Gildan’s International Growth

Gildan’s International Growth Strategy

Gildan Activewear employs 48 000 people around the globe, but is a name that is not well known to many Canadian consumers. Part of this comes from the products that the company makes: T-shirts, fleece shirts, socks, and underwear. But it has high visibility in two sectors. The first is what is known as the printwear business, which means specially ordered shirts with company, team, or other logos on them. It is the leader in this field in both Canada and the United States, and is extending its printwear abilities in global markets. The second area of visibility is through licensing agreements to produce New Balance and Under Armor branded products.
The company has a truly global supply chain system. The company’s headquarters are in Montreal. Its printwear operations are in Barbados. Its branded apparel operates out of South Carolina, United States. The manufacturing facilities that support both of these operations are located in Central America, the Caribbean basin, and Bangladesh. Finally, the company’s yarn spinning takes place in North Carolina and Georgia, in the United States.
The company is highly dependent on the price of its raw material: cotton. A few years ago cotton prices rose, then fell back to historic averages. The company made a strategic decision to lower its selling prices when cotton costs fell back to normal levels, even though this would mean lower profit margins for at least half a year as the company worked through the consumption of inventory that was purchased when cotton prices had reached an all-time high. This strategy had, obviously, negative short-term consequences, but positioned the company well in the medium-term. It worked well, as the lower prices ended up increasing demand, and Gildan was able to increase its market share in the U.S. printwear segment. This also helped international printwear sales where sales increased by 30 percent in the latest full fiscal year.
For the future, Gildan is planning upgrades to a textile manufacturing facility in Honduras and a new sewing facility in the Dominican Republic. These investments are expected to help the company’s position as a low-cost producer in the 2016–17 period. In February 2017, the company announced that it completed the acquisition of the American Apparel Brand, thus widening the company’s brands even further. 

Questions

1. What are the benefits of having a global supply chain such as Gildan’s? What are the risks?

2. The company is very sensitive to the price of its key raw material: cotton. Are there any steps it could take to reduce its risk (see Chapter 9)?

Place this order or similar order and get an amazing discount. USE Discount code “GET20” for 20% discount

Posted in Uncategorized