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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.

The garments industry started as a cottage-type producer of dresses and


other wearing apparel in the 1950’s. Although garments were produced in dress
shops and tailoring shops, the bigger volume was home sewn and undertaken in
cottage-type production outfits.

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).

Two distinct types of firms availed of these investment incentives: those


under the embroidery board operators and the non-embroidery board operators.
While the latter catered to the domestic market, embroidery board firms served the
foreign market. In the wake of the utilization of local raw materials, export activities
of the operating firms grew and new garment factories were established. Export
quota allocations from the country’s major trading partners, namely, the United
States, the European Economic Countries and Canada further bolstered the
industry’s export orientation.

The introduction of ready-to-wear (RTW) garments in the 1970’s ushered in a


new era for the industry. Consumers elsewhere in the world followed the fashion
trends in the US and started to buy RTW clothing.

A bigger number of entrepreneurs, mostly from the Southern Tagalog, region


joined the industry and started as contractors and sub-contractors of big garment
manufacturers in Metro Manila catering to the export market. In order to fill in the
voluminous volume of orders from importers, garment manufacturers in Metro Manila
delegated the most labor intensive part of production like embroidery, hemstitching
and monogramming to the sub-contractors in the region.

1.0 PERFORMANCE OF THE INDUSTRY AT THE


NATIONAL LEVEL
The Philippine garment industry is the second largest export industry in the
country, generating export sales of $2.26 billion in 1998, which was 7.6% of total
exports during the year.

The garment sector consists primarily of subcontracting operations for


international brands. Over the last few years, the growth of garment export has been
marginal and its contribution to total exports has been on a decline. The sector is
driven primarily by low-cost labor and quota allocations from major markets (75% of
garment export go to quota countries _ USA, Europe and Canada).

1.1 Gross Value Added and Contribution to GDP


Garments reported value added amounting to P11,881 million in 1995, up by
a minimal rate of 8.1% from the GVA reported in 1994. The sector’s contribution to
the manufacturing sector ranged from 5.3% in 1991 to 5.8% in 1995. Its
contribution to GDP, however, remained constant at 1.4% from 1991 to 1994 and
increased slightly to 1.5% in 1995 (Table1).

Table 1.

Gross Value Added in Garments :1991-1995 ( In Million Pesos)

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.

1.2 Demand Conditions


1.2.1 Imports

Philippine garment imports reached $2.2. billion in 1995 at an average


growth rate of 41% from 1991 to 1995 and by 3.7 % in 1996. Imported garments
came mainly from Hong Kong, United States and Taiwan. Despite the drop in US
imports in 1994, US imports still registered the highest average growth for imported
fabrics of almost 78% from 1991 to 1995. As shown in Table 2, this trend was
however reversed in the following year when imports from the US registered a
decline of almost 78%. Recent imports were from Hong Kong, China, Italy and
France.

Table 2.

Growth Rates of Garment Imports by Country and by Year: 1991-1996

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.

Cotton Shirt/Blouse Imports (Jan.- June 2000)

1.2.2 Exports

Garments made up 17.7% of the total Philippine exports of US$15.7 billion in


1995. In the following year, its contribution to total Philippine exports dropped to
13.37% brought about by a reduction of exports to only US$2.74 billion (Table 4).
A total of 1,200 export firms exported $2.74 billion worth of garments in 1996 and
$2.95 billion in 1997, or an increase of 10%.

Table 4.

Total Export Contribution of the Garment Industry: 1995-1998

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.

Among other export destinations of Philippine garments were Great Britain


and West Germany which had comparative shares of almost 30% each of the
$390.08 million exports. Benelux and France were likewise top export destinations
accounting for 15.6% and 11.4%, respectively. Table 6. presents the major importing
countries of Philippine garments.

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.

The industry is largely reliant on imported fabrics because of limited textile


production, especially fine woven fabrics. While local value added has increased to
almost 50%, majority of the garment exporters, especially SMEs, still operate on
CMT arrangements, thereby reducing their response flexibility.

Growth of exports

The GTEB reported that as of December 2000, exports grew by nearly 12


percent in the first 11 months of the year as more Filipino apparel makers complied
with quality and ethical manufacturing standards. Exports rose to $2.917 billion from
January to November in 2000 from $2.610 billion during the same period in 1999.
The Philippine reputation can be credited to those making quality apparel for global
brands such as GAP, Polo, Ralph Lauren, Ann Taylor, Liz Claiborne, Jansport, Nike,
Sears and Disney.

Aside from adhering to their strict quality standards, Philippine garment


makers have shown their strict compliance with ethical manufacturing standards
such as regulations against child labor and the mandatory installation of clean and
safe working conditions in factories. Foreign buyers conduct surprise visits to
factories to check the garments makers’ compliance with ethical standards, including
the availability of fire extinguishers and fire escapes, cleanliness of shopfloors, and
payment of social security premiums and benefits to workers.

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.

2.0 STRUCTURE OF THE INDUSTRY

2.1 Industry Players

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.

2.2 Size and Competition

The apparel business is a massive industry that spans global interaction to


produce a wide variety of products. Short fashion cycles, labor intensive production
and the fragmented nature of the market interplay to create a complex environment
of competition and a highly demand driven market. Within the value chain,
manufacturers or retailers compete as suppliers and users.

From 1995 to 1996, domestic production, net of $2.5 billion of export


garments, provided goods worth $9.7 billion representing 32.5% of the total gross
revenues of large wearing apparel establishments amounting to $29,864,723. Half
of these were manufactured in the NCR. Direct exports made up a significant 64%
with its gross revenues of $19,239, 332. An additional 4% were generated by export
subcontractors resulting in a total of 68% of total revenue accounted for by the
export market.

As seen in Table 7, the women’s, girl’s and babies garments segment


accounted for the biggest amount of revenues equivalent to almost 50%. This was
followed closely by ready clothing manufacturing, not otherwise classified, totaling
$10,184,844 or 34%. Men’s and boy’s garments manufacturing comprised only
10%. Custom made clothing added up to less than 1 percent of total revenues.

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

2.3 Products and Services

Garments manufacturing involves the production of apparel and non-apparel


items (Refer to Figure 1: Wearing Apparel). It generally produces clothing or wearing
apparel for the domestic and export market. A wide variety of product classes are
offered in the market in terms of material fabrication, product usage and user
demographics. User classification as to age and gender consists of men, boys,
women, girls and infants garments. Product usage category refers to shirts, blouses,
coats, jackets, nightwear, etc. Textile material fabrication classifies products into
knits and woven apparel. Table 9 presents the general classification of the wearing
apparel segment

Table 9.

Garment Industry Wearing Apparel Product Chain


Different product offerings in terms of styling, (basic and fashion) and other
intrinsic values as to fit, care, and sizing compete in the marketplace. Extrinsic
offering in terms of price (low value, designer), branding and garments presentation,
(i.e. display, appeal and packaging) has not only offered choices to consumers but
has contributed to the creation of mega-brands worldwide.

Custom-made services are provided by tailors, dress shop operators or


designer houses locally. Production of garments in larger volume has made
outsourcing or contracting of manufacturing at various stages of production cycle
widely practiced. This offers flexibility, specialization, and augments seasonal
requirements of the industry. Contractors are normally located in countries with
inexpensive labor supply. Services contracted include sewing, embroidery, smocking
and others. They are either independent entities or satellite operators of larger
firms. Specialty services such as product design, packaging, and drop shipping
create value-added services to the chain.

2.4 Supplier – Buyer Dynamics

The Philippine apparel industry is characterized by many sellers and buyers


contributing little individual shares in the market and having little control on total
industry output, for both domestic and export market. The industry is generally
demand driven, with big wholesaler and retail group oftentimes vertically integrated
engaging in cut-throat competition. Having the financial and market muscle, they
dictate purchase price leaving little margins to volume greedy manufacturers. Price
competition is normally pursued at the low-end and budget markets.

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

Buyers consist of domestic and export buyers. Up to 80% of the garment


industry’s total domestic sales now come from mall and retail chains. The emergence
of a strong buyer groups with strong distribution systems has consolidated the huge
but otherwise fragmented local market. Specialty shops comprised of retail sales.
The figure does not include sales from traditional wholesalers which accounts for the
bulk of local industry sales (Table 10).

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.

Channels of distribution are the traditional retailers, outlets, franchisers,


wholesalers’ mail order or personal direct selling. Corporate accounts are normally
handled by internal personnel or through service sales representatives. A basic
salary, fixed commission rate or mixed scheme is generally offered as compensation
methods. Selling skills and relationship building are normal hiring concerns. Fashion
trends and technical knowledge are left to designers and production personnel.
However, garment selling is highly related to fashion. It involves a deeper
understanding of customers’ needs and taste at particular point of time in fashion
taste and technical knowledge is needed to address client needs

2.4.4 Financing Sources

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.

2.4.5 Legal Environment

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.

3.0 Structure, Conduct and Performance of the


Marketing System

3.1 Market Structure

3.1.1 Degree of Seller and Buyer Concentration


The market structure of the garment industry at the seller’s level is near
perfect competition. There were 1,154 garment exporters in 1997 located in 10
regions all over the country contributing little individual shares in the market and
exercising little control over the total industry output. The National Capital Region
(NCR) which registered 620 garment exporters controlled 49.63 percent of the total
FOB value of garment exports. The Southern Tagalog Region comprising of 264
garment exporters accounted for the second biggest share of the total output with
US$ 868,890M (29.3%) followed by Central Luzon controlling 15.65 percent.
Southern Mindanao accounted for the smallest share of the market registering
some .20 percent. (Table 11 ).
Table 11.
VALUE OF GARMENT EXPORT BY REGION (Based on TECs Issued) : As of
December 31, 1997
Data culled from the national figures of the Bureau of Export Trade
Promotions (EDP-IRC) show that garment exporters in the province of Cavite
controlled the biggest share of the total output of the Southern Tagalog Region in
1998. Firms in the province of Rizal accounted for the second biggest share with
28.5 percent. Laguna contributed almost 16 percent of the total value of exports
amounting to US$90M (Table 12).
Table 12.
FOB VALUE OF GARMENT EXPORTS BY PROVINCE SOUTHERN TAGALOG
REGION 1998
On the other hand, the buyers market are located worldwide which are
classified as quota and non-quota countries. The USA, European Union countries and
Canada took the first three biggest shares among the quota countries representing
62.86 percent, 13.19 percent and 2.06 percent, respectively. Japan maintained its
lead as the major non-quota buyer’s market with purchases of US$190,284,340.69.
Coming in close were Hongkong with US$99,298,429 and the United Arab Emirates
accounting for US$78,008,555 (Table 13).
Table 13.
FOB Value of Garments and Textile Exports (Based on TEC’s Issued): As of
December 31, 1997
3.1.2 Degree of Product Differentiation
Garments are generally classified into wearing and non-wearing apparel.
Products are differentiated in terms of style, quality of raw materials and users
according to gender and age. Figure 2 presents the detailed classification of the
different products of the garments industry.

3.2 Market Conduct


3.2.1 Price Determination

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.

3.2.2 Product Flow

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

The main source of financing of garment manufacturers are banks/financing


institutions. Some other entrepreneurs use their own money while manufacturing
sub-contractors and satellites depend on their mother companies to finance their
operations.

4.0 The Competitive Advantage of the Philippine


Garments Industry

4.1 Factors Affecting Competitiveness

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.

Labor Productivity in Textile and Garments Industries in the Asean


countries

(in US$1,000 at 1985 prices)

Investments in new machineries. Part of the explanation of the decline in


labor productivity was traced to technological backwardness – too many old
machines that were in need of replacement. It was noted, however, that the
Philippines had taken steps to address this problem. From 1989 to 1995, the total
value of imported textile machinery by the Philippines increased by 121% over the
previous nine years. While organizational set-up is efficient, the garments industry
is plagued with either technological backwardness or inability to adapt to imported
new technology. Technical efficiency, however, while positive has not been growing
at an encouraging pace.

Product development and market diversification. Firms that are inefficient


with geographically concentrated markets and lacking in product differentiation are
the most vulnerable to increased risk with the quota phase under the Multi-Fiber
agreement. Risk also increases if the country is but an assembly base with the new
rules of origin. Also with NAFTA, Mexico is capable of taking over the market share
of the Philippines. Mexico has even surpassed China as the number one garment
supplier to the United States as of 1995. Therefore, for competitiveness, firms
would need to diversify product lines and market clientele. Furthermore, they could
develop particular market niches.

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.

Having to import raw materials naturally lead to decreased competitiveness as


reflected in longer turnaround time and lesser flexibility for the local firms. This,
together with the consignment arrangement, greatly constrains the local firm’s ability
to manage the value chain. Protection drives prices of textiles to increase. To
reduce costs, as already noted, producers source their input requirements from the
illegal market. This explains the lack of incentive for the garments industry to
integrate backward.

Energy costs: infrastructure neglect. The energy infrastructure environment


characterized with frequent power outages, cross subsidies and large distribution
losses throughout the 1980s to the early 1990s resulted in the decline in the price
competitiveness of the garments industry.

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

The garments industry is composed of numerous highly competitive garment


manufacturers in the country making its market structure move towards the perfect
competition stage.
From 1991 to 1995, it contributed an average of 5.6 percent to total
manufacturing Gross Value Added (GVA) and 1.4 percent to gross Domestic Product
(GDP). Its GVA grew by an average of 5.3 percent per year.
The sector remains a top dollar earner, contributing more than 13 percent to
the national export coffers. Region IV contributed US$ 479M in 1995 representing
17.23 percent of the total garment exports of the country. However, shipments
declined the following year both at the national and regional levels due to the world
economic forces at play. The industry was able to recover in 1997 until 1998 and
garment manufacturers in the region contributed 18.45 percent and 19.94 percent
respectively to the country’s total garment exports . A total of 17 firms, 13 from
Cavite, 3 from Rizal and l from Batangas, were even listed in the 1997 Top 100
Garment Exporters in the Philippines.
The industry’s critical advantages are its low-cost highly skilled labor and its
quota allocations from the USA, ECC and Canada. However, the critical variable
that threatens to choke the growth of the industry is its dependence on its quota
allocations. The full opening up of trade through the WTO would
completely do away with the existing quotas in year 2005. This would mean that
competition among garment manufacturers of developing countries would be more
intense after five years.

4.3 Forces Affecting Competition in the Garment


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 Strategy, Structure and Rivalry

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).

Thus, by 2006, importers will be free to source their requirements anywhere.


Purchase decision will be based on product competitiveness in terms of price, quality,
service, delivery, reliability, and fashion intent, among others.

In anticipation of this, the Philippines has formulated the following strategies:

• Increased market presence in five priority non-quota countries: Japan,


Singapore, Hongkong, Taiwan and South Korea;

• Development of emerging markets;

• Productivity improvements; and


• Expansion of product/production base and product development

4.4.2 Structure

The industry is composed of establishments owned and managed entirely by


Filipinos and firms with foreign investors employing foreign and Filipinos workers.

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).

These foreign-owned garments firms are mostly Taiwanese, Koreans and


Chinese. The companies in the Philippines are usually plant or manufacturing sites.
The head offices or mother companies, where the wheeling and dealings are done
are located in the countries of the owners. In this case, product designing and
sample making are usually done at the head offices.

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.

The industry is basically labor intensive in view of the unique production


process involved. China and Hongkong have been ranked first and second among the
Top 10 suppliers to the United States in terms of value and volume of exports in the
last five years. However, China has encountered difficulties in resolving talks with the
United States. The latter has threatened to reduce China’s quota by 35% if it would
fail to meet its market demand. In addition, a cloud of uncertainly hung over the
economic landscape of Hongkong due to its turnover to the Peoples Republic of
China. Other US foreign suppliers of garments are also having political/internal
problems, i.e. Indonesia, Taiwan, El Salvador.

5.0 Factor Conditions and Industry Trends

5.1 Factor Conditions

5.1.1 Labor

To date, the industry is not having difficulties with regards to sourcing of


workers. Skilled sewers, embroiderers, hand weavers and smockers for high-end
products are abundant in the region. Some Filipino supervisors are even tapped to
train workers in branches located in Turkey and El Salvador.

Semi-skilled and non-skilled workers are highly trainable, intelligent and


knowledgeable in English. Moreover, training on operation of new equipment are
usually provided by suppliers of the company.

5.1.2 Product Design


The Philippine garment manufacturers are mostly “order takers”, meaning the
designs and materials to be used for production are dedicated by foreign buyers.

The Design Consultancy for Product Development Program is a step to


improve the situation. Targeting the medium to high-end markets, the move is
expected to gradually veer the local exporters from the traditional image of an order
taker to one that initiates designs. The collections are envisioned to be responsive to
market needs, tastes and preferences.

5.1.3 Technology

Increases in production level required investments in state of the art


machines and equipment. The use of barcodes, CAD, EDI and other computerized
machines improved the manufacturing processes and lowered the manpower
requirements and supervising time needed in each production process. Product
delivery has also been improved through the use of containerized shipping and
hanger shipping.

5.2 Demand Conditions

5.2.1 Domestic Demand

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.

5.2.2 Foreign Demand

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.

5.3 Related and Support Industries


Infrastructure. Infrastructure relative to the garment industry have to do
with telecommunications, transport/shipping and government processing. The
government is providing all the support to respond to the needs of the industry.

Information Technology. The installation of the GTEBNet, an electronic


interchange information system, allows garment exporters to electronically transact
quota applications and file export documents. Another tool is the Electronic Visa
Information System (ELVIS) is now being used to transmit all visas issued by the
GTEB to the U.S. Customs to eliminate entry of illegal shipments to the U.S. Licenses
for raw material importation are now processed within the targetted time frame with
the aid of computerization.

Training Infrastructure. A welcome development to the industry is the


establishment of the Asian Institute of Design and Technology thru Executive Order
414. The Institute hopes to bolster the design capabilities of the garment export
sector, and could make the Philippines the fashion center of Asia.

Figure 6.

Forces Affecting Competition in the Garment Industry

5.4 INDUSTRY TRENDS AND PROSPECTS

5.4.1 Issues and Challenges

The Philippine apparel industry faces a cost disadvantage position in terms of


material and labor price. Whereas the Philippines used to compete with low labor
costs in the world market, the other Asian countries –China, Vietnam and Indonesia
offer lower wages. Moreover, these Asian countries were able to speed up the
growth of a vertically integrated clothing industry with government support and a
more liberalized policies. Coupled with low productivity and low long-term
technological investment, a shift to the upper end market was noted. Influx of cheap
imports pose a major concern to apparel makers and retailers. Continuous quality
offerings and providing downstream services and brands are strategies pursued as
the apparel market gives premium to quality and design.

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.

5.4.2 Export Thrust

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:

• Product is competitive; product’s export growth rate is much higher than


the market growth rate (for both growth and declining markets)

• Product is under performing: Product’s export growth is lower than


market growth rate or industry capacities or under-optimized.

• There is high and increasing world market demand for product.

The Export Development Plan of the Philippines places particular focus on


Philippine exports of men’s and women’s clothing, which have managed to grow at
higher than market rates for the past six years. This implies some level of
competitiveness for these specific products, which has translated into higher market
shares. Other quota categories could be given special attention, especially those
which are not being performed or where performance is low.

Export of garments can grow higher through the following:

Quota optimization. While the Multi-Fiber Agreement (MFA) is still in place, it


shall be optimized to the country’s advantage. DTI shall identify non-performed and
substantially under-utilized quota allocations. Investors and locators will then be
invited to avail of these quotas. Particular emphasis shall be given to those which
can bring in new technologies to upgrade and diversify production.

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.

Aggressive promotion of Philippine designer clothes. DTI and industry


associations shall initiate and promote Philippine designer clothes in men’s and
women’s fashion. Initiatives such as the Fashion Design Institute developed with the
Philippine Trade Training Center (PTTC), Natori and Philippine fashion designers must
be expanded and intensified. The “gurus” of international fashion shall be sought to
look into the Philippine fashion landscape to identify potentials and strengths. This
had been done for furniture where world famous designers were brought in under a
Product Specialist Program.

Promotion of industrial peace and more pragmatic work schedules. The


implementation of the New Social Accord must be intensified in the garments
sector. Moreover, the introduction of more pragmatic work schedules, such as
flexitime, without violating the 48-hour week, could bring about higher productivity.
An average annual growth rate of 5% for 2000 and 2001 for garments is targeted to
achieve the millenium target (Table 15).

Table 15.

US$34 Billion Target for 1999 and Projections for 2000 and 2001

5.4.3 Growth Forecast

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.

Better regional cooperation in the ASEAN provides better access to these


markets. A full trade agreement of common effective preferential tariff reduced rates
from 50% to 5% by 2003-2008. Although still competitive, better prospects await
local manufacturers on higher value added products.

6.0 PERFORMANCE OF THE INDUSTRY AT THE


REGIONAL LEVEL

6.1 Number of Establishments

In 1990, there were 379 garment establishments employing more than 10


employees in the Southern Tagalog region. These represented around 20 percent of
the total number of establishments. The remaining 80 percent were custom tailoring
and dressmaking shops. The number increased to 473 in 1993, 137 of which were
involved in the export trade. As a whole, the number of apparel making
establishments rose by a minimal rate of 1.4% a year. This was mainly brought
about by the slight increase in the number of ready made clothing manufacturing
establishments averaging 7.8% a year. A decline equivalent to –2.3% was noted
among establishments engaged in the manufacture of wearing apparel, not
otherwise classified (Table16).

Table 16.
Number of Garment Mfg. Establishments ,
Southern Tagalog Region: 1990-1994
6.2 Profile of Small, Medium and Large Enterprises

6.2.1 Employment Level

In 1994, the 401 garment establishments employing more than 10


workers employed, on the average, a total of 34,946 workers, or 19.8% of the
total employed in manufacturing activities in the region of 176,149. As seen in
Table15, more than half (52%) were engaged in the manufacture of women’s,
girl’s & babies garments. The second biggest group of workers (24.2%) were
into the production of ready-made clothing, not otherwise classified. The
manufacture of men’s and boy’s garments absorbed 7.2% of the total
employed. Custom tailoring shops and custom dressmaking shops employed the
smallest number of workers aggregating to less than 500.

Size and Location


In 1996, the NSO identified 2,005 establishments engaged in wearing
apparel manufacturing in the region. Of this number, 385 or 19.2% were small to
large establishments employing 10 or more workers. As seen in Table 16, ready
made clothing manufacturing which include garment production of women’s, boy’s ,
girls and babies clothes topped the list with 331 firms or 86% of the total number of
establishments with more than 10 workers.

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.

Number of Establishments by Level of Employment, by Industry


Description: 1996

6.2.2 Compensation Level

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)

Compensation by Type of Worker


The bigger percentage (84%) of the total compensation amount, was paid to
production workers while a much smaller percentage (7.7%) went to the managers,
executives and supervisors. Embroidery shops and custom dressmaking shops,
however, provided bigger proportionate shares of more than 90% of the
compensation amount to production workers, indicating perhaps that these types of
workers tended to work in smaller administrative units requiring lesser involvement
of paid managers or supervisors ( Table18)
Table 18.

Number of Establishments & Compensation by Type of


Employee for Garment
Establishments With Average Total Employment of 10 or More, by Industry Sub-Group:

1994

6.2.4 Hours Worked in Garment Manufacturing

In 1994, the employed workers in the garment sector rendered 79,284,047


hours of work, or an average of 2,269 hours per worker. The hours worked in
the sector comprised 22% of the total working hours of all manufacturing
establishments in the region. Judging from the average hours worked by each
production worker, production workers in the garment sector were relatively fully
employed, with average working hours ranging from 2,176 to 2,722 hours or from
272 to 340 days. Among the various industry divisions, production workers in
embroidery establishments had the least number of working hours while those in
the manufacture of gloves, etc. and men’s and boy’s clothing had the most number
of working hours.

Table 19.

No. of Establishments, Total Employment By Type of Worker and Hours


Actually Worked by All

Production Workers for Garment Mfg. Est. with Average Total Empl. of 10 or
More, by Industry Group:1994

6.2.5 Value of Products Sold

The wearing apparel sector generated products valued at P5.633 billion in


1994, more than three-fifths (62.3%) of which were generated by firms engaged in
women’s, girls and babies garments manufacturing. Another 25% were generated
by ready-made clothing (Table 20).

Table 20.

Number of Establishments & Value of Products Sold by Mode of Sale for Mfg.

Establishments with Average Employment of 10 or More, by Industry Sub-


Group:1994

6.2.6 Mode of Sale


As seen in the following Table 20, the bulk of wearing apparel products were
sold to the export market. This mode of sale made up 77.4% of the total while an
additional 1.6% were sold to exporters. The domestic market absorbed 17% and
interplant transfer corresponded to 3.45%. Custom tailoring and custom
dressmaking shops sold their goods only to the domestic market whereas other types
of establishments sold varying portions of their output to this sale outlet, with
embroidery establishments reporting the second biggest proportionate share of
products catering to this market. On the other hand, the bigger proportion of
products generated by men’s and boy’s garments, women’s & babies garments and
the manufacture of hats, gloves and others were for the export market (Table21).

Table 21.

Percent Share of Value of Products/By-Products Sold By Mode of Sale: 1994

6.3 Profile of Micro-enterprises

6.3.1 Employment Level

In 1994, firms employing less than 10 workers numbered 2,043 or 15% of


those employed in other manufacturing firms with less than 10 workers in the
region. These firms employed a total of 7,344, with 58% paid workers and 42% as
unpaid workers. This could be attributed to the small operations of these firms
where workers usually include family members. Employment level was highest in
custom and custom tailoring shops as well as in the women’s, girls & babies segment
(Table 22).

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.

w/ Aver. Total Empl. of Less than 10, by Industry & Sub-Group:1994

6.3.2 Size and Location

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

Micro-enterprises were mostly made up of custom tailoring (969) and custom


dressmaking (500) shops, and women’s, girls & babies wear (210). Total
compensation amounted to P86,592,000 in 1994 which came mostly in the form of
salaries and wages (Table 24)

Table 24.

No. of Establishments & Comp. By Type of Empl. for Garment Mfg. Est.

w/ Aver. Total Empl. of Less than 10, by Industry & Sub-Group:1994(P'000)

6.4 BOI – Registered Firms

6.4.1 Number of Garment Exporters

As of 1997, a total of 186 establishments were into export. Majority of


these establishments were in Cavite, Laguna and Rizal. From 1993 to 1997, the
number of garment exporters increased by some 5.2% a year. Laguna which
registered 34 establishments in 1997 reported the highest average increase of
12.2%. Cavite and Rizal which contained the bulk of garment exporters had
lower growth average of 5.7% and 3.2 %, respectively. It is to be noted that the
biggest increase in the number of garment exporting firms occurred in 1995 and
1997 (Table 25).

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.

Region IV Garment Manufacturers Listed in the Top


100 Garment Exporters: 1997
6.4.2 Value of Exports
The Southern Tagalog Region was the second biggest garment exporter in
the country, next only to the NCR. In 1997, the region posted some US868,890
FOB value of garment exports, contributing 29.3% to the total garment exports
for the year of US$2.965 million or some 39% lower than the export value
reported by the NCR. The region likewise accounted for 26.9% of the total value
added reported by garment exports in the Philippines in the same year (Table
27).
Table 27.
Value of Garment Export By Region (Based on TECs issued): As of
December 31,1997
In 1998, the region reported garment exports amounting to US$566.385
million. More than half of the value of the regional exports could be traced to
Cavite with its garment exports amounting to US$303.724 million. The two other
major exporting provinces of Laguna and Rizal accounted for the two other
bigger shares of the total at 15.9% and 8.5%, respectively.

Table 28.

FOB Value of Garment Exports by Province, Southern Tagalog Region: 1998

7.0 PRODUCTION AND TECHNOLOGY PROCESSES

7.1 Production Process


The production process of a garment establishment Inc. is divided into four
(4) major operations namely: raw materials inspection, fabric layout, marking and
cutting, sewing and finishing. The product design and master patterns are usually
being prepared by its customers/buyers.

7.1.1 Raw Materials Inspections

Raw materials inspections constitutes the heart of garment manufacturing


process as the results from the activity involved in this phased will determine the
major quality aspect of the finished goods. This is being done at the raw materials
warehouse.

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.

b. Raw Materials Inventory

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

Cutters measure the fabric in order to determine whether the supplier


delivered them according to the specifications and more importantly, to determine
whether actual consumption is in accordance with the computation.

7.1.2 Fabric lay-out, Marking and Cutting

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.

7.1.3 Sewing Operation

a. Preparatory Stage

Fusing is the preparatory process of the sewing operation. Depending on the


order, some styles require fusible liners normally on collars and pockets. These are
issued to the fusing section where a fusible liner together with the cut parts, are
placed in the Kanneglesser Fusing Machine where heat is applied to fuse together the
fabric and the liner.

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.

7.1.4 Finishing Operation

a. Pressing

Depending on the requirements, some style require steam pressing while


others require hard pressing. This is where the final cosmetics features of the
garments are enhanced. The collars must stand firmly, side seams should not
appeared bubbling or crumpled and hemlines are evenly and smoothly pressed.

b. Packing

Packing involves inspection, hagtagging, folding, polybagging, assorting and


cartoning. The supervisor sees to it that handbags, stickers, size of polybags and
cartons, destination are correct as to specifications. Once the shirts are completely
packed, a buyer’s representative or inspector inspect the shipment. He picks several
cartons for checking, prepares a final report and issues a release form which is
issued as supporting document for shipment. A detailed process flow chart showing
each phase of the production process is presented in Figure 7.

8.0 FINANCIAL PERFORMANCE


8.1 Profitability Measures of the Garment Industry

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.

As seen in Figure 8, the industry exhibited a steady increase in the ratio of


its net income to sales. The return on assets ratio, however, showed a drop in 1994
after the significant growth in the previous year when it reached 0.0514 from 0.0407
in 1992. The cost of doing business, appeared to have taken its toll on the industry
as seen in the unchanged ratio of cost of goods and the almost equal performance of
the ratio of operating expenses to sales. The cost of money has gone up
considerably in 1994 which brought about the steep climb of the interest expense to
sales ratio of up to 0.0196 as against the 0.0115 in 1993. As a whole, the various
profitability ratios seem to indicate that the industry performed best in 1993 as
shown by the positive ratios during this year.
8.2 Profitability and Liquidity Measures of Sample
Firms

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.

9.0 PROJECTED HUMAN RESOURCE AND SKILLS


REQUIREMENTS

9.1 Estimated Employment in Wearing Apparel Sector

Based on the 1996 survey of establishments, an estimate was done on the


employment level of establishments engaged in the wearing apparel sector. This
was done by assuming an average employment size and multiplying this by the
number of establishments for each of the sub-sectors (Table 31). This became the
basis for projecting employment for the subsequent years.

The human resource requirements of the industry is expected to grow in the


next five years owing to the industry’s positive performance in the last two years.
The 2000 third quarter economic performance report of the NEDA which came out In
November 2000 indicated that manufacturing value-added grew by 6.7 percent,
slightly higher than the 6.2% in the second quarter and much stronger compared to
the 2.4 percent expansion in 1999. Footwear and wearing apparel was one of the
20 manufacturing sectors that showed positive growth equivalent to 23.5%, the
third highest among the 20 sectors, next only to paper and paper products (34.8%)
and non-electrical machinery (24.3%).

At the same time, Philippine exports as a whole remained strong (18.3%) as


merchandise receipts increased by 22.9 percent. Garments, the country’s third
largest export and which suffered for most of 1999, expanded by 7.7%, in part due
to the depreciation of the peso. The GTEB reports cited that as of December 2000,
exports grew by nearly 12 percent in the first 11 months of the year resulting in the
$2.351 billion value of garment exports for the period. Many other developments in
the industry cited in the previous sections of this report point to the promising
prospects for the industry. The University of Asia and the Pacific projected a growth
of 5.2% for the industry in 1999. The Export Development Plan of the Philippines
likewise targets a growth rate of 5% for 2000 and 2001 for the garments sector in
order that the country could achieve its projected Philippine export level of US50.0
billion in 2001. This study therefore assumes a conservative estimate of 5% in
projecting the manpower requirements of the wearing apparel sector in Region 4.

Based on the assumptions made, the garments wearing apparel sector is


projected to employ an estimated 45,386 in 2001 and 55,167 up to the year 2005.
Table 30 presents the employment data for the garments industry.

9.2 Critical Skills

The Regional Investments Priorities Plan of TESDA has identified the


following critical skills in the garments sector: sewers/sewing machine operator,
cutter, quality control, knitters, flast sewing, pattern maker and CAD designer. Based
on the profile of manpower complement presented in this study of six garment
firms presented in Figure 9, a breakdown of the human resource total was made and
used as basis for arriving at the proportionate share of critical skills identified. As
seen in Table 32, more than half (61%) of the human resource would be sewers
sewing machine operators. An additional 17% would be involved in supervision and
quality control and 20% would be into other forms of work such as knitting,
embroidery, etc. About 2% of the workforce would be into cutting and pattern
making.

Figure 9.
Average Number of Workers by Firm Size and Position

Table 31.

Number of Establishments by Level of Employment, by Industry Description:


1996

Table 32.

Projected Human Resource Requirements, Garments Industry: Southern


Tagalog (Region IV)
Table 1. Gross Value Added in Garments :1991-1995

( In Million Pesos)

Year GVA % Contribution to % Contribution


Manufacturing to

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: National Statistical Coordination Board (NSCB)

Table 2. Growth Rates of Garment Imports by Country and by Year:


1991-1996

1991- 1992- 1993- 1994- Average 1995-


Country 1992 1993 1994 1995 growth 1996

Total Imports 41.6 26.1 28.3 69.3 41.3 3.7


Top 6 59.3 32.6 26.2 55.3 43.4 (6.2)
Hong Kong 66.0 35.7 42.9 80.2 56.2 (9.1)
Taiwan 1.4 (11.8) 11.5 24.1 31.3 (1.9)
France 91.0 50.7 16.6 52.0 52.6 (6.4)
USA 195.7 116.1 (13.5) 12.9 77.8 (77.8)
Italy 42.4 (23.1) (11.1) 174.6 45.6 95.6
China 107.0 (19.7) 18.8 61.9 42.0 109.1
Others (5.3) (3.0) 41.5 100.5 33.4 37.7

Source: GTEB

Table 3. Cotton Shirt/Blouse Imports (Jan.- June 2000)

Country Men (Qty) Value In $ % Women Value in $ %


(Qty)
Australia 96,975 102,629 8.0 144 1,568
China 24,240 20,759 2.0 31,512 13,764 4.0
Taiwan 1,880 13,109 1.0 2,024 5,132 1.0
France 16,794 309,244 24.0 525 11,491 3.0
Hong Kong 156,757 166,190 13.0 32,791 95,693 26.0
India 104,633 145,867 11.0 1,200 1,905 1.0
Indonesia 8,605 51,603 4.0 2,100 347
Italy 1,701 39,527 3.0 1,195 15,714 4.0
Japan 810 11,990 1.0 4,560 4,346 1.0
South Korea 18,287 12,969 1.0 7,480 2,951 1.0
Malaysia 1,770 4,305 244 5,934 2.0
Singapore 7,638 30,226 2.0 17,816 28,504 8.0
Thailand 60,055 37,976 3.0 10,575 7,925 2.0
UK Great 18,711 306,101 24.0 8,160 167,309 46.0
Britain & N.
Ireland
USA 27,673 22,781 2.0 325 1,876 1.0
TOTAL 546,529 1,275,276 100.0 120,621 364,459 100.0

Source: GTEB

Table 4. Total Export Contribution of the Garment Industry: 1995-


1998

Year Total Phil Total Garment Percent

Exports Exports
1995 15.7B 2.78 B 17.7
1996 20.5B 2.74B 13.37
1997 2.95B
1998 2.84B

Source: Garments & Textile Export Board (GTEB)

Bureau of Export Trade Promotion (BETP)

Table 6. FOB Value of Exports to the U.S. and E.U Markets

as of December 31,1997 (in US$ million)

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 8. Number, Gross Revenue and Total Assets of Garment Firms

in the Top 7000 Corporations

Wearing No. of Gross Revenue Total Assets


Apparel firms 1996 1995 1996 1995
Women, girls 62 8,795,647 8,309,174 4,524,387 4,.477,937
and babies
garments
Ready made 125 14,662,111 11,860,720 6,935,409 5,446,230
clothing
manufacturing
Men’s and 31 6,303,465 5,278,123 2,641,990 2,419,935
boy’s
garments
Total 218 29,763,219 25,450,012 14,103,780 12,346,097

Source: Top 7000 Corporations

Table 9. Garment Industry Wearing Apparel Product


Chain
Gender and Size Product Usage Materials Fiber Content
Men Top Knitted Natural
Ladies Trousers Warp knit synthetic
Boys teen Coats woven
Girls teen Jackets
Preteens boys Dress
Preteens girls Skirts
Girls children Sleepwear
Infants Underwear
Other wearing
apparel

Table 10. Gross Revenues and Net Income of Domestic and Wholesale

and Retail Outlets: 1995-1996

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

TOTAL 1,154 2,965,280 1,574.800


National Capital 620 1,471,720 842,930
Region
IV Southern Luzon 264 868,890 422,930
III Central Luzon 192 464,150 255,430
VII Central Visayas 43 118,820 40,130
I Ilocos Region 9 18,270 6,240
XII Central Mindanao 7 10,720 4,610
XI Southern 1 006 006
Mindanao
V Bicol Region 5 4,030 2,380
X Northern 2 002 002
Mindanao
VI Western Visayas 11 480 390
* In million US Dollars
Source: 1997 Annual Report, GTEB
Table 12. FOB VALUE OF GARMENT EXPORTS BY PROVINCE
SOUTHERN TAGALOG REGION 1998
PROVINCE FOB VALUE PERCENT
TOTAL US$ 566,3855,250.96 100.00
Batangas 10,898,355.18 1.92
Cavite 303,724047.19 53.62
Laguna 90,128,517.80 15.91
Oriental Mindoro 620.00
Palawan 60,636.90 .01
Rizal 8.53
161,573,073.89
Source: Bureau of Export Trade Promotion, EDP/IRC
Table 13. FOB Value of Garments and Textile Exports
(Based on TEC’s Issued): As of December 31, 1997
COUNTRY VALUE PERCENT
TOTAL US$2,957,100,640.22
100.00
Quota Countries: 2,309,591,563.21
78.10
USA 1,858,720,922.93 62.86
EEC 390,079,694.47 13.19
Canada 60,790,945.81 2.06
Non-Quota
Countries:
647,509,077.01 21.90
Source: Profile of the Philippine Garment & Textile Industry
GTEB, 1997

Table14. Labor Productivity in Textile and Garments Industries in


the

Asean countries (in US$1,000 at 1985 prices)

Phils. Indonesia Malaysia Singapore Thailand


Period
Textile
Industry
1970-74 3.82 1.41 3.31 4.96 4.10
1975-79 3.64 1.99 5.67 7.27 4.26
1980-84 3.20 2.27 5.41 9.71 5.27
1985-90 2.03 2.45 6.44 14.21 6.54
Garments
Industry
1970-74 1.64 0.91 2.27 2.94 2.71
1975-79 1.59 1.28 2.94 4.77 3.07
1980-84 2.05 1.74 3.33 6.30 5.20
1985-90 1.60 1.71 3.38 7.51 5.74

Source: Romel L. del Mundo

Table 15. US$34 Billion Target for 1999 and Projections for 2000 and 2001

Product 1998 1999 2000 2001


Value Value % Value % Value %
Change Change
Change
Total Phil. 29,496 34,982 18.60 41,813 19.53 50, 00019.58
Exports
Garments 2,260 2,314 2.39 2,430 5.00 2,551 5.00
% to Phil. 7.7 6.6 5.18 5.1
Exports
Source: Philippine Export Development Plan: 1999-2001
Rate
Indicator/Industry
Sensitivity Index 0.91
Profit squeezing in the local market 43.0

Import content 22.8

Increase in cost 6.8

% change (WPI) 16.0

Costs absorbed
Industry growth (footwear & wearing apparel: Jan-Sept. 1998) 24.6

Peso terms 10.9

Volume terms
Growth forecasts 6.5

1998 5.2

1999 (forecasts)

Source: NSCB, UAP-SEC

Table 16. Number of Garment Mfg. Establishments ,


Southern Tagalog Region: 1990-1994
Table 16. Number of Garment Mfg. Establishments , Southern Tagalog Region:
1990-1994
Description 1990 1991 1992 1993 1994
No. % No. % No. % No. % No % %
Share Share share share Share Change
Total 379 100 468 100 494 100 473 100 401 100 1.4
Custom tailoring & 17 4.49 21 4.49 16 3.24 19 4.02 23 5.74 7.8
dressmaking
shops
Ready made 309 8.53 391 83.55 420 85.02 402 84.99 328 81.8 1.5
clothing
Manufacturing
Embroidery 34 8.97 34 7.26 38 7.69 36 7.61 31 7.73 -2.3
establishments
Manufacture of 19 5.01 22 4.7 20 4.05 16 3.38 19 4.74 0.0
wearing
apparel n.e.c.
Source: NSO

Table 16-.Number of Establishments by Level of Employment, by Industry Description:


1996
Industry Description Employment Size
1-4 5-9 10-19 20-49 50-99 100-199 200-499 500-999 100
a)Custom Tailoring & 1,458 113 15 4 2 0 0 0
Dressmaking shops
b)Ready made clothing 103 236 184 53 24 33 27 15
manufacturing
c)Embroidery estab. 20 30 16 4 1 2 1 0
d) Manufacture of misc. 158 18 1 2 3 7 2 1
wearing apparel, except
footwear, n.e.c.
Total 1,739 397 216 63 30 42 30 16

Table 17. Employment and Compensation for Garment


Manufacturing Establishments
with Average Total Employment of 10 or More : 1994 ( Value in P'000)

Industry Description No. of Employment Compensation


Establishment (Average) R
Total Employees
Mfr. of wearing apparel except
Footwear 401 34,946 34,514 1,603,716
8
Custom tailoring shops 13 241 5,327
259
Custom dressmaking shops 10 189 4,922
202
Men's and boy's garment mfg. 34 2,469 138,094
2,499
Women's, girls' & babies garment 192 18,218 18,001 846,677
5
Manufacturing
Ready-made clothing mfg.n.e.c. 102 8,361 380,073
8,452 1
Embroidery establishments 31 1,017 20,028
1,066
Mfr. of hats, gloves, handkerchiefs 19 4,236 208,595
4,250
Neckwear, (except knitted & paper)
& apparel belts regardless of
Materials

Source: NSO Census of Establishment

Table 18. Number of Establishments & Compensation


by Type of Employee for Garment
Establishments With Average Total Employment of 10 or More, by Industry
Sub-Group: 1994
Mfr. of wearing apparel except

401

1,603,716

1,523,000

117,761

1,253,483

151,756

80,716

Footwear

Custom tailoring shops

13

5,327

5,023

228

4,455

340

304

Custom dressmaking shops

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

Women's, girls' & babies garment

192

846,677

801,861

64,670

656,905

80,286

44,816

Manufacturing

Ready-made clothing mfg.n.e.c.

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

Mfr. of hats, gloves, handkerchiefs

Neckwear, (except knitted & paper) & apparel belts regardless of materials

19

208,595

198,910

16,459

168,012

14,439

9,685

Source: NSO

Table 19. No. of Establishments, Total Employment By Type of Worker and


Hours Actually Worked by All

Production Workers for Garment Mfg. Est. with Average


Total Empl. of 10 or More, by Industry Group:1994
Industry Division No.of Total Unpaid Paid Employees
Est. Empl. Works. Total Mgrs.,exe. Prod.
& Sup. Works.

Mfr. of wearing apparel 401 34,946 432 34,514 1,002 30,751


except
Footwear
Custom tailoring shops 13 259 18 241 4 218
Custom dressmaking shops 10 202 13 189 2 173
Men's and boy's garment 34 2,499 30 2,469 71 2,121
mfg.
Women's, girls' & babies 192 18,218 217 18,001 542 16,020
garment
Manufacturing
Ready-made clothing 102 8,452 91 8,361 220 7,444
mfg.n.e.c.
Embroidery establishments 31 1,066 49 1,017 15 970
Mfr. of hats, gloves, 19 4,250 14 4,236 148 3,805
handkerchiefs
neckwear, (except
knitted & paper)
& apparel belts regardless
of
Materials

Source: NSO

Table 20. Number of Establishments & Value of Products Sold by Mode of


Sale for Mfg.

Establishments with Average Employment of 10 or More, by Industry Sub-


Group:1994

Industry Description No. of Value of Products/By-Products Sold (P'0


Est. Total Sold to Interplant Direct
Dom.Market Transfer Export
Mfr. of wearing apparel except
Footwear 401 5,663,195 961,494 196,063 4,383
Custom tailoring shops 13 12,287 12,287
Custom dressmaking shops 10 16,452 16,452
Men's and boy's garment mfg. 34 256,022 65,859 188
Women's, girls' & babies garment 192 3,530,898 523,221 2,924
Manufacturing
Ready-made clothing mfg.n.e.c. 102 1,400,786 259,437 196,063 941
Embroidery establishments 31 33,600 15,374 15
Mfr. of hats, gloves, handkerchiefs 19 383,150 68,864 314
neckwear, (except knitted & paper)
& apparel belts regardless of
materials

Table 21. Percent Share of Value of Products/By-


Products Sold By Mode of Sale: 1994
Industry No. Total Sold to Interplant Direct Sold to Other
Description of
Est. Dom.Market Transfer Export Exporters products
Mfr. of wearing
apparel except
Footwear 401 5,663,195 17.0 3.46 1.6 0.06
77.4
Custom 13 12,287 100.0 0.0 0.00
tailoring shops
Custom 10 16,452 100.0 0.0 0.00
dressmaking
shops
Men's and 34 256,022 25.7 73.5 0.6 0.09
boy's garment
mfg.
Women's, 192 3,530,898 14.8 82.8 2.4 0.00
girls' & babies
garment
#DIV/0! #DIV/0! #DIV/0! #DIV/0!
Manufacturing
Ready-made 102 1,400,786 18.5 14.0 67.2 0.3 0.03
clothing
mfg.n.e.c.
Embroidery 31 33,600 45.8 45.3 0.0 8.93
establishments
Mfr. of hats, 19 383,150 18.0 82.0 0.0 0.00
gloves,
handkerchiefs
neckwear, (except
knitted & paper)
& apparel belts
regardless of
materials

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

Industry/Description No. of Total Unpaid Paid


Est. Empl. Workers Workers
Mfr. of wearing apparel except 2,043 7,344 3,102 4,242
Footwear
Custom tailoring shops 949 2,489 1,431 1,058
Custom dressmaking shops 500 1,401 721 680
Men's and boy's garment mfg. 58 549 86 463
Women's, girls' & babies 210 1,621 301 1,320
garment
Manufacturing
Ready-made clothing mfg.n.e.c. 87 548 143 405
Embroidery establishments 60 381 165 216
Mfr. of hats, gloves, 179 355 255 100
handkerchiefs
neckwear, (except knitted &
paper)
& apparel belts regardless of
Materials

Source: NSO

Table 23. No. of Establishments & Female Empl. By Type of Worker for
Garment Mfg.

w/ Aver. Total Empl. of Less than 10, by Industry & Sub-Group:1994

Industry Description No. of Total Unpaid Paid Fem.


Est. Fem.Emp. Fem.Wkrs. Workers
Mfr. of wearing apparel except 2043 4678 1698 2980
footwear
Custom tailoring shops 949 809 496 313
Custom dressmaking shops 500 1150 587 563
Men's and boy's garment mfg. 58 376 54 322
Women's, girls' & babies 210 1410 211 1199
garment
manufacturing
Ready-made clothing 87 356 57 299
mfg.n.e.c.
Embroidery establishments 60 325 132 193
Mfr. of hats, gloves, 179 252 161 91
handkerchiefs
neckwear, (except knitted &
paper)
& apparel belts regardless of
materials

Table 24. No. of Establishments & Comp. By Type of Empl. for Garment Mfg.
Est.

w/ Aver. Total Empl. of Less than 10, by Industry & Sub-Group:1994(P'000)

Industry Description No.of Total Salaries Empl.Cont.


Estab. Comp. & Wages (SSS,etc.)
Mfr. of wearing apparel except 2043 86,592 1,139
85,454
Footwear
Custom tailoring shops 949 20,773 221
20,552
Custom dressmaking shops 500 10,146 231
9,915
Men's and boy's garment mfg. 58 83
7,719 7,636
Women's, girls' & babies garment 210 32,723 205
32,518
Manufacturing
Ready-made clothing mfg.n.e.c. 87 10,564 362
10,203
Embroidery establishments 60 9
2,898 2,889
Mfr. of hats, gloves, handkerchiefs 179 27
1,770 1,743
neckwear, (except knitted & paper)
& apparel belts regardless of
Materials

Source: NSO Census of Manufacturing Establishments

Table 25. Number of Garment Exporters by Province


and By Year
Southern Tagalog Region: 1993-1997
Province 1993 1994 1995 1996 1997 %change
Total 137 149 162 163 186 5.2
Batangas 8 8 6 6 6 -4.7
Cavite 53 58 70 69 74 5.7

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

Table 26. Region IV Garment Manufacturers Listed in


the

Top 100 Garment Exporters: 1997


Rank Name of Company Address
8 Leader Garments Cavite
13 Senga Philippines Cavite
15 Knitjoy Manufacturing Rizal
19 Easy Travel Goods Rizal
21 Marfis Garment Rizal
28 All Asia Garment Industries Cavite
30 Champan Garments Cavite
31 Philippines Jeon Garments Cavite
34 Kay Lee Fashion Inc. Batangas
43 D&A International Corp. Cavite
44 A Grade Garments Mfg. Corp. Cavite
45 V.T. Fashion Image Cavite
65 Cohin Philippines Inc. Cavite
82 Chunji International Phils. Inc. Cavite
83 Chong Won Fashion Inc. Cavite
84 Dae Young Apparel Corp. Cavite
93 Snowdown Phils. Inc. Cavite
Table 27. Value of Garment Export By Region (Based on TECs issued):
As of December 31,1997
Region No. of Value Added
exporters FOB Value

( 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

Source: 1997 Annual Report GTEB

Table 28. FOB Value of Garment Exports by Province,

Southern Tagalog Region: 1998

Province FOB Value Percent Share

( 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

Figure 9. Average Number of Workers by Firm Size and Position


Micro/Small Company Medium Company Large Company

FABRIC INSPECTION FABRIC INSPECTION FABRIC INSPECTION


2Inspector 3 Inspector 1 Operator
2 Reviser
1 Inspector

CUTTING SECTION CUTTING SECTION CUTTING SECTION


No workers; 1 supervisor 2 supervisors
Garment come from mother 1 cutter 6 cutters
companies
1 spreader 8 spreaders
1 pattern marker

BUNDLING SECTION BUNDLING SECTION BUNDLING SECTION


1Supervisor/Controller 1 Supervisor 1 supervisor
1 Meto gun tagger 3 bundlers 1 bundler
1 bundler 2 Meto gun tagger FUSING SECTION
14 fuser

PRODUCTION PRODUCTION PRODUCTION ASSEMBLY


ASSEMBLY ASSEMBLY
15 Line supervisors
2 Line Supervisor 5 line leaders
15 Roving inspectors
2 Roving Q.C. 5 assistant line leaders
16 End-line inspectors
2 End-line Q.C. 2 Roving Q.C.
395 sewers
70 Sewers 110 Sewers (5 special
69 In-line pressers
machines)
10
Handworkers/Markers 9 End-line Q.C.
2 bundle girls 10 Markers
4 Movers
FINISHED GOODS FINISHED GOODS FINISHED GOODS
1 Supervisor 1 Supervisor ! Supervisor
13 Final Pressers 8 Final pressers 67 Final pressers
4 Trimmer/Reviser 8 Final Q.C. 22 Controllers
5 4 Final Q.C. 5 Packers 5 Packers
6 5 Packers 6 Packing Utility

Table 31. Number of Establishments by Level of Employment, by Industry


Description: 1996
Industry Employment Size
Description
1-4 5-9 10- 20- 50- 100- 200- 500- 1000- 2000- Total
19 49 99 199 499 999 1999 Over
a)Custom 1,458 113 15 4 2 0 0 0 0 0
Tailoring & 1,592
Dressmaking
shops
b)Ready made 103 236 184 53 24 33 27 15 0 1
clothing 676
manufacturing
c)Embroidery 20 30 16 4 1 2 1 0 0 0
estab. 74
d) Manufacture of 158 18 1 2 3 7 2 1 1 0
misc. 193
wearing apparel,
except
footwear, n.e.c.
Total 1,739 397 216 63 30 42 30 16 1 1
2,535

Table 32. Projected Human Resource Requirements, Garments Industry:

Southern Tagalog (Region IV)

Sub- Employment Level


Sector/Critical
Skill
No. of NSO %Share Growth 2000 2001 2002 2003 2004 2005
(est.)
Estab. 1996 Workforce Forecast
(Estimates) (%)
a)Custom 1,399 6,727 5 8,177 8,586 9,015 9,466 9,939 10,436
Tailoring &
Dressmaking 5
shops
b)Ready made 670 25,242 30,682 32,216 33,827 35,518 37,294 39,159
clothing
manufacturing - - - - - -
c)Embroidery 82 970 5 1,179 1,238 1,300 1,365 1,433 1,505
estab.
d) Manufacture 193 2,622 5 3,187 3,346 3,514 3,689 3,874 4,068
of misc.
wearing - - - - - -
apparel, except
footwear, n.e.c. - - - - - -
Total for 2,344 35,561 43,225 45,386 47,655 50,038 52,540 55,167
Industry
Estimated New 7,664 2,161 2,269 2,383 2,502 2,627
Entrants*

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