"Good ideas can come from anywhere: Our customers have taught us new methods of quality control. But the best ideas often come from sewing-machine operators themselves. Last month, one of them asked why we couldn't buy groceries and supplies in bulk and then sell those items at a discounted rate to employees. We could, and so we did. That's a great idea that will make a huge difference."

Sidebar: Fernando's Fast Factories

When Fernando Capellán opened his first garment factory back in 1986, all of his cloth was cut in Miami. Thread was shipped in from Charlotte, North Carolina, and zippers were brought in from China. The logistics of managing the company's inventory were brutal. Buttons and thread had to be ordered as much as 12 weeks in advance.

"We were always waiting for materials," Capellán says. "And we were also paying a premium to get those goods imported."

His solution was good for Grupo M, and good for the Dominican Republic. Grupo M has forged eight partnerships with suppliers that are willing to set up subsidiaries in the island nation. Grupo M helps fund the new operations, and it buys big chunks of their output. The result: Grupo M's product-cycle times and inventory stockpiles have shrunk dramatically.

For Grupo M, the materials it needs to do business are now only a mile and a half down the road, instead of an ocean away: The proximity yields not only cost savings but also greater flexibility and faster turnaround. Part of Capellán's motive for striking up the deals was to bring more jobs to his country through businesses that he knew the Dominican economy could support. As the garment industry changes and as his country grows more prosperous, Capellán says that there will be an unmet need for businesses that provide higher-paying jobs. His solution? To court high-tech and electronics companies that will bring their production facilities to his industrial park.

"If this country's economy keeps growing at the current rate of between 7% and 8%, we're not going to reach the level of efficiency that we will need in order to be able to pay our people enough to keep the garment industry alive here," he says. "The industry is going to fade away faster than most people think it will. We have to be ready to diversify."