Girls', Children's, and Infants' Outerwear, NEC

SIC 2369

Industry report:

This category includes establishments primarily engaged in manufacturing girls', children's, and infants' outerwear, not elsewhere classified, from purchased woven or knit fabrics. This includes, but is not limited to, bathing suits, jeans, jogging suits, playsuits, shorts, skirts, slacks, and sweatsuits. Knitting mills primarily engaged in manufacturing outerwear are classified under SIC 2253: Knit Outwear Mills.

Industry Snapshot

By the late 2000s, the manufacture of products in this category was dominated by industry leaders such as Carter's Inc., yet smaller, niche-driven establishments were prevalent as well. The number of companies in this category steadily declined starting in the 1980s, because, as with much of the U.S. apparel industry, manufacturers faced stiff competition from low-cost imports. Nevertheless, during this time, a generation of well-educated baby-boomers, with more disposable income than their parents had, were themselves having children and spending increasing amounts on children's clothing. Consequently, the overall children's clothing industry became more fashion-oriented and expensive, and the market for girls', children's, and infants' outerwear was no exception.

Organization and Structure

Clothing lines in this industry include "infant wear" for babies up to 1 year in age, "toddlers' wear" for children from ages 2 to 3, "children's wear" for ages 3 to 6, and "girls' wear" for girls between the ages of 7 and 14. Children's apparel manufacturers generally produce one new line of clothing per season (spring, summer, winter, and fall) or four lines per year.

Establishments producing children's clothing could be contractors, jobbers, or manufacturers. Contractors are independent manufacturers, hired by various, usually 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provided to them and are hired by producers who do not have their own sewing facilities or whose own capacity has been superseded.

Jobbers are design and marketing businesses hired to perform specific functions, including purchasing materials, designing patterns, creating samples, cutting material, and hiring contractors to manufacture products. After purchasing materials needed to produce the pieces, jobbers send the cut material to contractors for assembly.

When creating apparel from purchased materials, manufacturers have their own staffs produce designs or buy them from freelancers, as well as purchase the fabric and trimmings. While cutting and sewing the garment is generally performed in the manufacturer's factories, outside contractors are hired when demand for an item exceeds the manufacturer's capacity or shipping deadlines cannot be met. For the purposes of this entry, the term "manufacturers" will refer cumulatively to contractors, jobbers, and manufacturers.

Most of the small satellite manufacturing sites had closed in the late 2000s, but California and New York remained viable locations for dress manufacturing activity, with some smaller facilities in Florida, Texas, and Pennsylvania.

Background and Development

Children's apparel production developed early in the twentieth century, concurrent with the emergence of the women's apparel industry. During this time, women joined the professional workforce in increasing numbers and had less time for sewing their own or their children's clothing. Advances in the industry eventually led to the production of more durable children's clothing available in standardized sizes.

The growing popularity of television during the 1950s, particularly among children, provided a boost to the children's apparel industry. Young people began to emulate fashions worn by their peers on television, and they were especially responsive to advertising. During this time, children assumed a greater role in choosing the clothing purchased for them by their parents. Moreover, children came to represent an independent consumer market, purchasing clothing themselves with the money they received as gifts or for allowances. In the 1990s, practically every major character on children's television shows or in the movies had a line of clothing available.

On January 1, 2005, the entire fabric and apparel industry suffered a major, but expected, setback when all previous import quotas were removed for WTO member countries. 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 outerwear products, domestic manufacturers implemented several fundamental changes, including consolidation, outsourcing, and domestic technological development.

As textile and apparel imports from China flooded the U.S. market, holding a 22 percent share of the apparel market in 2005 and driving down domestic sales and prices, the fiber producing sector of the U.S. textile industry joined with labor unions 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 to 7.5 percent above its shipments in the first 12 of the most recent 14 months.

By the late-2000s, competition from overseas continued to be problematic for U.S. apparel manufacturers, although the children's apparel industry segment was still experiencing growth. Key to that growth was the ability to identify and incorporate current trends into children's apparel. Responding to youngsters who wished to emulate the clothing styles of parents and celebrities, designers were increasingly inspired from adult fashions, creating lines of sophisticated, yet sturdy, apparel for children. Also gone were the limits of the "youth" color palette. Pastels, while still appropriate for infants, were often shunned in favor of more striking colors and patterns, such as chocolate and camouflage. Environmentally conscious parents could also opt to purchase children's clothing made from organic cotton, hemp, and soybean.

Current Conditions

According to Dun and Bradstreet's 2009 Industry Reports, 374 establishments employed 4,517 workers in 2008 in the category of girls' and children's outerwear not elsewhere classified. California accounted for $323.9 million in sales, or about 55 percent of the total $583.7 million in nationwide revenues. New York was the second highest in terms of revenues, with $114.4 million. Most companies in this segment were small, with 87 percent employing fewer than 25 workers. However, much of the revenue went to the few larger companies in the industry.

In the down economy of the late 2000s, price was a significant issue for consumers buying children's outerwear, 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 to $5.63 as compared to the same time period in 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 hold steady and revenues increase slightly during 2009 and 2010.

Industry Leaders

Based in Atlanta, Georgia, Carter's Inc. was the dominant force in the children's apparel industry in the late 2000s with 2008 revenues of $1.5 billion. Carter's, founded in 1864, produced children's apparel under its own name, the OshKosh B'Gosh brand, and other labels. Among its offerings were newborn layette clothing, sleepwear, playwear, underwear, diaper bags, strollers, hair accessories, and shoes.

Garan Inc. in New York and Gerber Childrenswear Inc. in Greenville, South Carolina, were also industry leaders.

Workforce

The number of employees in the industry continued to drop as the first decade of the twenty-first century neared a close. As in other sectors of the apparel industry, increased consolidation and the popularity of imported clothing contributed to downsizing in the industry. After experiencing huge losses in employment in the late 1990s and early 2000s, the cut and sew apparel manufacturing industry was down to 161,050 employees in 2008, according to the Bureau of Labor Statistics (BLS). About 71 percent of employees were production workers earning an average wage of $10.91 a hour. The BLS predicted that employment would continue to decline at a rate of about 6 percent annually so that by 2016 only 77,200 people would be employed in the industry.

America and the World

The United States was the world's largest market for children's apparel in the mid-2000s. Per capita spending on clothing for children ages 5 to 14 years old in the United States was nearly twice that of Western Europe and approximately 40 times higher than that of the Asia-Pacific region.

The U.S. market was not dominated by domestic manufacturers, however. Manufacturers in the Far East represented a significant source of children's apparel. In the 1960s, the U.S. children's apparel industry began moving manufacturing operations abroad, focusing on Hong Kong, Taiwan, and South Korea, where labor was cheap. However, by the 1980s, labor costs in these countries had increased and operations were moved to Bangladesh, Thailand, Pakistan, Indonesia, Malaysia, Sri Lanka, and India. By the early 1990s, China replaced Hong Kong as the greatest supplier of imports to the United States. The top five apparel suppliers to the United States in early 2009 were China, Vietnam, Bangladesh, Honduras, and Indonesia.

Increasingly, more imports entered the United States under provision 9802 (formerly known as Section 807) of the U.S. Harmonized Tariffs Schedule. This provision allowed pieces cut in the United States to be exported and assembled abroad be re-imported with duty paid only on the value added abroad. This meant that the most labor-intensive part of the assembly process could be accomplished for lower costs. Many U.S. manufacturers took advantage of Provision 9802, moving assembly operations to the Caribbean, where they expected to reduce costs and compete more successfully against imports from Asia. While the process greatly decreased the turnaround time for assembling more complex clothing, the logistics sometimes proved cumbersome and time-consuming as contractors in other countries managed the necessary transportation, paperwork, and assembly.

Research and Technology

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

Another new strategy involved "quick response," which brought apparel to the retailer more rapidly, and was designed to shorten the production cycle, reduce inventories, improve productivity, and help manufacturers avoid overstocking by providing them with more timely information regarding consumer preferences. Using computers to track inventory, sales, and consumer response, domestic manufacturers hoped to compete more effectively with importers. Department stores and manufacturers worked together to find ways to speed deliveries and increase efficiency.

© 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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