Men's and Boys' Clothing, NEC

SIC 2329

Companies in this industry

Industry report:

This category includes establishments primarily engaged in manufacturing men's and boys' clothing, not elsewhere classified, from purchased or woven fabrics. These items include, but are not limited to, athletic clothing, bathing suits, down-filled clothing, shorts, nontailored sports clothing, sweaters, athletic uniforms, and windbreakers. Establishments primarily engaged in manufacturing leather and sheep-lined garments are classified in SIC 2386: Leather and Sheep-Lined Clothing. Knitting mills primarily engaged in manufacturing outerwear are classified under SIC 2253: Knit Outwear Mills.

Industry Snapshot

According to a 2010 report by the U.S. Census Bureau, establishments that manufactured clothing in this classification shipped $860.6 million worth of goods in 2008, down from $973.7 million in 2007. The overall U.S. apparel industry continued to face increased pressure from imports from China and other countries. In addition, a global recession, which began in 2008 and continued into the early 2010s, dampened demand and put a severe strain on the industry. Imports in 2008 and 2009 were at their lowest since following the terrorist attacks of 2001. Although the economy had begun to show signs of recovery in 2010, manufacturers, wholesalers, and retailers were taking a new look at how they did business in a new environment. In addition, men were increasingly becoming an important part of the apparel marketplace; however, women still dominated, accounting for approximately 70 percent of all apparel and accessory purchases.

Organization and Structure

While many manufacturers in this sector of the apparel industry were small, family-owned businesses, several large, growing establishments dominated the category, which was comprised of manufacturers, contractors, and jobbers. Contractors were independent manufacturers hired by various and often competing manufacturers. Contractors specialized in sewing the garment from pieces provided them. They were hired by producers without sewing facilities or whose own capacity had been exceeded.

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

In creating apparel from the purchased materials, manufacturers produced designs or bought them from freelancers, then purchased the fabric and trimmings. Garments were usually cut and sewed in the manufacturer's factories, but outside contractors were hired when demand for an item exceeded the manufacturer's capacity or when shipping deadlines could not be met. In this industry, the term "manufacturers" refers cumulatively to contractors, jobbers, and manufacturers.

Background and Development

During the 1980s, interest in men's fashions increased, augmented by the introduction of several men's fashion magazines. Office wear became more comfortable and less formal, and sweaters and sports coats became acceptable in some work environments. As the men's apparel industry grew and diversified, manufacturers and retailers began to target specific markets according to income, age, and education, following a strategy already common in the women's fashion industry. Many retailers expanded their men's wear departments, and the industry grew at a faster pace than women's wear through the 1980s and well into the 1990s.

As in other sectors of the apparel industry, consolidation and competition from imported clothing were the industry's primary concerns in the early 1990s. The economic recession of the early 1990s prompted manufacturers to produce more comfortable and moderately priced casual wear, such as fleece sweat shirts, jackets, and pants. Shipments for all types of men's and boys' clothing were valued at about $2.3 billion in 1992, up from $1.6 billion in 1982. Employment in the industry expanded from approximately 44,600 people in 1982 to 53,300 in 1990.

The value of men's and boys' apparel production dropped twp percent in 1996. However, retail sales of men's apparel climbed 7.3 percent, and retail sales of boys' apparel grew 4.4 percent. While the production of sweat pants, shorts, and sweaters declined in 1996, the production of team sport uniforms grew slightly.

In 1998, the retail value of all apparel sold in the United States was $177 billion, up 4.7 percent from 1997, according to Apparel Industry magazine. Men's clothing revenues increased 6.8 percent, compared to a 3.7 percent growth in revenues for women's clothing.

Casual wear accounted for the largest percentage of sales in 1997. This widespread trend toward dressing less formally helped the sportswear industry because some companies began allowing employees to wear casual clothes instead of tailored suits to work. In the late 1990s, some clothing manufacturers were designing sportswear in modern, comfortable styles to appeal to young men who wanted to look sophisticated yet casual. Some of these sportswear lines were intended to be worn for work as well as play.

Other companies offered innovative features to attract customers. For example, some swimwear designers began incorporating utilitarian cargo pockets and toggles into their products.

The two major challenges faced by the U.S. apparel industry were increased imports from China and a weak domestic economy. Between 1997 and 2002, cotton textiles and apparel imports from China reached $9.8 billion in 2002, for an increase of 17 percent. Imports were expected to increase throughout the early 2000s, particularly as the Uruguay Round Agreement of the General Agreement on Trades and Tariffs (GATT), which was passed in the late 1990s by the World Trade Organization, mandated the elimination of textile quotas by 2005.

As the economic situation in the United States worsened in the early 2000s and was exacerbated by highly publicized corporate scandals and the September 11, 2001, terrorist attacks, apparel sales began to decline. The value of shipments for the contract men's and boys' cut-and-sew apparel sector declined from $1.94 billion to $1.37 billion from 1998 to 2001, while the value of shipments for the other men's and boys' cut-and-sew outerwear sector declined from $2.1 billion to $1.28 billion. One area of growth was men's and junior boys' athletic uniforms, which reported an increase in the value of shipments from $181.2 million in 2000 to $193.3 million in 2001. Total apparel sales in 2002 declined 1.7 percent, but men's wear sales grew 1.8 percent, compared to a 6.1 percent decline in women's wear. Sales of men's wear in 2002 were estimated at $52 billion.

This industry shipped $869.9 million worth of goods in 2001, and spent $405 million on materials. Of the 13,061 employees working in the industry, 10,599 were production workers earning an average wage of $11.08 per hour. Total payroll costs were $266 million. According to the U.S. Census Bureau, the value of shipments for the contract men's and boys' cut-and-sew apparel sector declined from $831.8 million in 2003 to $696.9 million in 2005. Men's and boys' cut-and-sew outerwear also declined, falling from $1 billion in 2003 to $699 million in 2005.

The industry recorded significant sales declines in the mid- to late 2000s as a result of a slowing economy in the United States, along with the flood of imports, especially from China. In 2003, shipments of men's and boys' cut-and-sew apparel contractors was reported at $831.8 million, then dropped in 2004 to $741.5 million and $696.9 million in 2005. Shipments for the other men's and boys' cut-and-sew outerwear category were valued at $1.09 billion in 2003 and plummeted to $699 million in 2005. Despite positive growth for the men's and boys' team sport uniforms category, which was valued at $255.4 million in 2003, shipments fell to $192.5 million in 2005. Revenues for men's and boys' shorts (including dress and athletic) and swimwear, made from purchased fabrics, fell from a high of $442.7 million in 2002 to $146.3 million in 2005.

According to industry statistics, there were an estimated 1,570 establishments primarily engaged in manufacturing miscellaneous men's and boys' clothing, from purchased fabrics in 2007 with an estimated 29,811 employees. The men's and boys' sportswear and athletic clothing sector constituted about 42 percent of overall industry market share, followed by the miscellaneous men's and boy' clothing sector, with about 14 percent of market share in 2007.

The outlook for U.S. textile manufacturers and retailers appeared to be guarded as a possible recession loomed. In early 2008, a number of retailers had cut back on inventory spending to avoid deep discounts on their merchandise in the event that a recession became a reality. Inventory fell between 5 and 18 percent during February 2008, compared to the same period in 2007. The output of apparel manufacturing was projected to climb at an annual compounded rate of -1.1 percent between 2007 and 2012.

Current Conditions

The apparel industry was deeply affected by the economic recession of the late 2000s. As demand disappeared while consumers reduced spending, retailers in 2008 slashed prices to entice customers into the store. Stores sold off inventory but did not restock shelves, leaving inventory levels low through 2009 and going into the early 2010s. However, by 2010, the industry was seeing some signs of consumer confidence returning. As retailers sought a larger profit margin and more control, they were finding more and more space on their floors for their own private label brands. In a similar trend, name brand manufacturers were extending their lines globally and beyond the big box retailers. For example, Calvin Klein, realizing that China does not have a department store infrastructure similar to the United States, greatly expanded its wholesale line up of stores in the early 2010s. With just 67 company-run stores in 2009, Calvin Klein expected to have open as many as 151 stores by the end of 2012 with approximately 60 of those stores located in China.

Men's wear in some segments had rebounded sufficiently by mid-2010 that some retailers were scrambling to keep merchandise stocked. Having allowed inventory to run low to rein in costs during difficult times, as well as fear of overordering and then underselling, by August 2010, some retailers were anxious for suppliers to restock their shelves. Suppliers, however, often working with their own overseas suppliers, expressed difficulties meeting retailers' expectations and timing.

According to Dun and Bradstreet, 1,450 firms in this industry posted sales of $3.5 billion and employed 25,993 in 2009. By revenues, Oregon ($1.29 billion) and Maryland ($861 million) led the industry; California led by number of firms and employees with 340 firms and 5,615 employees. Nearly 90 percent had fewer than 50 employees. However the top 10 percent of the largest companies generated over 60 percent of industry revenues.

Industry Leaders

Fruit of the Loom is a leader in this industry, selling merchandise under multiple labels, including athletic wear provider Russell. Warren Buffett's Berkshire Hathaway owns Fruit of the Loom. Columbia Sportswear Co. of Portland, Oregon, reported 3,113 employees and estimated sales of $1.24 million in 2009. Under Armour, based in Baltimore, Maryland, provides athletic wear and shoes. It expanded its operations rapidly during the second half of the 2000s, growing from revenues of $281.1 million in 2005 to $856.4 million in 2009.

Levi Strauss and Co. of San Francisco, California, was among the large, diversified firms that also competed in this industry. In 2009, Levi Strauss posted revenues of $4.02 million. Addidas Group, which includes the Addidas and Reebok brands, reported sales of $10.38 billion in 2009. Eddie Bauer Inc., which was a subsidiary of Redmond, Washington-based Spiegel Holdings Inc., posted sales of $1.6 billion in 2003. When Spiegel declared bankruptcy in 2004, it put Eddie Bauer up for sale. By 2006, Bellevue, Washington-based Eddie Bauer was a subsidiary of Eddie Bauer Holdings, and reported an estimated $67 million in sales with about 900 employees. Sales had increased to $1.04 billion by 2008, according to Dun & Bradstreet. However, Eddie Bauer Holdings filed for bankruptcy in September 2009.

America and the World

In the 1960s, the U.S. men's and boys' apparel industry began to lose significant market share to imports, which offered consumers lower prices and acceptable quality. U.S. apparel makers began moving manufacturing operations abroad, focusing on Hong Kong, Taiwan, and South Korea, where labor costs were low. By the 1980s, however, 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 had replaced Hong Kong as the largest source of imports to the United States, but both countries, along with Taiwan and South Korea, continued to lose market share to new players and represented only 28 percent of apparel imports in 1995. In the late 1990s and early 2000s, the largest gains in import market share belonged to the Caribbean countries and Mexico.

During the early 1990s, imports to the United States increased under Provision 9802 (formerly known as Section 807) of the Harmonized Tariffs Schedule of the United States. This provision allowed pieces cut in the United States to be assembled abroad and then imported with duty paid only for the value added abroad. This meant that companies could pay foreign workers lower wages to complete the most labor-intensive part of the assembly process. Many U.S. manufacturers moved assembly operations to the Caribbean, expecting to reduce costs and compete against imports from Asia. They encountered logistics problems, however, and Mexico was projected to ultimately become a more popular manufacturing location than the Caribbean.

The North American Free Trade Agreement (NAFTA) was ratified in 1993 to create a free-trade zone between the United States, Mexico, and Canada by gradually eliminating tariffs over 15 years. It was generally supported by executives in the men's apparel industry, but workers' unions tried unsuccessfully to stem the loss of American jobs by limiting imports. U.S. textile exports to Mexico jumped from $1.1 billion to more than $3 billion between 1995 and 2002 as a result of NAFTA. By the 2000s, imports had reached all-time highs, and as U.S. manufacturers increased their reliance on off-shore assembly plants, the industry experienced further losses.

The U.S. Congress had the support of a majority of trade associations for the passage of the Hunter-Ryan Currency Reform and Fair Trade Act of 2007, which was an effort to balance the U.S. trade deficit with China that had reached a record $31.8 billion in 2007. The intent of the bill was to discourage currency manipulation by China or any other country that undervalued their currency by allowing injured parties to be compensated for damages under U.S. "countervailing duty laws."

Imports of apparel grew tremendously during the 1990s through the mid-2000s. In 1990, the United States imports of apparel were valued at $21.94 billion. The value of apparel imports grew to $57.23 billion by 2000 and $68.71 billion by 2005. Imports peaked in value in 2007 at $73.92 billion. In 2008, as an economic recession emerged not only in the United States but around the globe, demand softened. In 2008 and 2009, U.S. imports of apparel declined to $71.57 billion and $63.10 billion, respectively. China's role in the U.S. apparel industry has become increasingly large. In 1990, imports from China were valued at $2.43 billion (11.1 percent of total imports); in 2009, Chinese imports totaled $23.5 billion (37.2 percent of total imports). The next-highest single country that imports to the United States is Vietnam, with $5.07 billion in imports in 2009, followed by Indonesia ($3.86 billion) and Bangladesh ($3.41 billion).

Research and Technology

U.S. apparel makers tried using additional automation, delivering higher quality goods, and closely tracking consumer's needs and desires to offset imports. Most of the large manufacturers continually sought to develop machinery that would improve efficiency, but the manufacture of apparel remained a highly labor-intensive industry.

Another new strategy involved "quick response," which would bring apparel to the retailer more rapidly, shorten the production cycle, reduce inventories, improve productivity, and help manufacturers avoid overstocking. Using computers to track inventory, sales, and consumer response, domestic manufacturers hoped to compete more effectively with importers. Department stores worked with manufacturers to speed deliveries and increase efficiency.

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