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

When Houman Salem, founder and CEO of Argyle Haus of Apparel, places fabric orders, his Los Angeles-based suppliers still require them by fax—and Salem says the company doesn't even have a fax machine. To accommodate the process, his team has to go through the hassle of printing, scanning, and then sending the orders.

"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."

According to Salem, apparel manufacturing businesses are mostly family-run, but the younger generation shows little interest in taking over, while current owners resist change.

"They're preparing to retire, and overhauling their systems isn't worth it to them, so they'd rather keep things as they are," he says.

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

Salem notes that California once had about 9,000 garment factories, and now that number hasshrunk to about 2,000, and it's still declining.

High manufacturing costs hinder technology investment

Cost is another major barrier to technology adoption. Salem says the average cost of manufacturing in the U.S. ishigher than overseas, especially inmajor manufacturing hubs like California and New York.

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 Centerreports that Los Angeles has the largest cut-and-sew garment center in the U.S., with more than 45,000 garment workers employed in the city's apparel manufacturing sector, sewing clothes for major American brands like T.J. Maxx, Revolve, Ross, and Fashion Nova.

However, Salem points out that the biggest cost drivers for California garment manufacturing facilities are wages, insurance, and taxes. "For example, I have to pay the highest workers' compensation rates for manufacturing employees," he says. "For every $100 in wages, we pay $18 in workers' comp." By comparison, 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 facilities—especially the rules for gig workers under the state's AB5 law—make it harder for businesses to stay compliant compared to states with looser regulations, and they face hefty fines. Fines range from thousands to millions of dollars, undermining companies' ability to invest in technology and automation.

But for manufacturing businesses, operating in these hubs is crucial because that's where the labor force is concentrated.

Salem says these extra costs ultimately get passed on to brands, pushing them toward overseas factories with lower labor costs and fewer regulations, but where systems and processes are more manual. A 2020 report from the University of Delaware shows that U.S. garment workers' minimum wage is about $1,160 per month, among the highest globally; in contrast, Indonesian garment workers earn a minimum of just $181 per month.

"What holds companies back can be a lack of skills or insufficient funding," says Inna Kuznetsova, CEO of supply chain planning and optimization company ToolsGroup. "They often get caught in a chicken-and-egg situation—you need to invest in technology to reduce inventory spending, but inventory spending is so high that you 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, they'll invest in modernized warehouses and manufacturers," says Matt Jackson, vice president of digital innovation services at Insight.

Focus on the supply chain

Jackson says that despite the 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 times for goods from Asia stretched from the previous 4 to 6 months to 8 months or even longer.

"Before the pandemic, everything revolved around cost control, pursuing the lowest cost and cheapest supply chain," Jackson says. Kuznetsova says supply chains were relatively stable back then, and retailers could manage inventory with basic tools or Excel, but technology did little to help optimize demand for specific items.

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. That's because these technologies don't replace brands' core business, but they do enable companies to respond faster to customer demand and fashion trends.

"We're seeing new investment around demand modeling," Jackson says, "understanding when demand peaks, what's happening in the market, what the trends are, and what other fashion companies are paying attention to."

One of Jackson's clients, brands like Abercrombie & Fitch, haveset aside fundsfor AI and data analytics to get products to customers faster and meet demand.

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, who previously consulted on automation processes and digital innovation.

In the past, retailers would enter a showroom and fill out paper orders, but now systems likeNuOrderandJoorhave digitized this process and are widely used. NuOrder'swebsite showsits fees start at $600 per month, while Joor's annual fees range from $5,000 to $20,000, according to Inc.

"If anyone is still doing things manually, it's their own choice," Cathcart says. "Some people say, 'I've been doing it this way 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. Unlike some aspects of supply chain management, automating apparel development is extremely costly.

Apparel development consists of 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 due to high costs. Salem says a single machine can cost upwards of $500,000, and it doesn't completely eliminate human labor—workers still need to feed fabric into the machine, which then spreads and cuts it, and afterward someone has to remove the fabric stacks and deliver them to sewers.

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

Cathcart says it's relatively easy to use robots to make car or airplane parts because they're rigid, but that's not the case with clothing. Fabric is soft and pliable, and making garments involves layering fabrics of different weights and stretch. "Thinking you can automate the entire process is extremely complex," she says.

That doesn't mean there haven't been attempts to find solutions. Launched in 2016,Sewbois a machine that chemically stiffens fabric, allowing robots to sew garments. According to itswebsite, the chemical used is polyvinyl alcohol, a polymer already widely used in textile production.

Sewbo founder Jon Zornow told Fashion Dive in an email 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 the fabric, while robots guide the sewing needles. In 2017, Softwear was selected by Adidas to produce 800,000 T-shirts per day—a volume that would be impossible with manual labor.

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

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