Women's, Misses', and Juniors' Outerwear, NEC

SIC 2339

Companies in this industry

Industry report:

This industry includes establishments primarily engaged in manufacturing women's, misses', and juniors' outerwear, not elsewhere classified, from purchased woven or knit fabrics. Knitting mills primarily engaged in manufacturing outerwear are classified in SIC 2253: Knit Outerwear Mills.

Industry Snapshot

Globalization was a major influence on the U.S. women's, misses' and juniors' knit outerwear industry at the end of the twentieth century and into the 2000s. While most design and sales operations were still primarily centered in California and New York, sourcing, sewing, and other labor moved overseas as a cost-cutting measure, sometimes at the expense of smaller family-based enterprises. The North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) spurred the migration of operations overseas, forcing smaller U.S. businesses to close down and ushering in a new worldwide business approach. The industry also experienced technical innovations and advances that improved production and permitted enhanced international cooperation; new computer applications allowed the seamless coordination of operations that were spread over several countries.

Notwithstanding, the apparel industry in general suffered a decline during the mid-2000s, as World Trade Organization (WTO) countries began to phase out their quotas on clothing and textiles. This was in furtherance of the original agreement between member countries that created the organization itself. All quotas were eliminated as of January 1, 2005. The enormous amounts of apparel from China, in particular, caused the United States to seek a safeguard from the WTO to limit Chinese imports into the country for a three-year period.

According to a 2005 FDCH government account report, U.S. shipments of all apparel products fell more than 50 percent from 1995 to 2004, to about $56 billion. Likewise, overall industry employment also declined by more than 50 percent during the same period. Conversely, imports of textiles and apparel products grew significantly, from $44 billion in 1995 to approximately $83 billion in 2004.

According to the U.S. Census Bureau, approximately 628 establishments operated in this category for part or all of 2004 for the women's and girls' cut and sew other outerwear manufacturing industry. Industry-wide employment totaled approximately 21,571 workers receiving a payroll of nearly $764 million. Companies in this industry tended to be smaller in size with nearly 66 percent employing less than 20 workers while only 3 percent were larger in size with greater than 500 employees. The Annual Survey of Manufactures reported that the larger category of women's and girls' cut and sew apparel manufacturing industry (also including manufacturing of women's and girls' cut and sew: lingerie, loungewear, and nightwear; blouse and shirt; dress; and suit coat, tailored jacket, and skirt) was valued at $11.95 billion in 2005, a decrease from the 2004 total of about $12.88 billion. Additionally, a total of 27,796 employees worked in production in 2005 (of 45,151 employees), putting in more than 53 million hours to earn wages of more than $658 million. Significant losses (140,000 workers) in expected employment were indicated by the U.S. Department of Labor's Bureau of Labor Statistics for the cut and sew apparel manufacturing industry as a whole by 2014 after enormous losses (484,000 workers) were experienced from 1994 to 2004; a minimal decrease of 2.9 average annual rate of change is anticipated in output between 2004 to 2014.

According to the U.S. Census Bureau, approximately 365 establishments operated in this category for part or all of 2008 for the women's and girls' cut and sew other outerwear manufacturing industry. Industry-wide employment totaled approximately 10,912 workers receiving a payroll of $392 million. The Annual Survey of Manufactures reported that the women's and girls' cut and sew apparel manufacturing industry, including manufacturing of women's and girls' cut and sew: lingerie, loungewear, and nightwear; blouse and shirt; dress; and suit coat, tailored jacket, and skirt was valued at $5.4 billion in 2009, a significant decline from the reported $8 billion in 2008 and an even steeper decline compared to the nearly $12 billion reported in 2005. Thus, an earlier prediction of a declining workforce was realized with a reported 19,765 workers employed within this industry sector in 2009, down from 24,998 in 2008. Of the 19,765 workers, 13,031 worked in production putting in more than 25 million hours to earn wages of more than $334 million.

Background and Development

Historically, the women's apparel industry has been particularly sensitive to changes in economic conditions. As the economic downturn of the 2000s caused consumers to look for value and savings, consumer tastes shifted from a preference for designer labels during the economic boom of the late 1990s to an increased interest in more casual, and less expensive, apparel. This shift in consumer behavior resulted in improved results for discount mass merchandisers at the expense of specialty boutiques and department stores. Manufacturers attempted to hold down costs and provide high quality garments for increasingly demanding and careful customers.

An increase in imports further increased competition in this already volatile and difficult industry. To help deal with these chaotic global circumstances, a new World Trade Organization (WTO) was established in 1995. Furthermore, the Multifiber Arrangement (MFA), which allowed importing countries to limit the flow of imports from lower cost, developing countries, was replaced by the Agreement on Textiles and Clothing (ATC), which required the phasing out of MFA quotas over a ten-year period. According to Linda Shelton in an Industry, Trade, and Technology Review report, "The elimination of MFA quotas likely will have a significant impact on the U.S. textile and apparel sector given the level of protection that such restrictions have provided domestic producers over the past two decades." The United States had until 2005 to implement the ATC, and once it did the legislation's impact on the women's, misses' and junior's outerwear industry was considerable, just as it was on the rest of the apparel industry. The influx of apparel from China was so significant that the United States needed to invoke a WTO safeguard that would limit imports for a three-year period, which was signed between the countries in November 2005.

Still, with the steady growth of the American economy and record highs in consumer confidence, the women's apparel market experienced a rejuvenation. There were some growing pains as the industry scrambled to employ new technology and initiatives to streamline operations. Profound advancements in communication and availability of information, combined with smarter uses of computer technology and tools, introduced strategies and processes that benefited manufacturers and customers alike. Such pivotal improvements, including the broad application of the Internet, inspired market time savers and positive outcomes like just-in-time merchandise delivery, fewer stagnant inventory levels, lower costs, and instant order fulfillment and verification.

These improved business strategies facilitated cooperation among the various industry channels on all levels. While corporate acquisitions--in an effort to expand or diversify--were common, a majority of industry participants collectively pooled their resources to better afford and understand these updated business methods. These industry innovations frequently required prohibitive investments of time and money, but many deemed the risk worthwhile and soon learned that doing so often resulted in significant savings and generous profits. Electronic commerce, a mode that had become a solid fixture in businesses large and small by the twenty-first century, proved to be one of the most important of the Web-based transactions. Although slow in its start and acceptance, it soon revolutionized the industry.

The global perspective that dominated the manufacturing side of the industry was evident in other aspects as well. Clothing designers were influenced by fashion developments and styles of other countries, indicated by the designs shown both on the high fashion runways and in retail clothing shops. American consumers had also become more diversified by the beginning of the twenty-first century: Asian and Hispanic American populations in particular were growing, especially female Hispanic American consumers, whose influence grew considerably going into the millennium. One survey by Cotton Inc. indicated that these women spent more on fashion and beauty items than any other market segment. Clothing merchants took notice of this trend and made special efforts to cater to these customers. Major retailer JCPenney, for example, created store signage in Spanish for its outlets in predominantly Hispanic areas like Los Angeles and Miami, further increasing sales to Hispanic American women.

The American Apparel and Footwear Association (AAFA) reported in 2005 that production of women's, misses', juniors', and little girls' jeans experienced a significant decrease in quantity (25.3 percent) from 2004 (79.3 million garments in 2004 to 59.3 million garments in 2005) as well as a monetary decline of 18.2 percent from $1.1 billion in 2004 to nearly $914 million in 2005. Shorts dropped even more sharply by 34.9 percent in quantity produced (36.3 million garments in 2004 to 23.6 million garments in 2005) with a monetary loss of 30.8 percent during that time ($317 million in 2004 to $219.4 million in 2005). Swimwear only saw a small drop in quantity produced of 4.5 percent (40.1 million garments in 2004 to 38.3 million garments in 2005) although the monetary value increased by 19.6 percent from $588.6 million in 2004 to $704.2 million in 2005). The sweater category (also including coats, cardigans, pullovers, and vest sweaters) had healthy gains in the number produced (20.2 percent, or 28.5 million garments in 2004 to 34.3 million garments in 2005) as well as a 12.4 percent rise from $392.2 million in 2004 to $440.7 million in 2005.

Imports for women's and girls' cotton sweaters experienced a large jump from 2004 to 2005 of 35.1 percent, from 5.8 million dozen garments to 7.8 million dozen garments for a 2005 total of nearly $676 million. That number, is vastly increased from the 1997 total of 2.9 million dozen. However, wool skirts saw a drop in imports from 2004 to 2005 of 32.6 percent in quantity produced while the monetary amount saw a 24.8 percent fall to nearly $95 million. Trousers, slacks, and shorts of manmade fiber (MMF) had $1.6 billion in imports in 2005 (a 6.75 percent drop from 2004) while the decline in the amount produced was 6.83 percent (from 29.1 million garments in 2004 to 27.1 million garments in 2005).

The entire fabric and apparel industry suffered a major, but expected, setback when all previous import quotas for WTO member countries were removed on January 1, 2005. By that year, 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. These included consolidation, outsourcing, and domestic technological development. As for consolidation, 2003 was the busiest year in decades for mergers and acquisitions, with a disclosed value of all merger deals exceeding $3.5 billion. Firms such as Jones Apparel, Liz Claiborne, and Kellwood all acquired smaller niche businesses to expand their offerings.

Another consideration in the industry equation was what analysts referred to as the "Wal-Mart Factor," referring to the impact the discount supply chain was having on special apparel suppliers, including outerwear. As of 2005, Wal-Mart carried a 12 percent share of the apparel industry, though it aimed for 30 percent. With more than 4,000 stores offering a wide variety of apparel falling within this industry, Wal-Mart's annual clothing and footwear budget alone was $35 billion.

As textile and apparel imports from China flooded the U.S. market (a 22 percent share of the apparel market 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, would allow China to continue to expand its exports to the United States, but would limit growth to 7.5 percent above its shipments in the first 12 of the most recent 14 months. The three-year agreement was enacted in November 2005.

According to Bruce Raynor, president of the labor union UNITE HERE, nearly 10,000 apparel and textile jobs were lost in the United States in the first 60 days of 2005, in large part due to China's impact on the apparel industry.

Current Conditions

According to the American Apparel and Footwear Association (AAFA), domestic consumption of apparel fell 3.1 percent to 19.5 billion garments, compared to the reported 20.1 billion garments in 2007. While most apparel categories experienced declines, demand for cotton and manmade fiber dresses increased 16.2 and 13.7 percent, respectively.

In the late 2000s, women's and misses' outwear, not elsewhere classified manufacturers held 28 percent of the industry total within this highly fragmented industry with shipment values of nearly $2 billion in 2009. Based on shipment value, women's sportswear was valued at $4.6 billion, or 18.1 percent of total industry shipments, indicating American women continued to enjoy comfortable clothing. Combined shipments of women's and misses' athletic clothing and sportswear totaled nearly $537 million, while women's, misses', including juniors' shipped about $269 million in garments.

Industry Leaders

The leader in the women's and misses' outerwear apparel industry during the mid-2000s was Nike Inc. of Beaverton, Oregon, with nearly $15 billion in 2006 sales with 28,000 employees. In second was Greensboro, North Carolina-based VF Corp. with 2006 sales of $6.2 billion and about 45,500 employees. In third was Liz Claiborne of New York City, with 2006 sales figures of nearly $5.0 billion and 17,000 employees. And in fourth was Jones Apparel Group, based in Bristol, Pennsylvania, which posted net sales in 2006 of $4.7 billion and had 10,880 employees. The company bought Barneys New York in 2004 and merged with Gloria Vanderbilt Apparel Corp. in 2002, two of many acquisitions that occurred during the early 2000s.

Founded in 1976 and based in New York, Liz Claiborne Inc. was considered the top overall manufacturer of women's apparel. Many in the industry attributed its success to the advertisement of designer products that were priced to attract a broader market. The company sold a number of lines of segmented brands like Lizsport, Liz & Co., Elisabeth, and Dana Buchman in an array of retail outlets. The label also licensed cosmetic items, shoes, sunglasses, watches, home furnishings, and men's clothes.

According to Women's Wear Daily, "brand-building" was key among top coat labels in the industry, including London Fog, L.L. Bean, Eddie Bauer, Land's End, and Sears.

Nike Inc.'s revenues climbed through the mid- to late 2000s reaching $18.6 billion in 2008 and $19 billion in 2010 with a work force of 34,400 employees. V.F. Corporation reported revenues totaling 7.2 billion in 2009 with 45,700 employees. Liz Claiborne's revenues fell from $4.5 billion in 2007 to $3.0 billion in 2009 with 11,500 employees. With sales plunging as the economy worsened, the company underwent restructuring in 2009, including hiring a turnaround specialist. The Jones Group (formerly Jones Apparel Group) reported declining sales, a reflection of the stagnant economy. Revenues continued downward with a reported $3.8 billion in 2007 and $3.3 billion in 2009 with 11,535 employees.

Workforce

The U.S. Department of Labor's Bureau of Labor Statistics (BLS) reported in May 2006 that 191,620 workers were in the cut and sew apparel manufacturing industry. The primary segment of the industry was in production at more than 69 percent, or 132,800 workers, with a mean annual salary of $21,190. Sewing machine operators were the primary occupational category with 90,100 workers earning a mean hourly wage of $9.13. By 2014, the industry is expected to experience further significant declines, dropping to about 80,000 per the BLS.

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