Clusters in the Garnment Industry

Clusters in the garnment industry

"Clusters play a key role in driving innovation and economic growth. Clusters provide

new firms with an ideal breeding ground, by offering them proximity to other

companies, investors, educational institutions and research centres. Clusters require a

foundation: their success depends on long-term business experience, fuelled by new

research, and a commitment to join forces."

Economic geography during an era of global competiotion involves a paradox. It is widely recognized that changes in technology and competition have diminished many of the traditional roles of location. Yet clusters, or geographic concentrations of interconnected companies, are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more advanced nations. The prevalence of clusters reveals important insights about the microeconomics of competition and the role of location in competitive advantage. Even as old reasons for clustering have diminished in importance with globalization, new influences of clusters on competition have taken on growing importance in an increasingly complex, knowledge-based, and dynamic economy. Clusters represent a new way of thinking about national, state, and local economies, and they necessitate new roles for companies, government, and other institutions in enhacing competitiveness.

It has been increasingly recognized that industrial clusters play a significant role in industrial development, not only by economists interested in the economic geography of industrialization but also by development economists (Henderson, Krugman, Hayami, World Bank).

According to Marshall, industrial clusters have three major advantages. The first one ispositive spillovers across complementary economic activities, which provides a stimulus for agglomeration: the growth rate of an industry within a region may be increasing in the size and "strength" of related economic sectors. This is particularly important in the early stage of cluster development, as new tehnologies are being implemented and actively developed. Secondly, the labor sector is much more organized and effective. Its division and specialization among the enterprises will become important in the later stage of cluster development when high-quality products are made. Last but not least, clusters determine the formation of skilled labor markets. Thus, enterprises located in the industrial cluster can easily imitate new technology developed by other enterprises, purchase (or sell) parts and intermediate products from (or to) other enterprises, and hire workers with required skills.

Geographic, cultural and institutional proximity provides companies with special access, closer relationships, better information, powerful incentives and other advantages that are difficult to tap from a distance. That's why competitive advantage lies increasingly in local things. Clusters affect competition in three broad ways: first, by increasing the productivity of companies based in the area; second, by driving th direction and pace of innovation; and third, by stimulating the formation of new businesses within the cluster.

Garnment clusters

Clothes are an epitome of a culture. People in different parts of the world have their own styles of dressing which symbolize their culture and status. The last two centuries have seen an upsurge in the use of man made textiles like polyster, nylon, PP, acrylic and other in almost every part of the world.

In order to emphasise the importance of garment clusters in different regions, we took some examples from Asia and from.

The first one is India. The textile industry including readymade garments occupies a unique position in the Indian economy. Its predominant presence in the Indian economy is manifested in terms of its significant contribution to the industrial production, employment generation and foreign exchange earnings. It contributes about 14% to the industrial production and about 4% to the GDP. It has immense potential for employment generation particularly in the rural and remote areas of the country on account of its close linkage with agriculture.It provides direct employment to about 35 million persons . In fact, the textile industry is the second largest provider of employment after agriculture. The contribution of this industry to the gross export earnings of the country is about 37% while it adds only 1 - 1.5% to the gross import bill of the country. It is the only industry which is self reliant and complete in value chain. As acorollary to this the growth and promotion of this industry has a significant influence onthe overall economic development India.

We will compare knitwear clusters in Ludhiana and Tiruppur. While Ludhiana is producing woolen knitting mainly for domestic market, Tippur concentrates on cotton knitting produced mainly for export market. There are four similarities between the two clusters. First, vertical networking among units specializing in different parts of their production process is working effectively. Second, information on market is shared among producers through intermediaries such as wholesalers, retailers and other marketing agents. Third, both clusters depend on migrant workers. Fourth, apparel industry contributes to improvement of household income in neighbouring villages. On the other hand, there is difference in the two points. First, while Ludhiana is catering mainly for the domestic market, Tippur is export-oriented cluster. Second, communities of ownets are different in the two clusters.

Ludhiana

Ludhiana has developed as the hub of woolen knitwear industry. Ludhiana's knitwear cluster is diversified and has created backward linkage. Some woolen knitwear factories accumulated capital and diversified into wool spinning. Later cotton and acrylic spinning mills, dyeing subcontractors, and textile machinery manufactures were set up.

The long term government contract between Indian and Soviet Union encouraged woolen knitwear firms to export to Soviet Union. Large quantity of low quality and cheap items were sold to the market. Ludhiana's knitwear producers exported over half their total production. In the domestic market, brands were established in the upper-end market. Even middle segment of the domestic market began to develop a demand for new design and better quality during the 1980s. Some large and medium sized producers exported the locality items to a stable and high-volume assured