Ranked as one of Thailand's top three textile producers and the country's seventh largest garment maker with a 2003 sales turnover of US$46 million, the Nan Yang Textile Group is one of only a handful of totally vertically integrated companies in Thailand producing yarn to finished knitwear. Niki Tait pays the company a visit.

Nan Yang was established in 1956 as an apparel wholesale business employing eight people. In 1962 it moved into knitting, then dyeing and finishing and today its production base includes spinning, knitting, dyeing, printing, garment production and embroidery.

The company employs 12,000 people in 14 factories operating a totally integrated textile manufacturing processes, from spinning to the manufacture of circular and fully-fashioned knitwear.

Nan Yang sells three products: yarn, fabric and garments. It produces ring spun yarn, combed cotton yarn and semi combed cotton yarn. The greige and dyed-state yarn account for 15 per cent of group sales - of which, 10 per cent of goes for direct export and 85 per cent is sold to local knitters. Of this 85 per cent, 15 per cent is exported in the form of made-up fabric or garments, so is indirectly exported.

Yarn and fabric dyed or printed circular knit fabric accounts for 50 per cent of group sales. 15 per cent goes to local garment manufacturers who produce for the local market. The remaining 85 per cent is exported either directly or indirectly. Fabrics include single and double jersey, plains, stripes, fancy, fleece, and performance knits.

Nearly 100 per cent of the fabric produced is finished in-house. Some of the regularly ordered fabric is made for stock, reducing the delivery lead times.

Around 1.2-1.8 million yards of printed fabric is sold per month. The company has one rotary and three flat bed printers, plus carousel printers for printing on garment parts and finished garments.

Cut and sewn circular knit garments such as polos and complex T-shirts like football shirts, as well as fully fashioned knitwear account for the remaining 35 per cent of sales.

Of the 1.6 million garments sold per month 250,000 are cotton sweaters. All garment production is exported: 70 per cent to the USA, 20 per cent to Europe and 10 per cent to other areas, mainly Asia, as nominated by US or EU customers such as Nike, Next, Umbro, Tommy, Nautica, Polo and Gap.

The spinning is all 100 per cent cotton. Depending on customer demands, approximately 40 per cent of the raw cotton is imported from the USA, 30 per cent from Australia and 30 per cent from West Africa.

The fabric is either 100 per cent cotton or cotton blends. 80 per cent of the cotton yarn used in house is the company's own production; the remaining blended yarns and the high count cotton yarn Nan Yang buys in. For garment production, 70 per cent of the fabric used is made in house; the remaining 30 per cent is outsourced, mainly from China and Taiwan.

Trials using the Switchtrack system are taking place at Nan Yang

Factory set-up

With its headquarters situated at Nongkham, Bangkok, Nan Yang has 14 factories: two spinning, two knitting, one dyeing and finishing, one for printing, one for embroidery and the rest making garments.

Eight factories are located in the Bangkok vicinity, with the rest in Thailand and one in neighbouring Laos. The factories employ between 200 and 2000 workers depending on function and location.

For garment factories outside Bangkok the minimum unit size is a workforce of 1000. The garment expansion is taking place outside Bangkok as the cost of labour in the provinces is cheaper than the city and is more readily available.

Ten years ago Nan Yang started to produce clothing in Laos to make use of the country's GSP status allowing goods to be exported both duty and quota free to the EU. 1000 people are employed in Vientiane, the capital of Laos, but the low productivity of the workforce means the plant has not been expanded since it was established.

Fabric spreading - Nan Yang

Garment production

Garment production utilises a progressive bundle system with 100 per cent offline inspection and random in-line quality control. All fabric is 100 per cent inspected prior to entering the cutting floor.

There is a mix of automatic and manual spreading and cutting, with the automatic machines supplied by Gerber Technology. 100 per cent cut panel inspection takes place after cutting and prior to sewing. Sewing machines mainly come from Brother, Juki and Pegasus.

The company believes the cost of non-conformance is one of the highest manufacturing costs - far higher then the cost of labour - so it invests heavily in advanced technology and internal technical training. Consultants are brought in on a contractual basis from Ireland, Germany and Italy to help train local staff.

A massive investment in Information Technology is also underway. The systems are based on an Oracle database enabling the information flow to be developed in-house according to needs.

Final production - Nan Yang

Business expansion

Nan Yang is also in the process of expanding its business. By the first quarter of 2006 it plans to have increased its spinning capacity from 34 to 48 million pounds in weight per year. By the third quarter of 2005 the knitting capacity should have increased from 1800 tons per month to 2400 tons.

The dyeing capacity is being increased from 2400 tons per month to between 3200 and 3400 tons. Garment production is also being gradually increased throughout 2005, from 1.3-1.4 million pieces per month at the beginning of the year, to 2 million per month by the end.

All production is carried out on an OEM basis as Nan Yang says it prefers to make to customers' requirements.

According to president Ben Tuangsitthisombat, the company is keen to concentrate on its core competencies, which he considers to be threefold: the manufacturing and business processes; research and development, particularly in terms of fabrication; and business integration.

He is very buoyant about the future indicated by the current expansion plans.

"If you can make to the price, quality and delivery required you can get new business. We are selling a service and if we understand our customers and their needs and react to them, they will buy from us.

"By increasing our economy of scale we can share whatever gains with our customers whilst providing a better service. Our verticality is our strength and thus to expand our capacity we need to expand throughout the chain."

OEM will remain the focus of Nan Yang's production for the foreseeable future and there are no plans to expand into branding or retail. The company hopes to partner with a key ASEAN brand on OEM and thus continue to expand the business this way.

Nan Yang's services are also extending down the supply chain to the point of sale, including things like warehousing in the customer's own country for stock replenishment on certain basic styles. It is also offering a quick response service for customers on both new and repeat orders.

The company has an office in Las Vegas, USA, with warehousing facilities in upstate New York where the majority of its business is located. Should this prove successful, Nan Yang says it would provide similar services in Europe.

Niki Tait, C.Text FTI, FCFI heads Apparel Solutions, (www.apparelsolutions.co.uk ) which provides independent assistance to the apparel industry in the areas of manufacturing methods, industrial engineering, information technology and quick response.