Apparel Manufacture
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Industry Overview
About 15,000 companies manufacture clothing in the US, with combined annual revenue of about $30 billion. Large companies include VF Corporation, Levi Strauss, and Warnaco. The industry is highly fragmented: the 50 largest companies hold less than 40 percent of the market. Some plants in the industry have 500 workers and annual sales of $50 million, but most manufacturers operate a single plant with fewer than 50 employees and annual revenue under $5 million. The industry includes knitting mills, but most apparel is cut and sewn.
Competitive Landscape
Demand is largely determined by consumer tastes and the comparative costs of manufacture in the US and overseas. The profitability of individual companies depends on operation efficiency and the ability to secure contracts with clothing marketers. Small companies can compete effectively with large ones by specializing in a particular type of apparel manufacture. There are few economies of scale in manufacture, because of the high labor content of most apparel. The industry is labor-intensive: average annual revenue per production worker is about $125,000.
Products, Operations & Technology
Because of the different skills and equipment needed to produce different types of clothes, manufacturers usually specialize in one type. The largest product segments are men's pants (20 percent of industry revenue); women's skirts and pants (15 percent); women's tops (15 percent); men's tops (12 percent); dresses (10 percent); and women's underwear (9 percent).
Several types of manufacturers exist. Integrated manufacturers, like Levi Strauss, design and market their own clothing brands, and make products both in their own manufacturing plants and in those of independent contractors. Licensees like Warnaco operate their own manufacturing plants and market clothing under license from the brand owner. Many clothing designers market their own brands, but contract out the manufacturing. Contract manufacturers may have long-standing relationships (but not actual contracts) with designers and marketers, or may use brokers to get new business.
The operations of most apparel manufacturers are similar. Designs for a piece of clothing are converted into cloth patterns along with a plan for the sewing steps needed to produce the finished product. Cloth is cut in various sizes (typically six to eight sizes) in a cutting room (or cutting plant), and is then sewn (or "made-up") into finished items by individual workers at sewing stations, in a series of assembly-line steps that may require special sewing equipment. Finished goods are pressed, inspected, and packaged for delivery.
The large labor content of the finished product has encouraged manufacturers to use the lowest-cost labor available. The US apparel manufacturing industry has shrunk 50 percent in recent years, as clothing companies have either moved plants offshore or outsourced production to foreign manufacturers. Wages in many countries are much lower than in the US; consequently, more apparel is now imported than produced domestically.
Despite attempts at greater automation, most apparel is still sewn by hand, using specialized sewing machines. Equipment is bought from makers like Pfaff, Yamato, or Juki. Computer systems have had a limited effect on the industry, although computerized machines may be used to produce patterns and cut materials.