Hidden Price of UK-Made Fashion: The Factory Absorbs What the Brand Will Not

It is a fait accompli of sorts. Before a single garment reaches the shop floor, a UK manufacturer has already spent money. That transfer of risk does not begin at the point of production. It begins the moment a factory enters a buyer's orbit.

For most manufacturers, the first financial exposure comes during onboarding. The report found that 90% of manufacturers are required to complete a formal onboarding process before orders are placed, with auditing and sustainability certification among the standard requirements. Audit costs range from £1,000 to £4,000 per year—and because different brands favour different audit schemes, factories working with multiple buyers are frequently required to fund several audits annually. The majority of respondents—79%—reported having never received any financial or in-kind support from brands to cover the costs of meeting audit requirements or implementing corrective actions.

They remain on tenterhooks. No order is guaranteed at the end of this process, and manufacturers absorb the compliance costs and allocate staff time without contractual assurance that work will follow. Almost all respondents—94%—confirmed that onboarding costs are borne entirely by manufacturers. More strikingly, 42% described situations in which they had successfully completed all onboarding and audit requirements for a brand, only to receive no orders at all.

Things worsen at the sampling stage. Ninety per cent of manufacturers reported bearing the full cost of producing samples—at an estimated cost of around £200–£300 per sample, or roughly 25 times the unit production price. Based on survey data, a typical manufacturer faces weekly upfront sampling costs of between £1,300 and £4,000, a significant portion of which will not be recovered if orders do not materialise. Nearly half of respondents (46%) reported that it was common or very common for styles they had designed, priced, and sampled to be placed with another factory, with no compensation paid. Factories, in effect, function as unpaid design and development resources.

Pricing negotiations follow, and this is where the power imbalance becomes pronounced. The survey findings are pointed: those negotiations are rarely balanced. Over half of manufacturers (52%) reported that brands open price discussions by setting a target figure rather than engaging with actual cost structures. Three-quarters (75%) said brands do not adjust unit prices when the National Minimum Wage rises, meaning the increased labour cost is absorbed entirely by the manufacturer. Order volumes are manipulated to compound the pressure further: 67% reported being quoted for large orders, only for a smaller order to be placed at the same per-unit price.

Forty per cent reported having accepted orders priced below the actual cost of production, typically to protect relationships or avoid losing future business after sunk costs had already been incurred. The cumulative effect is evident in margins: three times more respondents reported declining profits than rising ones, with average margins falling by 3% between 2019 and 2024.

One mechanism increasingly deployed in pricing negotiations is open costing, in which manufacturers disclose a full itemised breakdown of production costs to the buyer. While presented as a transparency tool, the survey findings suggest it rarely benefits the supplier: 76% of those who used it said it did not help in planning orders or production, and 88% reported that brand pricing pressure either stayed the same or increased as a result.

And, matters don’t get better. The risk does not stabilise once an order is confirmed. Thirty-one per cent of manufacturers reported that brands cancel orders after agreements have been reached—at a point when fabric may already have been purchased and production capacity committed. A further 79% said that when brands make specification changes to confirmed orders, they do not cover the resulting costs. Penalties for late delivery are imposed even when delays stem from buyer-initiated changes made after production had begun—reported by 31% of respondents. Each stage of the commercial relationship adds a layer of uncompensated risk. None of the mechanisms described restores balance; they accumulate in one direction only.

Financial pressure extends beyond point of production. Payment terms have lengthened from a median of 30 days in 2019 to 45 days in 2024. So, manufacturers wait longer to recover costs they have already absorbed. A further 44% of manufacturers report that brands make regular requests for payment extensions beyond even those lengthened terms—and 10% report payments being delayed more than three months past originally agreed dates. Beyond payment delays, 29% of manufacturers report brands demanding discounts after contracts have already been agreed—and 72% of those say they have never been able to successfully challenge such demands, with some describing last-minute discount requests of as much as 20% arriving after goods had already been cut or shipped.

The commercial pressures do not remain abstractions at the business level—they move down the supply chain and land on workers. The mechanisms vary, but the direction is consistent: instability generated by buyer behaviour is absorbed by the people on the factory floor.

Lead times offer a clear illustration. The survey found that median lead times in UK fashion manufacturing fell from 27 days in 2019 to 14 days in 2024—nearly halved in five years. The speed is real, and it is genuinely valued by brands. However, this is financed by suppliers.

Sixty-three per cent of manufacturers commit to fabric purchases before a formal order is placed, often because compressed timelines leave no alternative. Meanwhile, 75% said brands rarely or never provide a seasonal or annual volume forecast, or reserve production capacity in advance. Factories are expected to be ready to move at short notice, without the planning information that would make that readiness sustainable. Longer payment terms stretch cash flow further, leaving manufacturers funding production costs from their own reserves while awaiting settlement.

Workers are the first to feel the pinch. When orders are cancelled or cut, 58% of manufacturers reported reducing employee hours—an immediate impact on workers' incomes. Twenty-nine per cent reported workforce terminations linked to sudden contract changes. When orders spike unexpectedly, 72% reported increasing overtime to meet demand.

The workforce is mostly female—59% overall, rising to 61% of the core workforce—and consistently ethnically diverse, particularly in major manufacturing centres where workers are commonly drawn from White British, Eastern European, and British Asian communities. Concentrated in areas where alternative employment is limited, irregular hours and income insecurity fall disproportionately on workers who face the greatest structural labour market vulnerabilities.

It is a vicious cycle with no natural corrective. Volatile order flows make consistent staffing difficult to sustain; inconsistent staffing makes it harder to retain skilled workers; and the loss of skilled workers erodes the very capacity that makes UK manufacturing attractive to brands in the first place.

When factories experience unfair treatment, their options for challenging the status quo are few and far between. Half of manufacturers did not raise a formal dispute in the past year—and the report is clear that this does not reflect an absence of grievances. Of those who did raise a dispute, only 25% reported a successful outcome. It’s as if the fight is not worth it.

Fifty-seven per cent of respondents felt it was simply not possible to challenge unfair practices or contract violations with brands. Legal routes were seen as effectively inaccessible, with respondents citing the cost of litigation and the superior legal resources available to large buyers. Fear of losing future orders was the dominant constraint—a calculation that kept grievances unvoiced and practices unchallenged. In a system where factories fear challenging their customers, oversight becomes a structural question, not merely a commercial one.

The Price of Doing Nothing

The report's central finding is not that isolated bad actors are exploiting domestic manufacturers—it is that the practices documented are systemic. That distinction matters—not least because ‘Made in the UK’ is sold to consumers as an ethical guarantee. The report's authors propose a Garment Trading Adjudicator, backed by a statutory supply chain code of practice, as a mechanism for addressing the structural imbalance. The harder question remains: can the UK credibly rebuild domestic manufacturing while allowing buyers to externalise risk at every stage? If brands want speed, flexibility, and ethical credibility, the report makes plain that someone still pays. The evidence points consistently to the factory floor.