The textile-apparel chain

Argentina is one of the few countries in the world that produces locally each of the links in the textile-apparel chain. Yes, as you heard: raw materials such as cotton or wool are processed here, yarns and fabrics are made, clothes are sewn and also marketed. What is each of these stages like? Four infographics with everything you need to know about the clothing production process.

Unlike many countries, Argentina stands out for having local production in almost every link of the textile-apparel value chain. This includes the primary links, where cotton, sheep and camelid fiber is produced, as well as the industrial links, where yarns and fabrics are made ready for the production of garments intended for trade. While maintaining a robust regional presence in primary and textile links, clothing manufacturing and marketing are predominantly concentrated in Greater Buenos Aires. With the exception of fibers, most products are destined almost exclusively for the local market, making the textile industry highly dependent on domestic consumption.

The textile-apparel chain

The primary links involve the local production of cotton and wool from sheep and camelids. The initial industrial phase, the textile link, encompasses a spectrum of activities linked to input production: fiber processing, yarn production, fabric production, as well as dyeing and finishing. 

Next, the industrial phase of apparel manufacturing covers the tasks of garment-making, including design, tailoring, fabric cutting, sewing and fitting, and the placement of the different accessories (zippers, buttons, buckles, among others). Finally, marketing, whether wholesale or retail, completes the value chain to deliver products to end consumers.

Fiber sourcing

Fibers used for textiles are classified into three main groups based on their origin: natural (from animal or vegetal origin), synthetic (produced from oil derivatives) and artificial (produced through the chemical transformation of natural products such as cellulose). Although natural fibers have historically predominated, synthetic fibers have been gaining ground since the 1950s and currently represent 60% of the textile fibers used.

In Argentina, natural fibers are produced mainly in the north and south of the country. However, synthetic and man-made fibers are mostly imported, since local capacity is limited. Primary cotton production is concentrated in the northern reaches of the country, notably Santiago del Estero (58%) and Chaco (30%), with a more modest contribution from Santa Fe (7%), Salta (3%), and San Luis (2%). On the other hand, wool production takes center stage in the southern regions, particularly in Chubut (25%) and Santa Cruz (17.5%), with significant contributions from Buenos Aires (14.5%), Corrientes (8.4%), and Río Negro (8%). Both cotton and wool serve a dual purpose: catering to international markets and meeting domestic industry demands. In this regard, these are among the few products in the chain that are easily exported, with 95% of wool production being sold abroad.

The textile sector exports around US$500 million annually, representing less than 1% of total exports. 90% of these exports are textile raw materials, such as cotton and wool, with low value added. Despite insufficient domestic production of synthetic and artificial fibers and yarns, imports of these inputs are essential, resulting in a marked deficit in the chain’s foreign trade.

Yarn manufacturing

Spinning, a critical step in textile manufacturing, is the process of twisting multiple short fibers into a continuous strand of greater strength. This process is the second step in the value chain, the first for natural fibers and the second for synthetic and artificial fibers.

Domestic spinning mills are strategically located near the raw material, especially in Chaco, Corrientes and Tucumán, or in provinces that have benefited from industrial promotion regimes, such as La Rioja and Catamarca.

This activity is characterized by being capital and energy intensive. The machinery used, of considerable size and high cost (around US$10 million), operates uninterruptedly, 24 hours a day, 7 days a week, processing millions of kilos per year. Given the need for significant investments to establish a factory, the spinning link emerges as the most concentrated in the entire value chain. At present, the 12 main spinning companies account for practically all production, underscoring the marked concentration in this segment.

Fabric manufacturing

Weaving machines combine a large number of yarns to craft a singular textile. These textiles are systematically categorized into three primary genres based on the processing methodology applied: knitted (dominant in casual, intimate, and athletic apparel), woven (employed in denim, bespoke tailoring, and shirting), and nonwoven (utilized in industrial contexts and personal care artifacts). Typically, fabrics emerge from the weaving machines in an unadulterated hue, requiring additional processing (finishing) to give them color, prints and other characteristics.

 

Weaving mills have a relatively federal geographic distribution, with facilities in Chaco, San Juan, Corrientes, and Tucumán, despite a more pronounced concentration is observed in the Metropolitan Area of Buenos Aires (AMBA). It is worth noting that a large number of spinning mills have their own integrated weaving facilities, leading to instances where some exclusively trade in fabrics, forgoing the sale of yarn.

 

Like spinning, weaving is a capital-intensive activity. Given the comparatively smaller size of machinery compared to spinning mills, coupled with an average space requirement of only one-sixth (1,000 m2), the initial capital investment is correspondingly lower (US$1,000,000).The activity has lower entry barriers, which explains the greater number of companies dedicated to the production of fabrics compared to the spinning segment.

Apparel Manufacturing

Clothes manufacturing involves the execution of a series of interrelated production activities. First, the design of the garments is carried out, followed by the elaboration of the molding of its different parts. Subsequently, the fabrics are superimposed and a pattern is traced on them, after which the fabrics are cut and sewn, and the various pieces are assembled to create the final garment.

 

In stark contrast to spinning and weaving mills, this process is characterized by low automation. As a result, garment manufacturing stands out for generating a considerable amount of employment per unit of product.

The machines used in this link are relatively affordable, costing approximately US$2,000, and a sewing workshop can be set up in a small physical space of only 50 m2. These low barriers to entry contribute to the fact that this sector is the most fragmented in the entire textile chain. However, manufacturers face limited bargaining power due to intense competition, resulting in low incomes and poor working conditions.

The concentration of garment manufacturing activity is markedly concentrated in the Buenos Aires Metropolitan Area (AMBA). Approximately 80% of the country’s garment factories and workshops are concentrated in this region, which serves as a wholesale hub supplying all of Argentina. Virtually all of the local production of ready-made garments is destined for the domestic market, with the exception of some specific segments such as socks (for example, the Nike brand exports sports socks produced by the local company Derwill, which stands out as the country’s leading apparel exporter) and premium brand garments.

How apparel is sold

In Argentina, the retail clothing universe comprises a diversity of establishments. Although there are some international brands and well-known retail chains, none of them have a significant market share in terms of volume. The retail market is a heterogeneous set of stores that offer their products to consumers of various income levels, from premium brands in shopping malls to stalls in informal fairs or “saladitas” throughout the country.

Wholesale distribution is mainly centralized in Buenos Aires, concentrated on two major circuits: Flores and La Salada, which supply garments to retailers nationwide. Both circuits emerged and prospered in the 1990s, gaining relevance over time compared to the old Once circuit.

The commercialization sector employs 223,000 workers, characterized by a high degree of informality, low wages and a prevalence of self-employed workers.

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