This is the manufacturing stage which converts yarn into complete garments or into fabric.  There are three main types of knitting in the merino wool industry, the classic "fully-fashioned", complete garment knitting and circular-knitting which knits a length of fabric rather than individual panels. 

Fully fashioned knitted panels are linked together to make knitted garments where as fabric from circular knitting is cut into panels and made into garments in much the same way as in woven tailoring.