Women's, Misses', and Juniors' Suits, Skirts, and Coats

SIC 2337

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing women's, misses', and junior's suits, pantsuits, skirts, coats (except fur coats and raincoats), and tailored jackets and vests, from purchased woven or knit fabrics. These garments are generally tailored and usually lined. Establishments primarily engaged in manufacturing fur clothing are classified in SIC 2371: Fur Goods, and those manufacturing raincoats are classified in SIC 2385: Waterproof Outerwear. Knitting mills primarily engaged in manufacturing knit outerwear are classified in SIC 2253: Knit Outerwear Mills.

Industry Snapshot

Following the 20-year trend of declines in apparel purchases, sales continued to experience sharp declines throughout the 2000s. More consumers, including upper-end consumers, also preferred shopping for apparel in discount channels, lowering the value of purchases. As the decade went on, spending in the industry began to increase as consumer confidence grew with the stabilizing economy. While discounters were still doing well, upscale designers and retailers were back in the game, with surges in sales activity in the mid-2000s. However, in 2005, quotas on imported textile and apparel goods were lifted, causing a glut of inexpensive imports, primarily from China, to flood the U.S. market. Manufacturers in this industry fought back, and a WTO safeguard to limit imports until 2008.

According to the U.S. Census Bureau, approximately 106 establishments operated for the women's and girls' cut and sew suit coat, tailored jacket, and skirt manufacturing industry in 2007, down from 141 in 2004. Industry-wide employment was approximately 1,786, which represented a steep decline from the 3,124 figure of 2004. Companies in this industry tended to be small, with 82 percent employing fewer than 20 workers and only 3 percent reporting more than 100 employees. Total industry shipments were valued at $490.5 million. Pennsylvania had the largest concentration of employees in the industry, followed by New York and California, according to Dun and Bradstreet's 2009 Industry Reports. New York and California each accounted for about 24 percent of total sales, whereas Pennsylvania had about 7 percent.

Organization and Structure

The apparel industry is composed of three types of producers: contractors, jobbers, and manufacturers. Contractors are independent firms performing specialized work, such as sewing a garment, for a number of competing firms. Contractors are hired by producers who do not have their own sewing apparatus or whose own capacity had been exceeded. Contractors are not involved in the retail sale of merchandise. More than 50 percent of the plants making women's coats and suits are run by contractors.

Jobbers are design and marketing businesses that are hired to perform specific functions. For example, jobbers might purchase materials, design patterns, create samples, cut material, and hire contractors to manufacture the product. Most jobbers hire contractors to sew and finish the products rather than do it themselves. These contracted sewing-machine operators complete specific parts of the garment, which are provided by the manufacturer. Through this system of piece work, operators can work more quickly and efficiently because they do not need to switch or adjust their machines.

Jobbers often have their own design staff or hire freelance workers to create seasonal lines. A jobber buys the materials needed to produce the pieces and creates the patterns for different sizes. The cut material is then sent to contractors to be sewn and finished. Orders are taken for the garments, which are shipped to retailers.

Manufacturers perform all functions involved in creating apparel from purchased materials. The manufacturer has a staff or hires freelance workers to produce designs. The manufacturer purchases the needed materials, such as fabric and trimmings. Generally, the cutting and sewing of the garment is done in the manufacturer's factory. However, when demand for an item exceeds the manufacturer's ability to supply it within shipping deadlines, outside contractors are hired. The manufacturer's own sales and shipping staff takes orders and ships them.

When a manufacturer handles all stages of a garment's assembly, it clearly has greater control over the quality of the product. Nevertheless, the advantages to using contractors are numerous. For example, those companies without the capital to update machinery find the system advantageous. Manufacturers who rely on contractors also avoid the responsibility of hiring and training workers. Additionally, the contractor system is flexible, providing manufacturing capacity when needed at busy periods without having to meet payroll obligations at off-peak periods.

Background and Development

The growth of the U.S. women's apparel business began in the mid-nineteenth century when certain garments that did not need to be fitted, such as cloaks and mantles, started to be mass-produced. Small quantities of women's suits and skirts were turned out in a limited number of factories, but most women still made their own clothing at home.

Early in the twentieth century, the number of apparel manufacturers grew as more women chose to buy their clothing already made. New York City became the center of the women's apparel business for a variety of reasons, including the ability to take advantage of the inexpensive labor found among newly arrived immigrants. Most industry employees were young Jewish and Italian women. New York City was an ideal location for the industry as a port city and its proximity to the textile mills in New England and the South.

Many manufacturers began to outgrow their building as the industry rapidly expanded. A consortium of apparel makers, investors, and a real estate developer came up with the idea of moving to an undeveloped area of New York City. Between 1918 and 1921, approximately 50 clothing makers moved to the area along Seventh Avenue, which came to be known as the Garment District.

Because the garment industry was unregulated, employees in the early twentieth century often worked in crowded, unsafe, and poorly lit "sweat shops" for low pay. Early efforts to organize the workers into unions were met with industry-wide resistance. As one shop became organized, business would simply shift to an unorganized one.

The Triangle Shirtwaist Factory fire in 1911, when 146 employees were killed, was a tragedy that galvanized the industry. After much resistance from business owners, industry-wide minimum standards for worker safety were put into place. In the 1930s and 1940s, federal legislation made it easier for the unions to organize, and more labor standards were established. The International Ladies' Garment Workers' Union (ILGWU) and what eventually became known as the Amalgamated Clothing and Textile Workers Union (ACTWU) were the two unions that represented U.S. apparel workers. For many years they were able to negotiate contracts with yearly pay increases and benefits.

By the 1960s, apparel manufacturers were moving their production facilities out of the United States to markets where the labor was plentiful and cheap. Apparel manufacturing became a global industry. Manufacturers from the United States first looked largely to Hong Kong and Taiwan, but as labor costs grew, manufacturers moved to other Asian nations and the Caribbean. Apparel imports into the United States increased from 9 percent in 1967 to 62 percent in 1992. The value of imports of women's suits, coats, skirts, and jackets reached $2.8 billion in 1995.

Another important development that emerged in the 1960s was that many textile companies who produced the materials and retailers who bought the finished products grew into huge companies. The apparel manufacturers responded in kind as many merged to create large, publicly owned corporations. Historically, women's apparel companies were small businesses and were often family-run. Although the new corporations were large, they sometimes lacked the flexibility needed in the ever-changing fashion industry. However, the larger companies were armed with the capital needed to upgrade machinery and modernize equipment to compete more effectively with imports.

Another trend that led to profound change in the industry was the dramatic increase in the number of women in the workforce, which began in the 1970s. As a result, the demand for professional women's wear skyrocketed.

Personal consumption expenditures on clothing nearly doubled during the 1980s, and women's apparel was an important part of that increase. However, as the industry reacted to a recession in 1989, the spending splurge ended, and manufacturers responded by cutting costs. The women's apparel industry adjusted to the recession as larger manufacturers grew stronger and the industry continued to consolidate. Some big manufacturers were able to take advantage of the weakened position of many smaller firms and strengthen their already dominant positions.

Other factors changed the women's apparel industry as well. For example, as manufacturers began to sell their own products the line between manufacturer and retailer blurred. Manufacturers were often unhappy with the way the retailers displayed their products or with the performance of sales staff. By opening their own retail spaces as either complete stores or free-standing "shops" within department stores, manufacturers could exert direct control of the sales, service, and environment. Another popular tactic was for manufacturers to sell through catalogs, again eliminating the middleman and appealing directly to the consumer. By marketing their own goods, manufacturers could avoid retailers who sought to increase their profit margin at the expense of the manufacturers.

Manufacturers responded to the surge in imports in a variety of ways. Some sold their manufacturing facilities, hiring contractors to make products to their specifications, while others contracted for their apparel to be produced almost exclusively offshore and then re-imported. By contracting out, manufacturers could reduce their overhead while keeping their inventories more flexible. Those who kept their facilities in the United States often stressed their reliability, on-time delivery, and quality.

The value of women's wear shipments declined gradually through the 1990s. One of the many reasons was a leveling-off of the number of women entering the workforce. Historically, women's apparel accounted for half of all clothing sold, and it was sold primarily to working women, who by 1990 comprised 45 percent of the U.S. workforce. In addition, office wear became more casual, and this especially affected the sales of women's suits. Additionally, as the U.S. population aged, people often became less concerned with up-to-the-minute fashions than with saving for mortgage payments and their children's educations. The market stabilized in 1996 and 1997 as manufacturers adjusted their lines to meet the demands of the more casual workplace. Nearly 63 million women were in the labor force in 1997, and they represented almost 50 percent of managerial and professional positions.

Retailers themselves sought to cut costs and become more efficient as the market became more competitive. Retailers often looked to the larger apparel manufacturers that were providing merchandise recognized and respected by consumers. By limiting the number of manufacturers supplying them, retailers could reduce overhead expenses and thus favor the larger manufacturers over the smaller ones.

Mass merchandising was the focus of the 1990s. The beginning of a new century improved upon this concept by incorporating the Internet into numerous stages within the industry process. Electronic commerce, often called e-commerce or e-tailing, was a strategy that benefited both manufacturers and customers by moving goods to destinations almost instantly. These Internet-based transactions revolutionized the apparel trade in terms of turnaround and timelines. Access to this up-to-the-minute information, as well as the borderless venue, allowed for all parties to broaden their business reaches dramatically.

Overall purchases of women's apparel fell 5 percent in value in 2002, to $59.3 billion from $62.3 billion in 2001. Junior apparel was the only sector to increase, rising more than 9 percent in the first nine months of 2002. In 2001, the value of shipments of women's, misses', and juniors' suits, skirts, and coats totaled $2.18 billion, down from $2.24 billion in 2000. Skirts and divided skirts led the sector with 55.9 million units sold, valued at $849 million; tailored suit-type jackets followed, selling 20.9 million units with a value of $673.7 million; coats and capes sold 11.65 million units with a value of $516.3 million; the non-tailored jackets sector sold 5.6 million units valued at $126.8 million; and separate vests followed with 1 million units valued at $15.2 million.

An economic recession after the September 11, 2001, terrorist attacks on the United States accounted for much of the steep declines in the industry in the early 2000s. In addition, aging baby boomers with already full closets had fallen into a wardrobe replacement pattern of buying, negatively affecting apparel sales. The ongoing trend toward casual clothing in the workplace and in general also affected this sector. Suits were not the office staple they once were, although by the mid-2000s there were indications that offices were returning to a more polished, professional look. Finally, low-cost imports and custom-made suits, which were enjoying a resurgence in popularity in the mid-2000s, were cutting into manufacturers' dollars.

In 2003, women's apparel stores had increases in retail sales from $33 billion to $33.8 billion. Apparel suffered slumping sales for the prior two decades, but apparel sales were expected to plateau. Outsourcing of production to low-cost markets continued to affect the tailored apparel industry. Whereas large apparel companies were already ahead of this trend, other companies soon joined the ranks of firms that produced garments overseas to reduce costs. By 2004, 96 percent of apparel sold in the United States was manufactured in another country.

In 2003, the overall product value of U.S.-made women's apparel was reported to be more than $13 billion. Of this, $36 million was in suits, $581 million in skirts, and $143 million in coats. Certain high-end producers that continued domestic manufacturing with a staff of skilled employees utilizing high-quality construction techniques were expected to find other ways to cut costs to stay competitive with Italian and Canadian makers.

Entering the mid-2000s, signs pointed to increased activity in the apparel industry as the economy stabilized and grew. In 2003, the suit market was valued at $3.6 billion per year. Demand increased in the mid-2000s, as the trend away from "corporate casual" moved back toward more professional, traditional business attire, even without a company dress code. The career look was hot again, and some industry insiders predicted it would stay that way for a decade. After the economic climate of the early 2000s and the ultra-casual, anything-goes look, women and men were becoming more conscious of appearance as a measure of success.

Increasing demand pushed companies to increase offerings in the women's suits category, with sets ranging from business suits to evening suits to luxury suits and more. Trends for women's wear in the suit category were for tailored looks with subtle embellishment. Juniors were not the only ones clamoring for bold colors and hipper looks, and women's designers added trendy items such as short boucle jackets, panel skirts, and interchangeable details like reversible ribbons. By making these changes, designers brought suits to contemporary fashion tastes in both style and substance.

Current Conditions

Unlike many other sectors of the apparel industry, the women's and girls' suit and skirt manufacturing category saw some increases in production in the late 2000s. The American Apparel and Footwear Association (AAFA) reported that U.S. production of women's, and girls' cotton skirts, for example, increased from 990 million garments in 2006 to 1.1 billion in 2007, and import penetration for cotton skirts dropped from 94.1 percent in 2006 to 91.8 percent in 2007. Wool skirt production also increased slightly, from 16 million garments in 2006 to 19 million in 2007. The import penetration rate in that category decreased to 93.6 percent as compared to 95 percent in 2006. Finally, although production of skirts made from manmade fibers (MMF) decreased slightly, from 1.4 billion garments to 1.3 billion, consumption also decreased by 2 percent, allowing the import penetration rate for that category to fall from 82.9 percent in 2006 to 81.3 percent in 2007.

Other categories of women's apparel, however, saw fairly significant decreases in production. Only 2.0 million tailored, suit-type jackets were made in the United States in 2007, as compared to 2.9 million in 2006, a 29 percent decrease, and coats and capes dropped 38 percent from 521 million to 321 million. Nontailored jackets for women and girls saw fairly stable production numbers, dropping less than 1 percent to 3.5 million garments. Last, production of women's suits decreased 34 percent to 613 million garments in 2007. Overall, production in the women and girls' apparel industry dropped more than 36 percent between 2006 and 2007, and value of production declined almost 24 percent.

The ending of trade quotas in 2008 spelled trouble for the industry. In 2009, however, negotiations for further trade restrictions were under way.

Industry Leaders

Four of the leaders in this competitive industry in the late 2000s were based in New York. Liz Claiborne, Inc., had $4 billion in 2008 sales and 15,000 employees; Polo Ralph Lauren Corp. had $5.0 billion in sales and 17,000 employees; Jones Apparel Group Inc. had $3.6 billion in sales and 7,925 employees; and Phillips-Van Heusen Corp. had 2009 sales of almost $2.5 billion and 11,100 employees.

Workforce

As imports increasingly replaced U.S.-made clothing, the number of employees in the industry predictably declined. The former International Ladies' Garment Workers' Union (ILGWU) reported that from a high in 1973, 34 percent of production jobs (nearly 25,000) were lost in 20 years in the women's and children's apparel industry. The process began to accelerate in the 1980s, and job losses were expected well into 2015. Employment in the overall apparel manufacturing sector had dropped to 173,000 workers by January 2009, according to the American Apparel & Footwear Association.

Workers in the industry are protected by the Unite Here labor union, which was formed in 2004 by the merger of Union of Needletrades, Industrial and Textile Employees (UNITE) and the Hotel Employees and Restaurant Employees International Union (HERE) Unite Here oversees about 450,000 workers. In 1995, UNITE was created by the combination of the ILGWU and the Amalgamated Clothing & Textile Workers Union (ACTWU).

America and the World

The U.S. women's apparel industry was dominated by imports in the early 1990s, a trend that continued into the 2000s as quotas on imported goods were lifted in 2005. Imports were attractive to consumers because they were often less expensive than domestically produced clothing and had increased in quality over time. The industry began to lose market share to imports in the 1960s. The trend began to accelerate in the 1970s, and by the early 1990s imports reached all-time highs. Beginning in 1980 and through the early 1990s, apparel imports tripled when measured in square meters. Also contributing to the industry's decline in the United States was the reliance of manufacturers on off-shore assembly of pieces cut domestically.

Manufacturers in the Far East represented a significant source of women'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. By the 1980s, however, labor costs had increased, and capital and experience from those traditional low-wage markets moved to countries with lower wages such as Bangladesh, Thailand, Pakistan, Indonesia, Malaysia, Sri Lanka, and India, which became the sources for more of the imports entering the U.S. market. By the early 1990s, China replaced Hong Kong as the largest supplier of imported clothing to the United States.

The General Agreement on Tariffs and Trade (GATT) was first established in the 1940s, and it created the Arrangement Regarding International Trade in Textiles, known as the Multi Fiber Arrangement (MFA). The MFA regulated apparel that was imported into the United States and other member nations, and it was renewed every three years. Proposals involved in the GATT negotiations reduced the tariffs on imports into the United States by half over time, without guaranteeing U.S. products access to markets in other countries. Some countries that exported heavily into the United States, such as China, did not allow corresponding access to their home markets. GATT ended when the World Trade Organization was established in 1995.

The North American Free Trade Agreement (NAFTA), which created a free-trade zone between the United States, Mexico, and Canada by gradually eliminating tariffs over a 15-year period, took effect January 1, 1994. Because a similar agreement was already in effect between the United States and Canada, analysts expected NAFTA to increase trade with Mexico. Apparel industry executives supported NAFTA. The ILGWU and the ACTWU, by contrast, sought to stem the loss of jobs in the apparel industry by limiting the imports allowed into the country. However, their arguments did not succeed in challenging the free-market philosophy that ultimately triumphed in the passage of NAFTA.

The World Trade Organization (WTO) was established in 1995, and the Multi Fiber Arrangement (MFA), which allowed importing countries to limit the flow of imports from developing countries with lower costs, was replaced by the Agreement on Textiles and Clothing (ATC), which required that MFA quotas be phased out over a ten-year period. The United States was required to implement the ATC in 2005. After a notable increase in imports, particularly from China, the United States decided to invoke a WTO safeguard. In November 2005, the two countries came to a three-year agreement to place limits on China's imports. Using import figures from the previous year, the agreement allowed China to ship 10 to 15 percent more apparel imports to the United States in 2006, 12.5 to 16 percent more in 2007, and 15 to 17 percent more in 2008. 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.

More and more imports entered the United States under provision 9802 (formerly known as Section 807) of the Harmonized Tariffs Schedule of the United States. This provision allowed clothing assembled abroad from pieces cut in the United States to be re-imported 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. Many U.S. manufacturers took advantage of the provision and moved assembly operations overseas, noting that they could reduce costs to compete against imports more successfully.

Research and Technology

The large firms in the women's apparel industry had the capital to invest in new technology, but many of the smaller firms that were struggling against the tide of imports were not in a position to do so. Nevertheless, the intrinsic "soft" quality of material made it difficult to use automated equipment widely, and apparel manufacture remained a highly labor-intensive industry.

One tool that was advocated to better meet the market's demands was "quick response" (QR), which brought apparel to the retailer rapidly by shortening production cycles, reducing inventories, improving productivity, and relaying information regarding consumers' preferences to manufacturers quickly. By using computers to track inventory and sales, as well as consumers' responses to particular items, U.S. manufacturers could respond quickly to market demand and get a jump on foreign producers. Department stores and manufacturers worked together to find ways to speed deliveries and increase efficiency. Mass merchandisers were among the first to implement the quick response concept.

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