"Case Study I —The Sri Lankan Sewer An A-class sewer in Sri Lanka is paid $2.00 per day. An assembly line will produce about 18 shirts per day per machine, incurring a sewing cost of $0.11 per unit. The other operations, such as cutting, buttonholemaking and pressing, add a further $0.06. Total direct labor cost will therefore be less than $0.20 per shirt. Unless the importer requires Tiffany cufflinks for buttons, the total trim including packing materials will probably be under $0.25. Total of labor and trim should, therefore, be $0.45.
Most garment professionals can work out that in the case of the Sri Lankan factory, direct labor counts for only 10% of CMT. These same professionals know that as in the case of the five-pocket jeans, total CMT in a Third World factory seldom exceeds 30% of the FOB [Free On Board] price. That means the total cost of direct labor in these factories is a negligible 3% to 4% of FOB, which in turn works out to 2% of the LDP price or about 0.75% of the retail price.
Yet despite these ratios, I and almost every other garment professional around still looks at direct labor as the prime factor in determining total garment cost.
Take, for example, a senior executive for one of the world’s largest manufacturers of active sportswear and footwear in April 1997 commenting on a 10.7% pay rise recently won by their Indonesian factory workers, who stated, 'Indonesia could be reaching a point where it is pricing itself out of the market.'”
— David Birnbaum's Blog
|Triangle Shirtwaist Factory Fire (New York City)|
March 25, 1911 (Photo: Wkimedia Commons)
[But] Somehow, brands are able to control the quality of the products manufactured in their factories, and yet, they aren’t able to monitor the workers. If apparel retailers don’t know where the materials for their products are being sourced from, he said, it’s because they chose not to care."
— Kim Bhasin, Huffington Post
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