Gildan’s headquarters are in Canada but most of its manufacturing operations are now in low cost countries. The company has successfully built up two low cost manufacturing hubs—one in Central America, comprising operations in Honduras and Nicaragua, and the other in the Caribbean Basin with operations in the Dominican Republic and Haiti. Almost 60% of its 15,000 employees are located at its biggest integrated facility, in Rio Nance, Honduras. The facility houses a range of manufacturing activities, including knitting, bleaching, dyeing, finishing and cutting, as well as sewing. Gildan has ambitious plans, and in 2008/09 it aims to invest US$160 mn in expanding its capacity at the facility. When complete, the plant will have the capacity to produce about 51 mn dozen pieces of activewear and underwear per annum.
Gildan has enjoyed strong revenue growth in recent years. In 2006/07 alone its net revenues rose by 24.7% to US$964.4 mn, having risen each year since 2002/03. However, the company has a number of weaknesses. For example, its markets are extremely competitive and margins tend to be very small. The company competes on the basis of price and reliability, and relies on cost reduction and large volumes to remain profitable. Also, most of its sales are in the hands of a few customers. In 2006/07 one customer alone accounted for almost a quarter of total sales while its top ten customers represented almost two thirds. To address this issue, the company has acquired Kentucky Derby and V I Prewett & Son to strengthen its position with large US retailers.
A further weakness is Gildan’s dependence on a few geographical markets. The company is seeking to diversify geographically and is building up sales in Australia, China, Japan and New Zealand. But with 88.4% of total revenues generated in the US market alone in 2006/07, the company still has some way to go.
PRODUCTS AND MARKETS
Markets for basic activewear
Factors affecting the market
Markets for socks and men's and boys' underwear
Production and supply chain strategy
Quality and price strategy
Cost reduction strategy
Corporate social responsibility strategy
PRODUCTION, SOURCING AND DISTRIBUTION OPERATIONS
Central America manufacturing hub
Caribbean Basin manufacturing hub
List of tables
Table 1: Gildan Activewear: financial performance, 2003-07