Girls', Children's, and Infants' Dresses, Blouses, and Shirts

SIC 2361

Industry report:

This category covers establishments that are primarily engaged in manufacturing girls', children's, and infants' dresses, blouses, and shirts from purchased woven or knit materials. Knitting mills primarily engaged in manufacturing outerwear are classified in SIC 2253: Knit Outerwear Mills.

Industry Snapshot

The companies operating in this category range from large manufacturers like Carter's to small, family-run businesses. Notwithstanding the size of the operations, in the late 2000s, just as the rest of the U.S. apparel industry, these companies faced stiff competition from low-cost imports just as the rest of the U.S. apparel industry. Against this backdrop, the offspring of baby boomers benefited from parents who were better educated and had more disposable income than their parents, which influenced purchasing decisions for their children's clothing. Moreover, children's clothing became more fashionable and trendy than ever before. However, the weak economic conditions of the 2000s undercut revenues for most segments of the apparel industry, including children's and infant's clothing.

Organization and Structure

Establishments that produce children's clothing are organized in a manner similar to the rest of the apparel industry and are composed of contractors, jobbers, and manufacturers. Contractors are independent manufacturers hired by various, and often competing, manufacturers. Contractors specialize in sewing garments from pieces provided to them and are hired by producers who do not have their own sewing facilities or who do not have the necessary capacity to do the job at their own establishment.

Jobbers are design and marketing businesses hired to perform specific functions, such as purchasing materials, designing patterns, creating samples, cutting material, or hiring contractors to manufacture the products. The cut materials are sent to contractors to be assembled.

Manufacturers perform all functions, creating apparel from purchased materials. They have staffs that produce designs, or they buy them from freelancers and purchase the materials (fabric and trimmings) needed. Generally, the cutting and sewing of the garment is done on site. However, when demand for an item exceeds the manufacturer's capacity, or if shipping deadlines cannot be met, outside contractors are hired. Most manufacturers have their own sales and shipping staff.

In the mid-2000s, many of the smaller satellite manufacturing sites closed, but California and New York remained viable locations for dress manufacturing activity, with some smaller facilities in Texas, Florida, and Illinois. According to figures from the U.S. Census Bureau, there were approximately 449 reporting establishments that manufactured women's or girls' dresses in 2005. This segment of the industry employed some 10,000 workers in primarily small facilities with less than 20 employees. Another 256 establishments produced women's or girls' blouses or shirts and employed another 12,000 workers.

Children's clothing sizes are divided into separate categories for specific age groups. Clothing for infants includes newborns up to age one, clothing for toddlers covers ages two to three, clothing for children covers ages three to six, and clothing for girls covers ages 7 to 14. Children's apparel manufacturers generally produce one line per season, typically creating four lines a year in winter, spring, summer, and fall.

Background and Development

The children's wear industry developed early in the twentieth century around the same time as the women's apparel industry. As women joined the professional workforce, they stopped making clothes for themselves and their children. Over time, children's clothing became more durable and the sizes became standardized.

A significant factor affecting the development of children's wear was the growing importance of television in children's lives after World War II. Children could emulate what other children wore on television, and advertisers could appeal to them directly. Children began to assert a greater influence over the clothing their parents purchased for them and often asked for stylish and fashionable clothing. They became independent consumers themselves and were often very fashion conscious and aware of brand names.

The number of workers employed in this industry dropped during the 1980s even as the value of shipments rose. As in other sectors of the apparel industry, increased consolidation and the strength of imported clothing contributed to this trend. The value of shipments grew from $1.4 billion in 1982 to an estimated $5.2 billion in 1997.

The recession that began in the apparel industry in the late 1980s particularly affected children's apparel producers. Domestic manufacturers were affected significantly while imports slowed only moderately. Nevertheless, it was expected that children's apparel sales would continue to increase as parents, grandparents, and children themselves purchased clothing manufactured in this industry.

A solid U.S. economy, growing at a slow, steady pace in the 1990s, provided the apparel industry with low unemployment rates, along with low inflation and low interest rates. Consumer confidence and spending was high in the late 1990s, and many industry forecasts called for continued solid growth. However, the economic downturn that began in 2000 precipitated a shift in consumer buying habits to discounters and off-price outlets. Lack of time, due to work schedules and preferences to spend more leisure time with family and friends, increasingly led many consumers to shop through the mail and over the Internet.

On January 1, 2005, all previous import quotas were removed for WTO member countries, and the entire fabric and apparel industry suffered a major, but expected, setback. By then, the United States was importing more than 50 percent of all apparel sold domestically. In order to compensate for the influx of imported apparel products, domestic manufacturers implemented several fundamental changes, including consolidation, outsourcing, and domestic technological development.

Textile and apparel imports from China flooded the U.S. market with a 22 percent share in 2005, driving down domestic sales and prices. The fiber-producing sector of the U.S. textile industry joined with labor unions in early 2005 to petition the U.S. government to invoke the WTO safeguard mechanism to limit damages. Such a safeguard, incorporated in the WTO agreement, allowed China to continue to expand its exports to the United States but limited growth. When this agreement ended in 2008, the National Committee of Textile Organizations and other industry organizations lobbied Congress for a new import-monitoring program on Chinese products.

In the mid-2000s, manufacturers that previously focused on adult apparel began branching out into infant clothing and children's wear, and a trend for more sophisticated styles and colors stimulated the children's apparel market. Increasingly, children wanted to dress like adults, and their parents were often more than willing to encourage that desire.

As children's apparel increasingly resembled miniature versions of adult styles, manufacturers saw a shift in outlets for their products. In the mid-2000s, parents bypassed mid-market department stores in favor of three other types of retailers: discount stores like Wal-Mart and Kmart; children's apparel specialty stores, such as The Children's Place and Disney Stores; and high-end fashion retailers capitalizing on the trend toward adult styles. By 2009, however, discount stores were the most popular source for many American consumers as they dealt with effects of the slowing economy.

Current Conditions

In the down economy of the late 2000s, price was a significant issue for consumers buying children's clothing, and many parents were going to discount stores and factory outlets to buy their children's apparel. As a result, prices fell. In the first five months of 2009, the average price for an article of children's clothing was down 5.3 percent compared to 2008. However, the children's apparel market seemed to be less affected by the economy than women's or men's apparel, partly because children require new clothes periodically as they grow, whereas men and women can continue to use their existing wardrobes. From June 2008 to May 2009, sales in the children's clothing market reached $19.5 billion. Sales of children's clothing were expected to remain flat or come down only slightly in 2009 as compared to 2008, and revenues in the children's segment of the apparel industry were predicted to increase by at least 2 percent in 2010.

According to Dun and Bradstreet's 2009 Industry Reports, the girls' and children's dresses and blouses segment of the apparel industry had annual sales of $1.9 billion in 2008, with 262 establishments employing 3,779 workers. Georgia (where Carter's Inc. is located) accounted for almost $1.5 billion in sales, or 75 percent of the nationwide total. In second and third place in terms of revenue were California with $320.9 million and New York with $126.1 million.

Industry Leaders

Based in Atlanta, Georgia, Carter's Inc. was the dominant force in the children's apparel industry in the late 2000s. Carter's, founded in 1864, produced children's apparel under its own name, as well as under brands such as Child of Mine and Just One Year, through more than 415 outlet stores and more than 260 department and specialty stores in the United States. Among its offerings were newborn layette clothing, sleepwear, playwear, underwear, diaper bags, strollers, hair accessories, and shoes. In 2005, it purchased another leading player in the children's clothing industry, OshKosh B'Gosh Inc., for $312 million, adding the OshKosh B'Gosh brand to its own. The acquisition bolstered revenues 19.8 percent to surpass $1.3 billion in 2006. By 2008, the company was reporting annual sales of almost $1.5 billion with 6,548 employees.

Garan Inc. in New York was another key player in the children's apparel industry. This subsidiary of Berkshire Hathaway Inc. was founded in 1941. With some 4,500 employees and $160.4 million in revenue in 2006, Garan produced the Garanimals brand, known for the "matching animals" method of outfit coordination for children. Additionally, the company designed and manufactured private-label children's wear for other companies, as well as clothing for men and women.

Gerber Childrenswear Inc. in Greenville, South Carolina, also produced clothing for children. Former parent company Kellwood Company sold the firm in 2008 to Sun Capital Partners. Gerber Childrenswear manufactured sleepers, cloth diapers, footwear, playwear, underwear, and knitwear sold through mass retailers including Wal-Mart, Kmart, and Toys "R" Us. Revenues for this manufacturer reached $12.8 million in 2006.

Other major producers of children's clothing industry in the late 2000s included The Gap (San Francisco, California); The Children's Place (Secaucus, New Jersey); and The Walt Disney Company (Burbank, California).

America and the World

The U.S. children's apparel industry began to lose significant market share to imports as early as the 1960s, as did other sectors of the apparel industry. Imports were attractive to consumers because of their lower prices and acceptable quality. The process began to accelerate in the 1970s, and by the 1990s, imports reached all-time highs. Also contributing to the industry's decline in the United States was the reliance of manufacturers on offshore assembly of pieces cut in the United States, which actually increased during the mid-2000s.

Another factor affecting imports was Provision 9802 of the U.S. Harmonized Tariffs Schedule (formerly known as Section 807). This provision allowed clothing assembled abroad from pieces cut in the United States to be reimported as garments with duty paid only on the value added abroad. Thus, the most labor-intensive part of the assembly process could be done at lower wage rates, but both import and export data were skewed. Many U.S. manufacturers took advantage of Provision 9802 and moved assembly operations to the Caribbean, noting that they could reduce costs and compete more successfully against imports from Asia. By 1992, garments manufactured in this manner comprised 14 percent of apparel imports. However, the passage of the North American Free Trade Agreement (NAFTA) in 1993 created a free-trade zone between the United States, Mexico, and Canada by gradually eliminating tariffs over 15 years. NAFTA led some analysts to predict that the Caribbean would be a less desirable manufacturing destination than Mexico.

Manufacturers based in Asia represented a significant source of children's apparel. When apparel makers started to move their manufacturing bases out of the United States in the 1960s, they first went to Hong Kong, Taiwan, and South Korea to take advantage of the cheap labor there. However, by the 1980s, labor costs had increased, and capital and operations from those traditionally low-wage markets moved to countries with even lower wages, such as Bangladesh, Thailand, Pakistan, Indonesia, Malaysia, Sri Lanka, and India, which became the sources for more of the imports entering the United States. By the early 1990s, China had replaced Hong Kong as the greatest supplier of imports to the United States, a title it still held in the late 2000s. Under the provisions of NAFTA, by 1997 Mexico had increased its imports enough that it surpassed Hong Kong as the second largest supplier of apparel imports to the United States.

In November 2008, China's share of the U.S. apparel market reached a record 54 percent. Between 2008 and 2009, apparel imports from China, Vietnam, and India continued to increase. Figures from the Commerce Department's Office of Textiles & Apparel showed that in May 2009 apparel shipments from China totaled 592 million square meter equivalents (SME), up almost 9 percent from the same period the previous year. Shipments from Vietnam rose 2 percent to 120 million SME, and imports from India jumped 17.1 percent to 83 million SME.

In spite of the challenges of global competition, the U.S. market for children's apparel remained the world's largest in the mid- to late 2000s. Per capita spending on clothing for children ages 5 to 14 years old in the United States was 40 times higher than that of the Asia Pacific and nearly double that of the second highest market, Western Europe.

Research and Technology

In the battle against imports, U.S. apparel makers tried a variety of strategies, including increasing use of automation, delivering higher quality goods, and trying to more closely keep track of the consumers' needs and desires. Although the intrinsic "soft" quality of material made the extensive use of automated equipment difficult, most of the larger manufacturers tried to invest in newer machinery to improve efficiency. Nevertheless, apparel manufacture remained a highly labor-intensive industry.

One tool that was advocated to better meet the market's demands was "quick response," which brought apparel to the retailer rapidly by shortening the production cycle, reducing inventories, improving productivity, and sending information regarding consumers' preferences to the manufacturers quickly, thus avoiding overstocking. By using computers to track inventory and sales, as well as consumers' responses to particular items, manufacturers gained the ability to respond quickly to market demand. This allowed them to get a jump on foreign producers who were often half a world away and minimize their vulnerability to imports. Department stores and manufacturers worked together to find ways to speed deliveries and increase efficiency. Mass merchandisers were among the first to implement quick response systems.

The U.S. government also assisted the industry with the development and application of new technologies. The American Textile Partnership was a joint venture between the industry and the U.S. Department of Energy to link textile mills, apparel manufacturers, wholesalers, and retailers in an electronic network that would allow all industry segments to respond more quickly to consumer spending patterns.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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