At the very fundamental level, clothes are still made in the way that they were millennia ago. It's still crop to fibres to yarn to fabric to cloth. You still can't put the (harvested) crop at one end of a machine and take out a garment from the other. But the nearest that one can come to this—putting a garment at one end and take out a refurbished one at the other—is indeed possible.
The Hong Kong Research Institute of Textiles and Apparel's (HKRITA) novel Garment-to-Garment (G2G) Recycle System has been doing that. Set up in 2018, the G2G system is a mini-scale production line set up in a retail shop recycling post-consumer garment to a new one. It is more than proof of concept; it shows that integral and closed-loop garment recycling can indeed be done, and that too without using any water and chemicals.
The other side of the story is this: no big-time manufacturer or brand has been able to do this at the industrial or mass scale. The closest is H&M's Looop, which in any case is a G2G derivative.
The technology behind the Looop was created by the non-profit H&M Foundation, together with HKRITA and Hong Kong-based yarn spinner Novetex Textiles. H&M's official description goes thus: "Looop uses a technique that dissembles and assembles old garments into new ones. The garments are cleaned, shredded into fibres and spun into new yarn which is then knitted into new fashion finds. Some sustainably sourced virgin materials need to be added during the process, and we of course work to make this share as small as possible. The system uses no water and no chemicals, thus having a significantly lower environmental impact than when producing garments from scratch." Looop was opened to the public at H&M's Drottninggatan stores in Stockholm in October 2020.