, except the inventory turn-over ratio which is a lot higher among the
two medium sized firms compared to the two large firms. As seen in Table 30, Kay
Lee Fashion and Andrew Apparel registered inventory ratios of 51.7% and 40.2%,
respectively, as compared to the 3.0% posted by All Asia and A Grade. In the same
manner, average accounts receivable period was also a lot shorter with the two
medium firms at less than 10 days. On the other hand, the two large firms had
accounts receivables of more than 100 days or three months. This means that the
smaller firms had less receivables and did not hold big inventory at any given time.
The larger firms, on the other hand, because of the nature of their operations could
afford to provide goods on credit for a longer time and could maintain a bigger
inventory.
In terms of profitability, the larger firms as a whole were more profitable than the
smaller firms as shown by higher percentages of gross profits and net profit, return
on assets and return on owner’s equity.
Figure 9.
Average Number of Workers by Firm Size and Position
Table 31.
Table 32.
( In Million Pesos)
GDP
1991 9,672 5.3 1.4
1992 9,731 5.4 1.4
1993 10,418 5.7 1.4
1994 10,990 5.8 1.4
1995 11,881 5.8 1.5
Source: GTEB
Source: GTEB
Exports Exports
1995 15.7B 2.78 B 17.7
1996 20.5B 2.74B 13.37
1997 2.95B
1998 2.84B
Rank % Share
Country Value of
Exports
USA 1,858.72 62.86
European Union 390.08
Countries
1 Great Britain 113.62 29.13
2 West Germany 111.23 28.51
3 Benelux 60.72 15.57
4 France 44.57 11.43
5 Italy 21.54 5.52
6 Spain 17.85 4.57
7 Denmark 9.61 2.46
8 Austria 3.27 0.84
9 Ireland 2.32 0.60
10 Greece 2.04 0.52
11 Sweden 1.52 0.39
12 Portugal 0.95 0.24
13 Finland 0.83 0.21
14 Total 390.83 100.0
Table 7. Number and Gross Revenues of Large Wearing Apparel Firms by Gender
Market Segment and Product Destination (1995-1996)
Industry No. of Total Sold to Interplant Direct Sold to O
Description establishments domestic transfer export exporters pro
market
Custom 145 96,699 96,199
tailoring
shops
Custom 82 153,092 97,827 53,92
dressmaking
shops
Men’s & 215 3,013,487 2,018,754 3,054 923,007 68,443
boy’s
garments
mfg.
Women’s, 578 14,740,238 3,182,069 11,113,057 327,729 1
girls’ and
babies
garment
mfg.
Ready 416 10,184,844 3,918,722 239,539 6,001,031 21,441
clothing mfg
n.e.c.
Others 176 1,676,063 401,259 13,832 1,148,285 109,668
Total 1,612 29,864,723 9,715,550 256,425 19,239,332 527,301 1
Source: NSO
Table 10. Gross Revenues and Net Income of Domestic and Wholesale
Wholesale &
Retail Gross Revenues Net Income
1996 1995 1996 1995
Supermarket 31,690,712 25,631,951 263,756 175,499
Department & 47,392,223 39,683,206 3,248,074 3,169,369
variety stores
Wearing apparels 612,790 519,008 12,148 4,260
Textile fabrics, all 985,989 872,000 11,993 10,063
kinds
Total 80,560,714 66,706 3,535,970 3,359,191
Table 11. VALUE OF GARMENT EXPORT BY REGION
(Based on TECs Issued) : As of December 31, 1997
REGION NO. OF FOB VALUE* LOCAL VALUE
ADDED*
EXPORT-ERS
Table 15. US$34 Billion Target for 1999 and Projections for 2000 and 2001
Costs absorbed
Industry growth (footwear & wearing apparel: Jan-Sept. 1998) 24.6
Volume terms
Growth forecasts 6.5
1998 5.2
1999 (forecasts)
401
1,603,716
1,523,000
117,761
1,253,483
151,756
80,716
Footwear
13
5,327
5,023
228
4,455
340
304
10
4,922
4,627
59
4,244
325
294
Men's and boy's garment mfg.
34
138,094
132,002
6,953
108,118
16,931
6,092
192
846,677
801,861
64,670
656,905
80,286
44,816
Manufacturing
102
380,073
361,236
28,677
293,704
38,855
18,837
Embroidery establishments
31
20,028
19,340
715
18,045
580
688
Neckwear, (except knitted & paper) & apparel belts regardless of materials
19
208,595
198,910
16,459
168,012
14,439
9,685
Source: NSO
Source: NSO
Table 22. No. of Establishments & Total Empl. By Type of Worker for
Garment Mfg.
Est. w/ Aver. Total Empl. of Less than 10, by Industry & Sub-Group:1994
Source: NSO
Table 23. No. of Establishments & Female Empl. By Type of Worker for
Garment Mfg.
Table 24. No. of Establishments & Comp. By Type of Empl. for Garment Mfg.
Est.
Laguna 17 22 28 26 34 12.2
Occ. 0 0 1 0 0
Mindoro
Palawan 1 1 1 1 1 0
Quezon 0 0 0 0 1
Rizal 58 60 64 61 70 3.2
Philippines 1,273 1,125 1,154
Source: GTEB
( in US$ million)
NCR 620 1,471,720 842,930
Southern Luzon 264 868,890 422,930
Central Luzon 192 464,150 255,430
Central Visayas 43 118,120 40,130
Ilocos Region 9 18,270 6,240
Central Mindanao 7 10,720 4,610
Southern Mindanao 1 006 006
Bicol Region 5 4,030 2,380
Northern Mindanao 2 002 002
Western Visayas 11 480 390
Total 1,154 2,965,280 1,574,800
( In US$)
Batangas 10,898,355.18 1.92
Cavite 303,724,047.19 53.62
Laguna 90,128,517.80 15.91
Oriental Mindoro 620.00
Palawan 60,636.90 0.01
Rizal 161,573,073.89 8.53
Total 566,385,250.96 100.00
Source: Bureau of Export Trade Promotion, EDP/IRC
Critical Skills
Sewers 61% 4,675 1,318 1,384 1,453 1,526 1,602
Cutter 1.00% 77 22 23 24 25 26
Quality control 17% 1,303 367 386 405 425 447
to include
inspectors,
supervisors, QC
pattern maker 1% 77 22 23 24 25 26
Others 20% 1,533 432 454 477 500 525
(knitters,
embroiderers
etc.)
*From previous
year