The garment manufacturing industry urgently needs technological upgrades: traditional models face challenges

When Houman Salem, founder and CEO of Argyle Haus of Apparel, submits fabric orders, his Los Angeles-based supplier still requires them to be sent via fax—and Salem says the company doesn't even have a fax machine. To accommodate this process, his team has to go through the hassle of printing, scanning, and sending.

"We're talking about a very old and low-tech industry," Salem says. "The younger generation doesn't aspire to this industry; it's not as fun and cool as tech."

Salem observes that apparel manufacturing companies are mostly family-run, but the younger generation shows little interest in taking over the business, while current owners resist change.

"They're preparing for retirement, and a full system overhaul isn't cost-effective, so they'd rather keep things running as they are," he says.

This lack of succession is creating a ripple effect. Salem predicts these factories will eventually close, leaving a few giants, forcing brands to move production overseas.

Salem notes that California once had about 9,000 garment factories; now that numberhas shrunk to about 2,000and continues to decline.

Inherent manufacturing costs hinder technology investment

Cost is another barrier to technology adoption. Salem says the average cost of U.S. manufacturing ishigher than overseasespecially inCalifornia and New Yorkamong the largest manufacturing hubs.

According to the California Fashion Association, Los Angeles's fashion and apparel industry—covering textile mills, cut-and-sew factories, wholesalers, and distributors—is a$15 billion-a-year industry. The Los Angeles-basedGarment Worker Centeralso notes that Los Angeles has the largest cut-and-sew garment center in the U.S. The report found that the city's garment manufacturing sector employs more than 45,000 garment workers, sewing clothes for some of America's biggest brands like T.J. Maxx, Revolve, Ross, and Fashion Nova.

However, according to Salem, the biggest cost drivers for the state's apparel and manufacturing plants are wages, insurance, and taxes. "For example, I have to pay the highest workers' compensation rate for manufacturing employees," he says. "For every $100 in wages, we pay $18 in workers' comp." In contrast, the national average in 2023 was 93 cents per $100, according to insurer The Hartford.

Salem also says California's multiple regulations and inspections for manufacturing plants—especially the rules on gig workers under the state's AB5 law—make compliance far more difficult than in other states with looser oversight, and can lead to hefty fines. Fines range from thousands to millions of dollars, undermining companies' ability to invest in technology and automation.

But for manufacturing companies, operating plants in these hubs is crucial because that's where the workforce is concentrated.

Salem points out that these excess costs ultimately get passed on to brands, which then turn to overseas factories with lower labor costs, fewer regulations, but more manual systems and processes. According to a 2020 report from the University of Delaware, the U.S. offers one of the highest monthly minimum wages for garment workers globally at about $1,160; by comparison, Indonesian garment workers earn just $181 a month.

"What holds companies back could be a lack of skills or insufficient funding," says Inna Kuznetsova, CEO of supply chain planning and optimization company ToolsGroup. "They often get stuck in a chicken-and-egg dilemma—they need to invest in technology to reduce inventory costs, but inventory costs are so high they can't afford to invest in technology."

This dilemma also applies to companies looking to bring production back to the U.S. "If brands are going to invest in reshoring manufacturing processes, they'll invest in modernized warehouses and manufacturers," says Matt Jackson, vice president of digital innovation services at Insight.

Focus on supply chain

Jackson says that even with high costs, U.S. apparel manufacturers have been forced to increase technology investment over the past three years because the COVID-19 pandemic exposed problems in demand management and supply chains.

According to Kuznetsova, the pandemic disrupted retailers' monthly inventory forecasts, especially as shipping lead times from Asia stretched from four to six months pre-pandemic to eight months or even longer.

"Before the pandemic, everything was centered on cost control, pursuing the absolute lowest cost and cheapest supply chain," Jackson says. Kuznetsova notes that supply chains were relatively stable then, and retailers could manage inventory with basic tools or Excel, but technology did little to optimize how much of specific items to buy.

Now, Jackson observes that most technology investment is flowing into AI and data analytics to solve these problems by improving efficiency, thereby boosting profitability and improving sustainability. This is because such technology doesn't replace a brand's core business but enables it to respond faster to customer demand and trends.

"We're seeing new investment around demand modeling," Jackson says. "Understanding when demand peaks occur, what market dynamics are, what the fashion trends are, and what other fashion companies are doing."

Brands like Abercrombie & Fitch, one of Jackson's clients, have beensetting aside fundsfor AI and data analytics to get products to customers faster and meet demand.

"What holds companies back could be a lack of skills or insufficient funding. They often get stuck in a chicken-and-egg dilemma—they need to invest in technology to reduce inventory costs, but inventory costs are so high they can't afford to invest in technology."

—Inna Kuznetsova, CEO of ToolsGroup

Another area of the supply chain process seeing the most innovation is showroom ordering, according to Whitney Cathcart, co-founder of AI mobile body scanning solution 3DLook and former consultant for automated processes and digital innovation.

Previously, retailers had to go into showrooms and fill out paper orders; now systems likeNuOrderandJoorhave digitized the process and are widely used. According to its website, NuOrder starts at $600 per month; Joor's annual fees range from $5,000 to $20,000, according to Inc.

"If someone is still doing things manually, it's by choice," Cathcart says. "Some people say, 'I've been doing this for 30 or 40 years, so I'll keep doing it.'"

Lack of innovation in apparel development

Another part of the manufacturing process that remains highly manual is apparel development, which—unlike some aspects of supply chain management—is extremely costly to automate.

Apparel development involves three stages: pattern making, cutting, and sewing. Salem says the industry has made significant progress in automated cutting and software-based pattern making.

Although cutting technology exists, automated equipment hasn't been widely adopted because of its high cost—Salem says it costs over $500,000. The equipment also doesn't fully eliminate human labor: workers still need to feed fabric into the machine, which spreads and cuts it, and then someone has to pick up the fabric stacks and deliver them to sewers.

On the other hand, the sewing process is nearly impossible to automate, and most manufacturers still rely on traditional methods like hand sewing or sewing machines. The cut-and-sew segment, because it depends on manual labor, is one of the largest expenses in apparel manufacturing, accounting for roughly 35% to 40% of total costs.

Cathcart points out that it's relatively easy to use robots to make car or airplane parts because they're rigid, but apparel is different. Fabrics are flexible and pliable, and making garments requires layering fabrics of different weights and stretch. "Thinking you can fully automate the entire process is extremely complex," she says.

That doesn't mean there haven't been attempts to find solutions.Sewbo, launched in 2016,is a machine that chemically stiffens fabric so robots can sew garments. According to its website, the chemical used is polyvinyl alcohol, a polymer already widely used in textile production.

Sewbo founder Jon Zornow said in an email to Fashion Dive that the company is developing the technology with a team of industry partners, including Saitex (one of Levi's denim production partners), Bluewater Defense (a U.S. Department of Defense uniform manufacturer), and the Industry Sewing and Innovation Center. However, its tools are still in the development and evaluation stage and are not yet in production.

Softwear Automationhas also found a way to automate sewing, but only for T-shirts. The company developed a robotic system called Sewbots Workline that uses cameras to map fabric while robots guide sewing needles. In 2017, Softwear was selected by Adidas to produce 800,000 T-shirts daily—a volume that couldn't be achieved with human labor.

"The fashion industry overall, from concept and creation to sales, has always been an area of very slow innovation," Cathcart says.

But these emerging technologies show that change is brewing. "There's already a lot of innovation and progress, and the pace is accelerating because consumers have enormous power," Cathcart says.