Automation and fears of long-term disruption
By Sabine Hertveldt
For decades, leading global ready-to-wear apparel brands have routinely outsourced their manufacturing to countries where costs were cheap and the business environments favorable. In the 1970s, they turned to factories in fast-growing places such as Korea and Hong Kong, which had inexpensive workforces that could do the labor-intensive stitching, sewing and dying that apparel assembly requires.
When those economies advanced beyond rudimentary manufacturing and the cost of production increased, the brands pivoted to the then-emerging economies of China, Bangladesh and Vietnam. These countries had a ready labor supply, inexpensive electricity, good ports and the infrastructure needed to become today’s textile and garment manufacturing giants.
Now, another shift is underway. Automation and the cost of robotic machinery may soon become competitive with low-wage workers. If machines replace garment assembly workers on a large scale, the implications for the industry and for developing economies would be dramatic. Some consider massive automation a cause for long-term disruption — others question whether the anxiety is premature. While the crisis around COVID-19 and the impact on economies and people’s lives is at the forefront of everyone’s mind and actions, the issue of automation is something that remains current.
Today, clothing factories employ about 60 million workers who rely on international clothing brands for their jobs. Within 15 years, an estimated 600 million people will be entering the labor force in developing countries. Governments are looking at garment manufacturers to provide jobs for the growing number of workers, many of them rural women, entering the labor force.
More than ever, brands feel compelled to manufacture as close to their customers as possible. It’s an attempt to keep up with fast trending fashions and the demands of consumers in Europe, the United States and, more recently, China. Economists have argued that relocating manufacturing to industrialized countries — reshoring production, as it is known — will accelerate automation. However, Adidas’ recent decision to move its Speedfactories from Germany and the United States to Asia suggests that the verdict is still out. Relocating mass production to affluent consumer markets has been complicated by a lack of affordable and skilled labor
Development finance institutions like the IFC, a sister organization of the World Bank, are actively promoting sustainable investment in the textile and apparel value chains. At IFC, we are keenly following this next iteration of the industry because garment manufacturing has long been a first step into the formal economy for low-income countries. One program that provides unique insights into factory realities is the IFC/ILO Better Work program, which is helping to improve working conditions in more than 1,600 ready-made-garment factories around the world.
Based on what we see today in Better Work factories, automation in garment assembly is not progressing at the same pace as in other industries. Typical assembly activities such as sewing are still very much the domain of human beings. Massive automation is not yet happening because of technical issues and cost concerns, particularly since it is notoriously tricky for manufacturers to forecast return on investment given the unpredictability of orders. That said, segments of the manufacturing process, such as ginning, spinning, weaving and knitting have been largely automated. Factories are also introducing technologies such as 3D printing, laser cutting and laser stonewashing, resulting in fewer assembly line jobs but greater opportunities for skilled workers who will need to be trained and educated to operate next generation machinery, integrate telecommunications networks, service and repair sophisticated equipment and develop the programming languages that are the brain centers of modern factories.
As the world’s population expands to an estimated nine billion people by 2030, the apparel industry is expected to double in size to a $4.4 trillion business with regional production clusters emerging to cater to new consumer markets. Just as in previous industrial revolutions, when factory owners adopted new technologies to leverage a competitive advantage in their industries, it is incumbent on today’s manufacturers to invest in the education of tomorrow’s workforce.
To meet this need in a sustainable, inclusive manner, the industry, policymakers and labor advocates are developing models for responsible automation adoption that addresses the impact on workers across the value chain. Bangladesh, for example, has started planning for a diversified economy by improving the complexity of its manufacturing processes and sophistication of its products, aware that investments in skill-building is a crucial part of the equation. This will take time, collaboration, and innovative thinking as the industry again pivots into a new era.
Sabine Hertveldt is IFC — ILO Better Work Program Lead at the International Finance Corporation