Apparel Production MOQ's by Country

Emily Lane  00:07

Let's move over to Bangladesh. This is an area I believe it's known for higher quantities. Somebody is a has a volume program, this is a good place to go. Tell me why.

Bret Schnitker  00:20

Being in Bangladesh and looking at the size of the factories, their large production lines on multiple floors. And being in both Dhaka and Chittagong, you see a huge amount of consistency with factory size. And almost every conversation when I'm in Bangladesh about production is can you fill a line? Can we keep lines consistently running?

Emily Lane  00:45

Welcome to Clothing Coulture, a fashion industry podcast at the intersection of technology and innovation. I'm Emily Lane.

Bret Schnitker  00:54

I'm Bret Schnitker. We speak with experts and disruptors who are moving the industry forward and discuss solutions to real industry challenges.

Emily Lane  01:03

Clothing culture is produced by Stars Design Group, a global design and production house with more than 30 years of experience.

Emily Lane  01:12

Welcome back to another episode of Clothing Coulture. We are here once again, going through a tabletop conversation. This is where we talk about newsworthy topics, as well as address questions from the audience. Today, we're going to be talking about production, understanding origins for production minimums, strengths and weaknesses. This is something that we're addressing daily in conversation. So we thought this would be rather timely. We've had a few longer episodes about this topic. And today, we're going to do a little bit more of a deeper dive into some of those specifics. You can also by the way, find this nifty little download that will support a little further knowledge. So with that, let's roll. Bret, when we're talking about key countries that, you know, are known for production and apparel, one of the first that comes to mind is China.

Bret Schnitker  02:10

Why would that be?

Emily Lane  02:12

Well, I believe it's still the largest producer. Tell me a little bit about you know, what has made China such a powerhouse.

Bret Schnitker  02:22

Their commitment to production and industry, globally. I mean, they're a powerhouse for not just our category, but pretty much everything that the US and Europe and every other country purchases today. I mean, it's it's been an intentional goal for that country for a long time. So

Emily Lane  02:43

Are there certain products in apparel that are a key strength?

Bret Schnitker  02:49

China overall, for many years have have have really concentrated and diversifying and make sure and making sure that all products, all categories are strengths within the country. And that goes all the way down to footwear, accessories, everything you really can get whatever category you want out of China, I think as labor rates rise in the country, certain categories become more and more challenging. And then certainly with some of the restrictions on cotton in the country. As we've talked in other episodes today, those categories are taking a little bit of a hit, for sure. But China is really good at at producing all categories, all fabrications, from basic commodity items to very, very complex, there's factories that are doing very, very unique things in the industry.

Emily Lane  03:44

What are MOQ is like for this country.

Bret Schnitker  03:47

The interesting thing is that when you have a country that has so much production, and you've got certainly outrageously large, large, medium, small, very small kind of cottage industry, within the country, all of those things exist in these large producing countries. So you can get production, you know, in the hundreds of 1000s of units, millions of units production, all the way down to in women's wear in China, there's there's certain small shops that are maybe making 100 or 200 pieces, etc. That's not to say that it's super affordable not to say that it's not super efficient, but there's there's a place for it. You know, when you're looking at production. For an overall industry, there's things that we look into requiring certifications. Are they treating their workers fairly as their certifications to make sure that those are happening? You know, health, safety, all of those areas. It's more challenging to manage the certifications when you have a very, very small factor because those certifications are time consuming and expensive. So most of those really occur in medium large to large facilities. And within those facilities, the minimums become a little bit more important, because when you're setting up a line, it can take maybe half a day to prepare the line for production, it could take maybe half a day to set to tear it down. And so for some of these smaller quantities, we call them MOQ minimum order quantities. The efficiency is kind of divided across all of the setup teardown, sure, right. And so, on natural fibers, usually the MOQ is run somewhere around 1000, people will maybe do less than that 750, 500, but you get premium surcharges, and no one likes to do those really, in these in the size factories. And then for synthetics, they're usually about 1200 units per stop per color. If unless you jump into nylons and nylons, the fabric itself dictates the minimums. So it's higher right? It is higher acid dyeing requires higher minimums. And so usually some around depending on the consumption of the garment, right? Because of the fabric, it can be somewhere around 3000 units per color.

Emily Lane  06:11

Okay. So as the world is seeking to broaden their manufacturing portfolio, one of the countries that we we love and are focused on is India. Sure, can you tell me why this has become such a key area of interest?

Bret Schnitker  06:28

Well, one, much like some of the other countries in the Near East, they've really focused on apparel as a major sector. Now, even India, like China has tried to move past apparel as being a main a main area for the economy there, you know, all economies go through this shift from kind of Textiles and Apparel into appliances, and, you know, other, tecnology, in India is no exception. That's happening too. But, you know, India itself is this, or United, at least in the US by a common language. So there's not a big language barrier. They are aligned kind of with the US in terms of mentality and thinking and, you know, democratic kind of environment.

Emily Lane  07:16

Creative spirit as well.

Bret Schnitker  07:17

Yeah, very creative, entrepreneurial. I say the Indians can be very entrepreneurial, you give them a difficult task, and they want to figure it out. And that's not indicative of all cultures, especially in the apparel industry, but and India, also based upon how they've structured their industry, they can do the same they can do, you know, again, you're looking at these certified factories, those minimums are about the same. But India is mainly a cotton producing nation. Okay. You know, as on our recent trip, we were in India for about a month, we're seeing some massive shifts from a government focus, to provide both incentives for building more synthetic production plants, but also timelines tied to those. And in India, that's a really important thing. You tie a timeline to an incentive, then things can move very, very quickly. In India, some things don't move super quickly.

Emily Lane  08:14

So from a product string standpoint, knowing that it's very cotton, Rich, I would imagine it's also apparel programs that are you know, use the cotton fabrics. Of course, tees, sweatshirt.

Bret Schnitker  08:29

Yeah, a lot of knitwear fabrics and natural fiber. There's a growing bottoms kind of industry for a lot of years when I was in India, it was just very difficult to get a reasonably priced bottom. And now we're seeing more and more that come online, certainly, woven shirts, and they they've kind of in terms of the world looking at woven shirts, plaid shirts, yarn, dyed shirts, India is really a main producer in that category also.

Emily Lane  08:58

let's move over to Bangladesh. This is an area I believe it's known for higher quantities. Somebody is a has a volume program, this is a good place to go. Tell me why?

Bret Schnitker  09:11

Being in Bangladesh and looking at the size of the factories, their large production lines on multiple floors. And being in both Dhaka and Chittagong. You see a huge amount of consistency with the factory size. And almost every conversation when I'm in Bangladesh about production is can you fill a line can we keep lines consistently running? So they're really focused on large production, basic production, they don't do a lot of very, very complicated finishers. Not a bunch of complicated assembly work. There are some outdoor factories in Chittagong that do some nice outerwear pieces, but it's still very large minimums, you know 1000 units of a style, you know before they really want to sit and talk to you and outerwear. And then in the factories that are doing sportswear, they really want 20,30, 40000 unit conversations, they can be made up of maybe multiple colors with different prints, but they, you know, if it's doing a t shirt or something like that, but they still want 20 or 30,000 units just to begin the conversation, there are people that will talk to you about doing less quantities. But I think doing the research on what those factories look like, what's their long term expectations, you can get some short term gains if you can get into a factory to do some smaller quantities, but it's not really a long term conversation in Bangladesh.

Emily Lane  10:37

We've had a lot of questions about Pakistan recently. Yeah, what what's happening in that country.

Bret Schnitker  10:42

So in Pakistan, they've definitely focused on apparel as a major, you know, economic category. And when I look globally, in terms of segmenting programs into different areas, you really get incredible value and things like fleece and sweatshirts there. They produce a good two thread and three thread fleece, you got again to concentrate on the individual factory and production unit. But the cost value relationship for heavier weight cotton fabrics, is certainly seen in Pakistan versus India, for sure. There again, they struggle with all of the unique finishes as a country overall, they're more driven by more commodity items. But there's certainly gems there that are doing some interesting finishes and better quality.

Emily Lane  11:38

I remember when COVID happened, a lot of the world moved from China to Vietnam, and then very quickly those factories got, you know, very full with demand, it seems like that demand has not really left Vietnam. Why, tell me about this strengths in Vietnam.

Bret Schnitker  11:56

Vietnam is less expensive later labor than China, which is a big plus, they also have good productivity, similar to China, not exactly to the same level, but the workers move very quickly. European companies have focused on Vietnam, especially French companies, for a long time used to be kind of a French protectorate. And so they've had an established garment making an assembly operation for years. The downside to Vietnam is that there hasn't been an entire ecosystem from fabric manufacturer. So the majority of fabrics that come into the country are coming from China. So China is producing the fabrics, you're bringing those in. So whenever you're transporting fabrics into the country, you tend to have to deal with larger minimums because the transportation, the clearance through customs, theinland delivery, those are not inexpensive items. If you're trying to do that on small quantities, it's not super effective.

Emily Lane  13:01

Are you still paying a duty on those on part of that, on part of that garment, because of the fabric being imported from China?

Bret Schnitker  13:07

Sometimes different countries, depending on the fabrications, will levy certain amounts of duty Vietnam has a import charge for per container, but they're not necessarily from my knowledge, doing a duty because they're reliant today, on fabric from other countries. They are building more of a developing kind of position in more factories or textile mills in the country, but they've got a long way to go. Okay.

Emily Lane  13:39

You know, in North America, there's been a lot of requests for nearshoring. And in that central America has been a region of focus, or there's some key strengths and or weaknesses in this particular region.

Bret Schnitker  13:56

Certainly duty free is a big strength on any fabrication that is manufactured in the Central American country area. And so they have some restrictions to qualify for duty free, but there is a there is certainly large Mills there that are producing, fabrications for duty free. Surprisingly enough with our time in El Salvador, there was a big emphasis on synthetic and El Salvador, which I think shows a great benefit to the US because duty rates on synthetics for most countries outside of China are 32% means about a third of the actual cost of the garment is paid to the US government for importation taxes. In China. Now that you have the 7% tariff, it's almost 40% of the cost of the garment for synthetics.

Emily Lane  14:45

How does that how does it how do they compare with regards to labor rates and overall production time?

Bret Schnitker  14:53

Productivity is lower and labor rates are higher. Okay, now the offset a little bit for that duty free is that you're you're paying more for those garments in general, on mass scale basics, T shirts, printed logo tees and things like that in Guatemala, they're turning out quite a bit and their productivity is, is good. But those are simpler garments again. Yes. So understanding what a what a country does well, it doesn't do well, you don't want to walk down into Guatemala, Honduras or El Salvador and start doing very, very complicated items, because that's just not the country for that.

Emily Lane  15:28

And we've seen a pretty diverse range in that region for you know, quantity. minimum.

Bret Schnitker  15:34

Sure, you got small maquinas. Yeah, that will do small quantities, but they're generally not certified. They don't have a lot of QC control, you kind of see what you get with those things. And then the factories that have that are medium to large. And some of them that are very large, they're, you know, you're you have a completely different deal. You have got to reserve lines, yeah, they're fully booked. And if you you can't go in and do a hit and run, you can't do a program and then leave and expect to get back in again.

Emily Lane  16:05

It's really a long term relationship really is Yeah. Okay. So the final country that I want to talk about today, is bringing it home to the United States. You know, we've talked about the fact that the United States, mostly abdicated apparel manufacturing many years ago. That being said, there is still some manufacturing happening, let's talk about some of those, some of the strengths, and what it's, what are some of those requirements to get?

Bret Schnitker  16:34

The string set based, or that you're employing Americans, it's close to home, you've got no customs clearance, and you have no long lead times on product. You know, I think that, and that works for a number of programs. So government programs that are very compliant, those have to be produced in US

Emily Lane  16:55

Very compliant?

Bret Schnitker  16:56

Very compliant is really driven from the US Department of Defense to protect suppliers during times of war, so that they are always they're always trying to keep an industry alive, should you not be able to get things from outside. So a lot of military uniforms are very compliant need to be very compliant. That means made in the US or US protector. So Puerto Rico is a main manufacturer also very compliant items. Sure. So you know, the challenges you have in the US generally are that it's expensive, of course, super expensive. So a lot of people, we've had a number of conversations to people like, hey, we want made in the USA, and I'm like, Well, you want a $200 Polo you know versus $25 overseas in those conversations kind of shift pretty quickly. There's a lot of opportunities for new and burgeoning companies to produce in the US also, because they can buy much smaller quantities in the US, they can use these kind of operations that are that are in on the coasts majority of it on the coast, some of them are in middle America, but they can run these programs, they can test the success of their particular brand, or style, or whatever, and they get back into it and kind of build that business. That's great for revenue, that's great for kind of driving the test, if you will. But when it comes down to profitability, it can always be challenged, because you're always kind of pressing profits to kind of fall in line with a reasonable MSRP. Sure, a Manufacturer's Suggested Retail Price. And so that that's that tends to be challenging, super complex programs in the US become even more expensive, because you're applying that labor rate times the complexity of the program, which means that they're spending more hours on it.

Emily Lane  18:47

Sure. That being said, you can kind of get into some of these places with a much lower MOQ.

Bret Schnitker  18:55

You can, and there is there is this incredible conversation going on with robotics, robotics, taking the place of workers in the US, and major tasking and speeding up process and whole garment knitting and 3D garment knitting and adjusting assembly lines for different parts that can be robotically sewed or put together, those kinds of things will level the playing field. And more and more opportunities can come to the US when you're applying this new technology that's starting to make its way into our business for a lot of years. Human labor was always so much less expensive, so no one invest in new technology. But for places where even the least expensive labor exists like Bangladesh, you're seeing robotics playing parts online, speeding up different processes. So it's definitely bound to come home to roost in the US and I think there will be a new economy and a parallel perhaps in the US with robotics.

Emily Lane  19:56

That'd be so exciting.

Bret Schnitker  19:57

Yeah, for sure.

Emily Lane  19:59

Well, thank you so much. For this conversation has been really enlightening. And if you would like to get a little bit of a deeper dive yourself, we do have a download available. It's called production, understanding origins for production minimums. And we will make sure to have this on our website at starsdesigngroup.com and access the shownotes everywhere you'll be able to find it. So thank you for joining us today. Don't forget to reach out and let us know if you have any questions and most importantly, subscribe to stay apprised of upcoming episodes of Clothing Coulture.

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