Global Advantages Of Industrial Clustering

Two sock-making factories — one in the U.S. and one in China — compete for global dominance of the industry. Industrial clustering is the key to success.

China’s Strategy Gives It the Edge in the Battle of Two Sock Capitals

This Appalachian town declared itself the Sock Capital of the World for good reason.

It began making stockings in 1907 and once boasted of producing 1 of every 8 pairs worn on the planet. The cushion-sole sock was invented here. Local sock makers are models of U.S. manufacturing, working hard, sharing resources, shaving expenses, investing in technology.

The Robin-Lynn Mills Inc. factory, for instance, owns some of the finest equipment in the business, electronic knitting machines from Italy that set the company back more than $25,000 apiece and can spin out a sock in 75 seconds, with the toe seam automatically sewn.

But Robin-Lynn, whose employees typically earn about $10 an hour, didn’t turn a profit last year. On the other hand, Three Star Socks in Datang, China, made about $500,000 using knitting machines worth $1,000 each and paying its workers an average of 60 cents to 70 cents an hour plus room and board.

But this familiar story of an enormous difference in costs is only part of the tale of two sock makers and their two towns.

China’s advantages in the global marketplace are moving well beyond cheap equipment, material and labor. The country also exploits something called clustering in a way that the United States just can’t match.

By Don Lee, Times Staff Writer

Full Story: http://www.latimes.com/business/la-fi-socks10apr10,1,5181869.story?ctrack=1&cset=true