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Paper Abstract: Discusses methods of manufacturing clothing and textiles. The small-scale production of Italian home production of knitwear. Compares its efficiency to factory production of knitwear represented by Benetton. Success of Benetton Group in Italy. Describes knitwear production in Modena. Basic steps of production. Issues of quality control, transportation, theft and embezzlement. Paper Introduction: INTRODUCTION Italian knitwear firms use an ancient method of production by which homeworkers use their own tools and workplaces to convert raw and semi-finished materials owned by large manufacturers into finished goods. This is quite different from the factory-oriented output used by other clothing and textile industries in modern industrialized nations. Lazerson (1993) notes that within both the Marxist and liberal paradigms of economic development, this sort of small-scale production would eventually give way to larger and more complex organizational forms, yet these firms persist in following the old ways. Lazerson finds that this is true in Japan as well, and in both countries "small firms dominate important production activities from numerical control machine tools to textiles" (Lazerson, Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. If a serious disruptionprevents a subcontractor from completing the work, another subcontractorcan almost always be found to take up the slack. HOME PRODUCTION Lazerson (1993) describes knitwear production in the province ofModena, noting that Modena became one of the five richest provinces inItaly through knitwear production. Knitwear lends itself to frequent movements because it is lightand relatively immune form damage during transport, and it has to be movedfrom one subcontractor and homeworker to the next in the process. The Benetton's have a stake of 87 percent in thepublicly traded retail company Benetton SpA that alone is worth $95 million. The system thus has roots in the local political and socialhistory and may not be replicable in other situations. These processes are concentrated in one place,but this also entails a larger bureaucratic structure to see to it thatmaterials are acquired, cloth woven, goods produced, and orders filledaccording to specifications. The Benettons make no garment until it has beenordered by a shop that stocks only their merchandise. Theftand embezzlement can be reduced by the reduced bureaucracy and by the factthat each artisan is responsible for all materials, product, and so on,which also reduces costs for idleness and quality problems. "Fast forward." Business Month, 24-3 . Lazerson finds that this is true in Japan as well,and in both countries "small firms dominate important production activitiesfrom numerical control machine tools to textiles" (Lazerson, 1993, 4 3).The issue is how efficient can this method be, and it is argued thatItalian home production in this industry has shown that it can be asefficient as the factory production of knitwear represented by Benetton. The industry employs approximately16, people. Weavers first transform the manufacturer's yarn into cloth. Many of these steps are accomplished withless direct involvement by any given worker and without the personal touchthat is often provided by the homeworker. In the 198 s the brothersadded stakes in several Italian banks, a mutual fund business, an insurancecompany, a hotel chain, and the most profitable department store chain inItaly. Thus, while these different issues might seem to create limitationsfor putting out, in truth, they show that companies that depend on homeproduction actually can reduce costs because of these very issues. EFFICIENCY Can Italian home production compete with the factory methods ofBenetton? The home production system requires largerbuffer inventories to assure constant product-flow because of the longdistance between work-stations, but this has not been a limitation becausemost factories have maintained large inventories to guarantee fullutilization of the labor force and adequate supplies. Other similaritiesexist as well, to be noted below. Pepper, C.B. Bothtypes have to consider transportation of the finished goods, of course, todistributors, suppliers, and ultimately retailers. Thedifficulty of transferring even a form of the system can be seen in howmany difficulties Benetton has had in the American market. Assemblers cut and sew the cloth into sweaters. Lack of supervision can contribute to theft and has also impeded theability of manufacturers to control how much outworkers do. "Future alternatives of work reflected in thepast: Putting-out production in Modena." In Explorations in economicsociology. Costs for both can be increased by theft, shirking by employees, andhigh transportation costs. (1993). INTRODUCTION Italian knitwear firms use an ancient method of production by whichhomeworkers use their own tools and workplaces to convert raw and semi-finished materials owned by large manufacturers into finished goods. There are legal differences which also benefit home production,because of differences in pay, social insurance costs, dismissalprotection, and sickness benefits which are accorded to factory workers. "Benetton learns to darn." Forbes,122-126, Lazerson, M. Other subcontractors press, inspect, mend, and package thesesweaters. quality control is of great importance given that thegarments from Modena are in the middle- to upper-price range. President Luciano Benettonmade a decision in the early days of the company to subcontract, a strategythat has cut down on the number of employees and freed the company frommany government and union controls. ISSUES TO CONSIDER There are also provisions to be made for transportation in bothsystems. (1988, October 3). In Italy they builttheir company into the country's most dynamic and successful apparelexporting company. FLEXIBILITY The social characteristics underpinning the model are identified byLazerson (1993) as being most important. The Benettons entered the clothingindustry 25 years ago, and 2 years ago they opened their first store.There are four Benetton brothers who run the company. Onereason for this is that it fits the agricultural tradition in Modena, whereintense periods of seasonal labor were the norm in an earlier era. Works Cited Fuhrman, P. Ninetypercent of the Modena knitwear firms are located in three townships, allwithin twenty miles of one another, which reduces the distance that has tobe covered. The lack of supervision, though, might be blamed for poor and unevenquality of output. There are important legalentitlements granted to artisanal firms, but there are also entitlementsderived from the peculiarities of socialist cooperation and Catholiccorporatism. The company has continued to grow through the development of newbusinesses as well as through increased sales. Additional steps may be required depending on the needs of the buyerand the type of material. A company like Benetton also keeps its subcontractors in a tight areaand so must also transport these goods from one to another, perhaps with amore controlled system than is used for the home production method. There are limited or no production facilities, so themanufacturer depends on highly specialized subcontractors to transform rawmaterials into a finished product. For one thing, the company subcontractscertain tasks, though it creates factories for the different steps so thatone factory may produce the cloth, another do the cutting, and another dyethe sweaters. Subcontractors also rely on homeworkers for performing individualtasks. In 1987 Benetton sold merchandise world $1 billion to4,5 franchised stores in 6 countries, and these stores produced retailsales of $2.5 billion. Still, the systemshows that it can compete with the factory system and compete well. A computer networkallows overnight adjustment of production and mid-season reordering withdelivery within two to three weeks, a schedule unique in the clothingindustry (Pepper, 1989, 22-3 ). The company also operates more like the home system in thatit does not make product until it has an order for it. the knitwear sectoras a whole uses a just-in-time supply system. Even thoughsome manufacturers reported that defects among put-out garments wereslightly higher than for those produced internally, the costs were stilllower than with the factory system because subcontractors, unlikeemployees, are liable for their own mistakes. A company like Benetton operates in a manner not entirely unlike theItalian home production of Modena. These steps might include the sewing and pre-ironing of the cloth prior to its cutting, the dying of the alreadyassembled sweater or the washing of it to soften it and remove excessanimal hairs, embroidery, and button-making. PRODUCTION IN A KNITWEAR FACTORY The basic steps in the production process are the same in theknitwear factory as in home production, though the different steps are allperformed in the same locale and may be performed by machine instead of byindividual artisan workers. The family also had a sizable holding of real estate, includinglarge commercial holdings in and around the family hometown of Treviso andin New York City. This mightseem to be a limitation, but it has not harmed the system in Modena becausethe business attracts those who value work far more than leisure. The Benetton Group, with sales of $2 billion, is the largestItalian producer of casual wear. New York: Russell Sage. Forbes estimated that the Benettons were worth $1.5billion (Fuhrman, 1988, 122). Early on, Benetton also introducedmanagement systems in production and marketing that resulted in realsavings in money and time. Lazerson (1993)notes that within both the Marxist and liberal paradigms of economicdevelopment, this sort of small-scale production would eventually give wayto larger and more complex organizational forms, yet these firms persist infollowing the old ways. (1989, February). Thisis quite different from the factory-oriented output used by other clothingand textile industries in modern industrialized nations. Studies of workers in Modena shows that the artisans are readyto work for long hours and at times even on holidays and Sundays. Observers believe that the Benetton Group's success in Italy has beenthe result of a management style rooted in the resourcefulness and devotionto hard work of the people of the Veneto region of Italy, where theBenetton family grew up and continues to live. Theworkers make their own hours but do so with an eye to maintaining theirincome, which is unlike the factory system with its five-day, forty-hourwork week. 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