The Philippine Garments Industry suffers long after the World Trade Organization began a 10 year phase-out of the Multi-Fiber Agreement in 1995. It had previously established quotas and preferential tariffs on apparel and textile items imported by the United States, Canada and the European nations.  The quota phase out has caused a serious blow on Philippines garments manufacturers because it opens the playing field to countries specifically China, which could produce huge volumes at lower cost. A number of garment manufacturers decided to drop from the garment export trade since then and a few companies remain.

Armina Garments Manufacturing Inc. is among the surviving companies – a testament of resilience, flexibility and change.

Armina's QC team check finished product
Armina’s QC team manually checks each finished product.

The Big Shift

Armina Garments began operation in 1985 during the glory days of the garments export industry. It is owned and managed by Mr. Armand Cruel. Their main export products are baby and children’s sweater and dresses which are sent to Spain, Italy, United Kingdom and United States of America.

After the quota phase out, orders for their products dropped because of extreme competition which forces the company to downsize.

sewer sews the hemline - lycah blog
A sewer sews the hemline of an underwear.

Triggered by the sudden drop in exports, Mr. Cruel looked for other products to replace their current line and decided to shift to the manufacture baby and children’s underwear.

The shift was difficult because their workers are more skilled in doing the intricate designs of their previous product lines and are not trained in doing the underwear design which is simpler but requires more precision in sewing.

The company also struggled to find the balance between having the old sewers and the young but ultimately achieved their goals of reaching their quota through synergy – the old taught the young how to properly sew, the young introduced agility and precision in sewing.

Control and Focus

In the early phase of the transition, the company suffered from a messy set up and things ran out of order. It was very difficult for the Armina to scale up production because they are still having problem with the availability of manpower and skill of the workers.

Mr. Cruel tried to make several other products alongside the underwear to diversify but it didn’t work well. He made risky decisions until he decided to put their focus on one line so they can scale up faster. Eventually, they specialized in making baby and children’s underwear for the US market.

Slowly, they learned the trade, scaled up in manufacturing and took control over the business by focusing more on their current production.

Hinrich Foundation team took a photo after their factory tour
From L-R (Lycah Baylon, Mr. Armand Cruel and Gabish Joshi) took a photo after their factory tour.

Scaling Up

After several trials, mistakes, and finding the right mix of getting the business going, the company started expanding. They increased their production from making 100,000 pieces to 500,000 pieces per month and hired more than 100 workers. They developed a culture of output-quality synergy that not just focuses on the quality but also in the quantity of their output. To quote Mr. Cruel, “Start small and learn from experiences. Learn from the old and new. You’ll never get wrong unless you continue learning.”

Listening to Mr. Cruel during the factory visit, I realized three important things. One, change is inevitable especially in business and it pays to be flexible. Two, you should never stop learning especially from your mistakes; and three, if you want to go further, you have to get your feet wet – take risks!

About the author – Cherrilyn Baylon (Lycah)

EAP-Hinrich happenings-Hong Kong trade show blog-Blog Picture_Lycah

Cherrilyn Baylon (Lycah) is based in Manila and works as the export consultant for the Export Trade Assistance program in the Philippines. She is responsible in pre-screening suppliers for ETA and provides them one-on-one training and practical approaches using online marketing tools to increase export sales and create jobs. She also conducts research and interviews for the content of the PH Developing Country Sourcing Reports.

Prior to working with Hinrich, she’s been into development work for 4 years focusing on micro, small and medium enterprises. She worked as a Program Coordinator (2 years) and a Project Development Analyst (2 years) for MASICAP MSME Development Foundation, Inc., a non-government organization that also promotes trade by helping MSMEs gain access to financing. She is trained in the preparation of project feasibility study and business proposals.

Lycah graduated from the Notre Dame of Marbel University in 2010 and obtained a degree on Bachelor of Science in Commerce major in Management Accounting.