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IJOPM 25,2

Globalisation and manufacturing strategy in the TCF industry

Geoff Buxey
Faculty of Business and Law, Deakin University, Geelong, Australia
Abstract
Purpose The textiles, clothing, and footwear (TCF) industry has struggled in Australia since the government commenced dismantling tariffs. By sourcing from Asia, middlemen undercut established suppliers, and retail chains set benchmark low prices with their imported house labels. The policy-makers predicted that local producers would become more efcient, and export to make up for lost sales, but the media paints a picture of rising imports, retrenchments, and factory closures. The research objective was to discover what strategies the survivors (actually) employ in adapting to the pressures of globalisation. Design/methodology/approach More than 30 companies were involved in the study, ranging from small family businesses to subsidiaries of big multinationals. Each case study was based on an interview with a senior executive, normally followed by a plant tour. This methodology suits a fresh topic, as it avoids preconceptions and imposes no bounds. Findings Results show that the policy change was based on pie in the sky forecasts. Increasingly, TCF production is transferred to cheap offshore locations, generally via subcontracting plus the badging of foreign designs. To survive, local factories should focus on quality and customer service, preferably in niche markets (like uniforms), or for specic customer groups, and develop technologically advanced products. A move down the supply chain into retailing can also assist. Large multinational corporations that engage in foreign direct investment dominate the management literature. Originality/value This paper presents a different perspective, neglected in international operations management, whereby domestically oriented businesses attempt to defend themselves against the adverse consequences of globalisation. Keywords Australia, Globalization, Garment industry, Tariffs, Case studies, Competitive strategy Paper type Research paper

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International Journal of Operations & Production Management Vol. 25 No. 2, 2005 pp. 100-113 q Emerald Group Publishing Limited 0144-3577 DOI 10.1108/01443570510576985

Australias textiles, clothing, and footwear (TCF) industry In the mid-1980s, the Australian government began to progressively reduce import barriers. The prevailing opinion was that manufacturers were over-protected and inefcient, and full exposure to international competition would result in cheaper goods for consumers. To survive, rms would adopt worlds best practice, turning to exports to compensate for lost domestic market share. TCF has borne the brunt of this change. In 1985, there were quotas, and the average tariff was 88 per cent. Quotas were abolished by 2000, and import duties were down to 15 per cent for woven fabrics and footwear and 25 per cent for garments (Buxey, 1999). Consequently, the number of people employed in textiles production dropped from 20,300 in 1985 to 6,300 in 2001, and the combined fall for clothing and footwear was 71,900 down to 51,700 (McCallum, 2001). In 1999, 78 per cent of Australias clothing was imported, compared to just 25 per cent 14 years before. The surge in imports is not due to foreign producers targeting Australia. Local retailing is dominated by several powerful chain stores that were quick to procure TCF lines offshore. So, traditional suppliers face strong competition from house labels. Many small businesses ceased trading, whilst bigger companies outsourced

production to countries like China (The Age, 1997; Colebatch, 1997; Kennedy, 1998). Textile plants suffered too, as apparel manufacturers imported raw materials or disappeared overseas along with their orders. The Chinese government has established integrated industrial clusters. Australian manufacturers design clothing and specify the fabrics, leaving the subcontractors free to purchase inputs from their own textile mills. The constraint is partly responsible for the growth of CMT (cut, make, trim patterns and materials supplied) contract manufacture in Fiji. Another factor is the Australian Governments Import Credit Scheme (Garran, 2000). This allows businesses to ship fabrics to Fiji and claim export credits, which are used to offset tariff payments on future imports. Finished goods return duty free, under the South Pacic free trade agreement. A leading TCF producers managing director summarised the present problems (Gettler, 1999). It is difcult to sustain home production due to the markets small size, unless a clear competitive advantage exists. Therefore, all domestic low-value TCF operations will be outsourced, but the corporation will retain facilities for highly automated sock production and short-run, quick response clothing. The business will revolve around areas where it adds greater value, such as brand management, customer focus, design, and supply chain management. Noteworthy developments in other countries Greater concentration in the USAs retail scene brought a transfer of power, away from small garment manufacturers to the retail giants (Abernathy et al., 1999). At rst, these omnipresent stores obtained cheap goods from low wage Asian countries. Then lean supply operations demanded short lead times, so Mexico and certain Caribbean nations took over. Actually, basic apparel (e.g. underwear, white business shirts) is often best left to imports. There are greater possibilities in fashion-basic (everyday clothes but fabrics, styles, trim, etc. follow fashion) and true fashion garments, where sales are volatile and hard to predict. According to their chief executive, Levi Strauss was probably the last major US-based apparel manufacturer with a substantial amount of production still in company-owned factories in North America (The Australian, 1999). Nevertheless, after further cuts in favour of Mexico, just two US factories remain, compared to 31 in 1997 (Cheng, 2002). The jeans icon wishes to emphasise product design and marketing. In Italy, Benetton relies heavily on local subcontractors, keeping a close eye on quality and costs. The organisation executes effective supply chain management for its 7,000 dedicated shops, with restricted storage space, scattered across the globe (Mahoney et al., 2001; Hill, 2000). A woollen shirt comes in short, mid, and full-length sleeves, with or without a collar. Bodies are common and a proportion is made for stock. Thus, production schedules can be adjusted at short notice by completing work in progress. For similar reasons, uniform grey apparel is dyed the desired shade, despite it being dearer than knitting with different coloured yarns. Consequently, shop orders are delivered worldwide within 13 to 27 days. Koreas sports shoe subcontractors experienced a chronic recession when Nike, Reebok and LA Gear switched to South East Asian and Chinese suppliers as wage levels rose (Business Korea, 1992). In Denmark, Ecco makes in excess of 7 million pairs of shoes per year, with the soles automatically moulded and attached to the uppers under robotic guidance at a single process stage. Notwithstanding, the labour-intensive

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uppers come from India or Indonesia (Slack et al., 2001). Brazil boasts the worlds third biggest footwear industry, immediately behind China and Italy. Attacks by cheaper Chinese products have weakened it considerably (The Economist, 1995). Quality problems and a lack of brand names stalled attempts to move upmarket and tackle Italian and Spanish competition. One commentator believes rms should capitalise on their capability to turn export orders around quicker than the Chinese can. Abernathy et al. (1999) also discovered the textiles category had moved away from supplying fabrics to clothing manufacturers. Instead, it sells nished articles like sheets, carpets, and socks directly to Americas retailers. High-variety items with a fashion component are a bonus. Technical and speciality textiles for industrial clients represent promising opportunities, which German and Japanese companies have grasped (Young et al., 1992). Norways textile sector has declined steadily (Espeli, 1997), but the successful rms achieved technological or market breakthroughs, by focusing on particular industrial groups or consumer product niches. Examples include ropes and nets for shing eets, armoured textiles for the navys minesweepers, and an internationally recognised brand of quality knitwear, sleeping bags, and feather doonas. Research approach and scope The aim of the research was to document how the Australian TCF industry has responded to the forces of globalisation. Current statistics on imports and employment are depressing, but many local participants endure and certain strategies must work. Hence, a selection of case studies was compiled. Judgement is required about a good sample size (Eisenhardt, 1989). If the number is too small results can be biased. Equally, the researcher can be overwhelmed by the data. In fact, the project involved over 30 (varied) companies. Thumbnail sketches appear in the Appendix, whilst three cases are highlighted in the main text to illustrate the overall nature of the investigations and the rationale behind the generic conclusions. Each case comprised a written record of an open-ended conversation with a senior executive. For reference purposes, a checklist of topics was on hand. Interviews were supplemented, whenever feasible, by a plant tour. Occasionally, a follow up telephone call was made to clarify a point or expand a line of inquiry. Amongst the topics raised were the organisations history, business and manufacturing strategies, products, manufacturing processes and production system, main market segments, chief sources of competition, and the corresponding impact of tariff reductions. Further questions depended upon the relevance of overseas-based activities and operations. Fawcett (1992) provides a foundation for categorising and comparing manufacturing strategies. The low cost strategy locates production in cheap labour countries. However, the intention is to ship the nished goods home to cater for the domestic market. On the other hand, the market access strategy aims to penetrate individual foreign markets. Multinational corporations maintain a manufacturing presence within each nation state or trade bloc to circumvent import barriers, to reduce transport and warehousing costs, and to facilitate all aspects of customer service. In the modern era, it is imperative to establish a global supply network (Canel and Khumawala, 1997), dened as a coordinated resources management, production, and logistics system. The global strategy combines the tactics and benets of the previous two strategies, and is driven by cost leadership ambitions. Thus, for all nal and

intermediate product destinations, the best sources of nished goods, feeder components, and raw materials are determined by appropriate least landed-cost calculations. The defender strategy is designed to maintain an existing Australian manufacturing presence by virtue of warding off intense competition from imports (supposedly via world-class productivity). Hence, a key component of the investigation is to discover exactly what tactics these exemplary companies deploy. At the same time, the new trade environment is meant to push any domestically oriented rm into becoming an exporter. Therefore, it is necessary to distinguish between cases that adopted this stance as a reaction to globalisation, and those where pre-existing motives hold sway. A sixth possibility to emerge is the importer strategy, whereby an ersatz manufacturer buys badged goods from an offshore supplier (like the retail chains house labels). The enterprise makes no real manufacturing contribution, and relies on its quality assurance, sourcing, and logistical capabilities, and perhaps the brand name, for competitive advantage. In practice, a mixed bag of several strategies may apply across a rms complete product range and market spectrum. Three representative cases Textiles (case 4) A privately owned Canadian company acquired the bedding side of a large Australian textiles group and rationalised operations. The subsidiary is the Australian markets biggest player and is more or less independent. Plain fabrics are woven at the South Australian mill on three shifts. A high proportion is shipped to Tasmania for pattern printing. This sister plant uses rotary metal screens, somewhat akin to newspaper production. All nished materials return for the labour-intensive hemming process, which converts them to nished goods such as sheets, pillowcases, quilt covers, eiderdowns, blankets, curtains, etc. for the bedroom, and towels, robes, etc. for the bathroom. Outworkers produce the simpler lines. Product variety amounts to 12,000 distinctive items, many with matching fabrics, but not all in current production. There are two new ranges per label per year, and one label for retail and another for commercial clients like hospitals and motels. Design amounts to a major activity. Six major retailers plus about 50 smaller commercial clients dominate domestic sales. The normal competitive advantages are design (aesthetics), top quality, and customer service (an extensive product selection combined with fast deliveries). Large orders have three weeks lead time (one week if prior notice is given). Otherwise, all requirements are delivered ex stock within 48 hours. Major retail chains get split deliveries straight to their individual stores, with the option of bar-coded price labels. The Bill of Materials starts with ve basic yarns (in several colours), which in turn explodes into 25-30 basic textiles. Printing and hemming adds most of the diversity. So, the secret is accurate prediction of the aggregate demand for particular textiles and designs, followed by a quick reaction to the detailed order mix. The Canadian operation does not export. However, 40 per cent of Australian sales go overseas. The USA takes the biggest cut. Yarns and certain high volume base materials (to provide volume exibility) are imported and paid for in US dollars. Therefore, American sales are vitally important to avoid exposure to a worsening exchange rate. At present, the Canadian facility hems North Americas orders. Soon it will be upgraded to print patterns straight from electronic designs. Then only plain

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rolls will be shipped from Australia. The investment will slash inventory costs and improve customer service, because the shorter planning horizon for actual fabrics will make demand forecasting easier, plus the lead time for stock replenishments will contract. The previous strategy was to slash the product range and focus on the top (quality) 5 per cent of the market. This was risky, as the mill had to be an extremely successful exporter to generate enough volume to be protable. The supply vacuum was immediately lled by cheap Chinese imports, due entirely to the initiatives of local buyers. To recapture the medium price and house label segments, management introduced simpler designs in fewer colours using inexpensive base textiles. A similar range was launched in New Zealand, whence hemming, and subsequent dispatch of orders by airfreight, was outsourced to a subcontractor in Fiji. Now these goods are earmarked for Australia. In the middle section of the market, the big buyers exert pressure with regard to both price and exibility. The factory repels imports on the basis of lead times and customer service but must still accept poor margins. Therefore, the company opened 25 shops located within department stores, and the number is growing. These outlets consume 20 per cent of production. Similar moves are afoot for Hong Kong, the USA and Japan, but warehouse type premises will be rented to keep the running costs down.

Clothing (case 18) Formerly, the government ran this facility as part of the Australian Defence Industries group. Shortly before privatisation a lot of money was spent on capital equipment to make the concern attractive to potential buyers. The new owners (the CEO and another individual) reinvested prots in CAD-CAM and further process automation. Product innovation is a strongpoint, so research and development is a major activity. Contracts are obtained by submitting bids, whence all products are custom designed and made to order. Furthermore, many products must be certied as meeting US or European standards before they can be exported. Management avoids depending on lines where labour charges dominate. Hence, two thirds of a re coat and 60 per cent of a ying suits costs are swallowed up by raw materials charges. Half the sales are still defence oriented, including various dress uniforms, basic shirts, quality trousers, army slouch hats, coveralls, reproof ying suits, protective suits against chemical warfare, and different combat outts. The factory worked at out to ll a recent order for Desert Print suits that the army urgently required for Afghanistan. Uniforms are a mix of standard sizes and made to measure. A third of the business consists of high tech protective apparel, like ballistic vests, jockeys lightweight impact vests, stab-resistant clothing, and special coats for re brigades. These garments are all custom engineered for individual clients. The nal product group is corporate wardrobes. The factory wants to be a one-stop shop and emphasises exibility with 16-18 completely different products. Nevertheless, a few items like scarves for corporate uniforms are imported. The operation commands the lions share of the nations military market, whilst exports amount to approximately 10 per cent of turnover. The latter include ballistic vests for police forces in Thailand, Vietnam, and China, Nomex ying suits for Thailand, Pakistan, and Indias air forces, and coveralls for Singapores navy.

There are 80 core clients. The three arms of the Australian Defence Force are the keys to success, along with the New South Wales and Queensland (state) Fire Services and Australia Post. Further tariff cuts may affect the corporate sector. However, due to national security issues, certain military purchases will always be Australian made. Military and protective apparel has a relatively long life, and even the corporate wardrobes have a two- to three-year span. So, a lot of the orders are repeats. And when it comes to big ve-year contracts the business has a clear competitive advantage. It can offer a superior service by holding consignment stocks, and then packaging and delivering the garments to the customers dispersed network of sites. In fact, management will not bid for the one-off contracts unless they relate to defence. Normally, the order lead time is four weeks, provided materials are in stock, although only one week is spent in manufacturing. The factory layout features ten specialised manufacturing cells, where teams produce a mix of small orders (say 200 shirts) under a exible, quick response JIT system. Multi-skilled machinists stand up to work within a certain (overlapping) band of stations. Workers progress a single garment down the line until meeting the next operator, before returning upstream as far as their rst station. Processes are automated whenever possible. For example, a German machine that attaches pockets replaced six workers, whilst another from Great Britain seals the seams on weatherproof garments by applying a clear tape. Considerable process knowledge is required as military standards are exacting. Footwear (case 30) This privately owned manufacturer of mens shoes introduced a casual clothing range (shirts, rugby tops, jeans, trousers, outdoor jackets, etc.) as insurance against the negative impact of tariff cuts. No retailer would buy the apparel. Therefore, the company opened retail outlets to promote the brand to the public. Soon the factory had to produce ladies shoes to broaden their stores appeal. The brand is the market leader for its type of mid-price mens shoes, still a minor player in clothing, and a newcomer in womens footwear. Accordingly, the captive shops take 60 per cent of garments, 30 per cent of womens footwear, but a mere 15 per cent of the mens shoes. Otherwise, several major retailers dominate sales, although the smaller footwear chains and independents are important too and offer better prospects. The main competition is from the big clients house brands made offshore, so the corresponding margins are less attractive. Also, these buyers are unpredictable. Smaller rms are more loyal, so aggregate sales forecasting is easier. There are some exports to Asia, but the company makes no real effort there because of the potential for copying the brand. It did target the USA for a while. Unfortunately, the marketing department could not afford the sales practices of powerful rivals like Timberland, Rockport, and Ecco. With various colours, but excluding sizes, there are 60 different male plus 20 female models. The styles are classed as basic. Typically, the mens lines run for four seasons (two years) and the womens for two seasons. The 60 clothing lines are either basic (three or more years) or seasonal (one season). Success as a manufacturer depends on good product quality, supported by customer service, certainly not price. Customer service means plenty of choice and a quick turnaround of orders. Small stores receive advice on each models potential sales, and can take advantage of a stock replenishment service, whilst their credit is extended for 60 days after a delivery is made.

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The shoes are still made at the Australian plant but subcontractors in China supply the majority of (labour-intensive) uppers. This make or buy decision weighs the comparative costs (certain boots take 60 minutes to stitch) against the models demand volatility. Either way, US-owned tanneries in China or Korea provide the leather. For quality reasons, the soles are cast or injection moulded in house, although the moulds are purchased outside. The capital-intensive machinery runs three shifts per day. Finally, small batches of uppers and soles are assembled into shoes and nished. When production was entirely local, a JIT schedule lled indent orders. Now overall lead times are much longer, and general inventories must be replenished to meet forecast sales. The rm designs its footwear and clothing on a CAD system but garments production is entirely outsourced. Furthermore, all pattern-making and grading of shoes occurs in house, whilst a local rm looks after the clothing side. CMT arrangements apply to clothing subcontractors in Fiji and Australia. However, large integrated groups in China specialise in particular materials, and subcontractors there acquire cheap fabrics of excellent quality from their own textile mills. Discussion of results Most textile mills display the twin strategies of defender and exporter. The heart of their manufacturing is capital-intensive, which affords a degree of protection against imports from cheap labour countries. Nevertheless, given the limitations of the domestic market, substantial exports are mandatory in order to reach a protable volume. No textile case relies on supplying basic fabrics to conventional garment manufacturers. Rather, these companies produce nished goods and deal with the retailers directly, or else focus on client groups that belong to selected industrial sectors where they possess appropriate technical expertise. The clothing cases tell a different story because labour-intensive assembly stages dominate production. Despite CAD-CAM and other process improvements, local factories nd it impossible to match imports on price. As tariffs fall and competition becomes ercer, the low cost strategy becomes increasingly apparent. Outsourcing is the production mode of choice and China is the standout destination. However, for quality control purposes, subcontractors in Indonesia or Fiji are sometimes preferred. Still, plenty of defenders remain. The evidence suggests that domestic production thrives best in niche markets involving custom design, supported by exible, small batch production with a rapid turnaround of orders. In general, this translates into various uniforms (military, school, corporate, protective, sporting), which may include a made to measure component. Such a exible scenario is unsuited to the cost-oriented importers or their suppliers. By the same token, Australian-based manufacturers face similar hurdles when trying to compete against the locals in overseas markets. So, it is hardly surprising that exports contribute very little to sales. The featured case constitutes the exception. Technologically advanced products transcend most barriers, especially when the prime issue for potential buyers is the wearers physical wellbeing. Footwear represents the intermediate situation. Soles and heels manufacture can take advantage of sophisticated (CAD-CAM) mould design systems and capital-intensive production equipment, but uppers are still labour-intensive. The upshot is that uppers production has largely gone overseas to low cost subcontractors. However, if soles are moulded in house, or obtained locally, a parallel defender strategy applies, with subsequent assembly and nishing steps retained too. Conditions

pertaining to exible small batch production aid these defenders. Notwithstanding, when uppers production goes offshore the remaining processes tend to follow sooner or later. Quick service, minimum stock levels, and fewer stock outs are welcome, but there comes a point where such advantages play second ddle to the attraction of cheaper shoes. Semi- protected niche markets exist for work/safety boots and school shoes, since durability and comfort really counts here. Moreover, the successful boots manufacturer is the lone exporter, with a domestic plant that still produces the bulk of the uppers, thanks to a market share that supports investments in process automation. In this context the market access strategy is only germane to locally owned businesses (the foreign subsidiaries once followed the same course when targeting Australia). Even so, it is rarely employed. Note that case 3 was forced to react to the imposition of tariffs, whilst case 21 holds a fortuitous competitive advantage (Australia is associated with surng). More signicantly, various organisations used cheap sources (established under low cost and importer strategies) to export to third countries, or else licensed the subcontractors or other interested parties to exploit foreign markets on their behalf. No Australian corporation has sufcient scope to implement a global strategy. Nor does this option benet the local operations of foreign multinationals. In fact, the global strategy caused two such factory closures, whilst the third plant affected cannot supply markets outside the immediate region. On the other hand, many local producers implemented the importer strategy. This secondary activity affords downmarket versions of the core range, or expands the available product variety via complementary lines (non-core, no manufacturing capability). There are plenty of illustrations of ongoing process improvements (CAD-CAM, automation, JIT, etc.). Yet in order for local production to stay viable a mix of supportive factors must take some pressure off selling prices. Product and/or process technological innovations are important (as previously mentioned), along with certain aspects of design that result in a strong brand name (own or licensed) and a reputation for high quality goods. Moreover, certain circumstances favour close contact between manufacturer and customer. These include custom-engineered or custom-designed products and, as far as standard items are concerned, a fast stock replenishment service with small minimum order quantities. With their long lead times, importers experience difculties in supplying a high variety of similar or matching goods on such a frequent basis. The problem is exacerbated if a (volatile) fashion element is present. In addition, importers lack the resources to service a network of individual sites for major commercial or industrial clients. Vertical integration along the supply chain helps too. Backward integration cuts costs, but forward integration is more prevalent. A chain of shops can generate a large share of the prots, whence manufacturing operates as more of a cost centre. Finally, a few (private) companies accept lower margins to hold on to their domestic market share. Conclusions The Australian government always believed that tariff cuts would result in a contraction of the TCF industry. However, it would consist of world class manufacturers that were also export oriented. So far, these have not been the most obvious outcomes, although many survivors introduced some degree of process automation and other productivity improvements. In general, the successful operations involve niche market segments or technology based, unconventional applications.

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Moreover, there appear to be far better opportunities for textiles than in clothing and footwear. On the down side, this means that a large portion of the mainstream TCF industry has been lost. Such ndings are in broad agreement with the reports about other developed nations, except that by and large Australias fashion-basic garments have already succumbed to attacks from cheap imports. All this leaves just a small fraction of the total domestic market for local suppliers to share. Exports have failed to come to the rescue. The textile rms are active, but these resilient mills always found the domestic market to be uneconomic and did not need any jolting by tariff reform. Meanwhile, the majority of clothing and footwear manufacturers struggle to repel imports, and are in no state to tackle the same competition on less favourable ground. To make matters worse, the tactics that they employ at home may work against them for exports. Australia is a remote island with a small population, so size and distance play their part. Typically, even successful Australian-owned businesses lack the nancial resources necessary to promote consumer goods heavily in faraway overseas markets. Therefore, licensing is sometimes a more practical alternative. In fact, the clothing and footwear manufacturers responded logically to intense market pressures. The majority of clothing and footwear production remains fairly low tech and Chinese producers have intrinsically lower cost structures. Therefore, production was transferred offshore, but rather than invest in new plants, the threatened rms opted for subcontractors. Such arrangements are exible, and incur negligible strategic or nancial risk. The different contracts (badging, regular subcontracting, and CMT agreements) reect the nominal makers contribution to the total manufacturing process. Obviously, there is less scope for this sort of division where textiles are concerned. The government opined that increased foreign competition would lead to lower prices for consumers. However, the wholesale switch to the low cost strategy was unexpected, and a viewpoint exists that the principal outcome (for footwear) has been greater company prots (Porter, 2003). Tariff reductions prompted the chain stores and certain opportunistic middlemen to go offshore and bring in cheaper goods. This was accompanied by the rapid growth of house labels. Thus, the big retailers infringed on territory that belonged to their local suppliers. Now many of these manufacturers have managed to turn the tables and become more like the retailers. Besides outsourcing production, they import various ranges of badged goods, or have even moved forwards along the supply chain to embrace retailing itself. Thus, instead of striving to become world class producers, these companies have taken the necessary steps to adjust the scope of their activities and to lessen the previous dependence on straight manufacturing capabilities.

References Abernathy, F., Dunlop, J., Hammond, J. and Weil, D. (1999), A Stitch in Time: Lean Retailing and the Transformation of Manufacturing Lessons from the Apparel and Textile Industries, Oxford University Press, New York, NY. (The) Age (1997), Tariff cuts threat prompts Berlei closure, The Age, 14 August. (The) Australian (1999), Levi cuts its cloth, The Australian, 24 February. Business Korea (1992), Wearing out fast, Business Korea, November, p. 33.

Buxey, G. (1999), Shaping manufacturing strategy: government policy and the textiles, clothing and footwear industry, Proceedings of the 3rd International Symposium on Multinational Business Management, Nanjing, December 10-12, pp. 245-63. Canel, C. and Khumawala, B. (1997), Multi-period international facilities location: an algorithm and application, International Journal of Production Research, Vol. 35 No. 7, pp. 1891-910. Cheng, A. (2002), Fading icon heads down Mexico way, The Age, 10 April. Colebatch, T. (1997), Crying woman a telling picture in tariff debate, The Age, 15 March. (The) Economist (1995), Making shoes in Brazil: not just a load of cobblers, The Economist, 24 June, pp. 63-5. Eisenhardt, K. (1989), Building theories from case study research, Academy of Management Review, Vol. 14 No. 4, pp. 532-50. Espeli, H. (1997), Protectionism, lobbying and innovation: perspectives on the development of the Norwegian textile industry, Scandinavian Economic History Review, Vol. 45 No. 3, pp. 257-75. Fawcett, S. (1992), Strategic logistics in coordinated global manufacturing success, International Journal of Production Research, Vol. 30 No. 5, pp. 1081-99. Garran, R. (2000), Textile jobs under threat, The Australian, 19 July. Gettler, L. (1999), PacDun to get rid of its factory operations, The Age, 28 April. Hill, T. (2000), Operations Management: Strategic Context and Managerial Analysis, Macmillan Press, Basingstoke. Kennedy, A. (1998), Tottering TCF takes yet another beating, Business Review Weekly, 19 January, pp. 44-6. McCallum, J. (2001), Textile revival, Business Review Weekly, 10 August, pp. 58-61. Mahoney, D., Trigg, M., Grifn, R. and Pustay, M. (2001), International Business: A Management Perspective, 2nd ed., Prentice-Hall, Frenchs Forest. Porter, I. (2003), Shoe importers proteering, The Age, 19 March. Slack, N., Chambers, S. and Johnston, R. (2001), Operations Management, 3rd ed., Prentice-Hall, Harlow. Young, S., Kwong, K., Li, C. and Fok, W. (1992), Global Manufacturing strategies and practices: a study of two industries, International Journal of Operations & Production Management, Vol. 12 No. 9, pp. 5-14. Appendix (1) Knitted polyester fabrics for lace and sheer curtains, drapes, blinds, bedspreads, etc. A defender based on a huge range of matching products with a stock replenishment service for retailers. Exporter, to run the mill close to full capacity. An importer of complementary woven and cotton lines from Indonesia and Europe. (2) Woven wool carpets. UK parent with plants in UK, Portugal and India. A defender based on top quality and custom design (80 per cent of sales). Price is still important. CAD-CAM and productivity improvements, with an advantage in weaving speed (parent manufactures the looms). Major exporter, although parent imposes restrictions. Soon to become an importer of standard lines from the Indian factory. (3) Woven automotive fabrics; technical textiles for tarpaulins, conveyor belts, horse rugs, cinema upholstery, protective garments, uniforms, etc. A defender involving quality accreditation, custom-design, and quick service to motor manufacturers, and process know-how for technical textiles. CAD-CAM applications. Production made to order.

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(5)

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(6)

(7)

(8)

(9)

(10)

(11)

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Exporter is a minor strategy. Joint venture plant to open in India due to the Governments protectionist policies. Sheets, pillowcases, quilt covers, valances, eiderdowns, curtains, etc. for bedrooms and towels, robes, etc. for bathrooms. Canadian owner. A defender and exporter featuring elements of the global and low cost strategies. Mens socks. A defender focusing on brand name, innovative designs (performance and aesthetics), quality and value, plus superior customer service (pre-pricing and rapid stock replenishment for major clients individual stores). Targets the top market tier and ignores the biggest segment. 600-800 items, mostly for stock. A quarter of the items are fashion-oriented and a new range launched every six months. An exporter to USA and UK but an importer of pantyhose from Italy and underwear from China. Purchases ladies and childrens socks from local manufacturers. New (CAD-CAM) knitting machines and dyeing and nishing facilities installed. Woven fabrics for automotive, transport and furnishings/upholstery sectors. A German multinational with relatively few clients. Targets the motor vehicle builders in particular. Products are customer specic and made to order in high volumes. A defender that competes on design quality, a fast, reliable service, and price. Parent prohibits exports. Polyester fabrics for civil engineering (drainage) applications. Established jointly by a South African and an Austrian company, using technology licensed from France. Consisted of 10-15 grades (densities) produced mainly for stock in various lengths and widths. Importers only stock three or four grades. This defender has product variety and exibility, backed up by an engineering design service and on site deliveries. An exporter, but the Austrians protect their Malaysian factorys sales. The licensor imposes further limitations. Replacement clothing for papermaking machines. German company bought the facility from its American founder. Products are highly engineered and very expensive. Custom designed and made to order to produce a particular type of paper on a specic machine. A defender, stressing innovation and quality (durability, characteristics imparted to the paper, energy saved in the papermakers process). An exporter too, as 70 per cent of sales go to Asia. Tie fabrics, ties, scarves, pullovers, tunics and blazers. Family business with two market segments school uniforms and club/corporate wear. The designs are customer specic, but patterns are standard with minimal fashion content. A defender whose strength is exibility (quick design and delivery of very small orders), supplemented by quality and convenience (one-stop shop). CAD-CAM improves general productivity and the designs aesthetic quality. Male and female briefs; ladies lingerie including sleepwear. Currently split between the defender and low cost strategies. Output custom-made for several large clients own labels. Most briefs are Australian made by a highly automated process. The higher volume, basic lingerie outsourced to China. Soon everything will be made in China, after contractors receive the textile machinery on loan. Complete range of ladies, mens, childrens and toddlers fashions. Family business. Has a design team serving proprietary and major retailers labels, but never involved in production. Targets bottom of the market via a low cost strategy using subcontractors in China. Specialist in denim, silk, satins and crepes. Fashion house with a low cost strategy. Short runs of high fashion lines sourced from domestic subcontractors. Larger orders placed with Chinese rms. Provides patterns, process instructions, fabrics and trim. Competes on design and outsourcing ability. High proportion of sales in own shops.

(13) School shirts, uniforms. Family business. A defender based on brand name, quality, and a stock service to retailers. Computerised some operations. Made nancial sacrices to retain local production. Therefore, eschews cut price chains. (14) Business and casual shirts. Family business. Low cost strategy uses subcontractors in Indonesia and China. Formerly, invested in CAD-CAM and process automation and settled for lower margins to retain high-variety, low-volume fashion lines. Basic shirts outsourced offshore. Then gave up ghting imports. Licensed Indonesia supplier to market shirts in its region. In China, joint venture with a large retailer sells locally made shirts. (15) Worsted mens jackets, trousers, suits and ladies jackets, slacks, skirts, kilts. Targets a conservative, upper market niche. Volume manufacturer company shops take the bulk of production. A defender based on brand name, quality, and made to measure (declining), plus a little contract work (military uniforms). Long time CAD-CAM user. Low cost strategy, whereby cotton casual, and cream lawn bowls sporting trousers made by CMT subcontractors in Fiji and Indonesia (different label and greater prot margins). (16) Industrial clothing, uniforms, and fashion jeans. A defender citing brand name, quality and a distribution network offering a stock service to large industrial customers. The typical client is spread over many sites and its logo is embroidered on garments. Central CAD-CAM facility. JIT methods at factories. Low cost strategy covers non-core products with a new label. Chinese, Indonesian, and Fijian subcontractors replaced local rms or in house production. Importer is a minor strategy that includes cheap jeans and safety footwear from China. (17) Jeans and related fashion items. US multinational with global (Asia-Pacic region) strategy. Design and raw materials sourcing undertaken in Japan. Local plant supplies Australia/New Zealand. An efcient volume jeans manufacturer competing on brand name, top quality, and a customer (stock) service. Four stable ranges correspond to different quality/price levels. Bottom range sports another label and is outsourced to subcontractor in Fiji. Fashion items (mainly) from a rm in Pakistan. (18) Military, protective and corporate apparel. A defender and exporter emphasising product innovation, process know-how, and superior customer service. CAD-CAM and process automation. Products custom designed and made to order. (19) Ladies wear (blouses, skirts, dresses, tops, T-shirts, etc.). UK manufacturers subsidiary produced 500 styles per year, 60 per cent new designs. Output was customer specic and made to order for Australias large retail chains. Business very price competitive. Closed factory, adopted the low cost strategy, and outsourced production to Sri Lanka. (20) Cricket and hockey gear and footwear, and sports bags. Manufactures balls and sticks but is an importer of complementary TCF products from India, Pakistan and China to exploit the brand name. The foreign suppliers are licensed to use the label overseas. (21) Wetsuits, surf wear, skiwear, plus lifestyle apparel and accessories. Combines market access, low cost, importer and defender strategies. Maintains domestic operations for wetsuits and established wholly owned (in Mexico, for USA) and joint venture factories (in France) to ensure top quality backed up with good customer service. Ceased Australian clothing production for more outsourcing in Fiji and China. Penetrates smaller overseas markets by granting licenses to local businesses. Skiwear badged by manufacturers in China, Hong Kong, Korea and Thailand, since processes are labour-intensive and company lacks the required expertise. Several retail outlets at home and in France. (22) Riding jackets, waistcoats, jodhpurs, breeches and shirts. Struggling small business. A defender based on quality and a stock service, along with contract manufacturing for

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fashion houses and public authorities (uniforms). Tries to be an exporter, but lacks adequate nancial resources. Football jumpers and school sportswear. Family business. A defender, holding the exclusive license to supply league clubs with ofcial playing kit. Produces small custom orders of jumpers and buys the shorts and socks. School sportswear is a sideline high quality rugby tops with individual logos. Fabrics knitted in house, on fully automated machines. Sports type clothing (mainly for schools) and school uniforms. Mixes defender and low cost strategies to compete on price. Small lots made on site, materials for medium-sized runs cut on CAD-CAM facility and sewn by local subcontractors. More standard jobs go to China, but may be screen-printed (customised) in house. A network of company shops is located in schools and shopping centres. Sports clothing and footwear. Belongs to German multinational and responsible for South Pacic regions sales. A corporate global strategy terminated local production in favour of subcontractors in China and Fiji. Sports clothing and footwear. German multinationals licensee. Mixes low cost and defender strategies. Transferred footwear production to Asian subcontractors, and sold clothing factory to a dedicated supplier. Domestic garment production relies on brand image, fashion, custom design, and a stock service. Most (standard) lines outsourced to China, Fiji, and the licensors international division. Slippers, and inexpensive runners and casual shoes. Part of a big TCF group. High volume runs of a minimum number of styles. Amongst the rst to adopt the low cost strategy to protect domestic market share. Chinese joint venture plant safeguards special moulding know-how. Lines not requiring this process given to Chinese subcontractors. Third country exports signicant. Women and teens fashion shoes. Same group as previous case. Initially, kept local production by dint of strong brand name, fashion designs, premium pricing, and quick delivery of small orders. Later, sourced uppers offshore. Finally, shut plant and converted to a low cost strategy using subcontractors in China. Importer of (non-core) soft slippers from China. Rubber soles and heels. UK owned components supplier. CAD-CAM for high variety moulds. A defender promoting fast turnaround of customer-specic components and better conformance quality. Ladies fashion takes 85 per cent of output. Small export volume includes old domestic clients who moved offshore. Men and ladies casual and semi-dress shoes, casual clothing. Combines defender and low cost strategies. Most uppers made in China. Work/safety, walking and urban boots. Group contains dedicated tannery. A defender based on brand name, quality, price and a stock service for retailers. Patented certain boot features. Volume production incorporates JIT approach. Continuous process improvement includes CAD-CAM, automation and mechanisation. Much equipment made or designed in house. Exporter to boost output and justify expenditure. Mens dress and casual shoes. American multinational assumed control and introduced its up market label. Obtained uppers from India but kept shoe production in Australia due to brand name, quality, process upgrades and a network of captive shops. Later, applied a global strategy and closed factory in favour of Mexican operations. Importer of complementary golf shoes and work boots from China. Casual and formal womens footwear. Family rm and defender whose strengths were brand name, quality and quick deliveries in a fashion oriented market. Two retail outlets. A total of 20 per cent of uppers and 10 per cent of shoes (for technical reasons) came from

China. By the time business sold to a big shoe retailer low cost option dominated, with 80 per cent of shoes outsourced to China. (34) Children and adults shoes. UK parent restricts exports. Core lines are school shoes. A defender competing on quality and comfort (more sizes, different widths). Flexible processes accommodate quite different ranges. So, automation seldom feasible. JIT system applies. Subcontractors in Fiji and China supply uppers, and cheaper shoes from Fiji using Brazilian leather and a new label under low cost strategy. Importer of badged alternatives from China (normal ttings) for bottom of market. Famous US mens brand produced under license (in Fiji) using own designs. (Geoff Buxey teaches Operations Management and International Business on Deakin Universitys MBA and BCom programs. Previously, he worked in the US electronics industry as an engineer, was a member of staff at Bradford University Management Centre and then Glasgow University in the UK, and spent a year in Brazil as a Visiting Professor at UFSC. He has served a term on the Editorial Board of the International Journal of Production Research.)

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