Apparel Manufacturing
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Industry Overview
The US apparel manufacturing industry includes about 8,000 companies that have combined annual revenue of about $14 billion. Large companies include Levi Strauss, PVH, VF Corporation, and Warnaco. The industry is fragmented: the 50 largest companies generate less than 40 percent of revenue. The industry includes knitting mills, but most apparel is cut and sewn.
Globally, the apparel manufacturing industry dwarfs the US industry, with global export revenue alone topping $315 billion. China controls a third of the world market. Major international clothing makers are Youngor Group (China) and Armani (Italy).
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 efficient operations 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 $90,000.
Because of the lower costs to manufacture apparel abroad, the US imports more clothes than it makes domestically. Imports account for about 85 percent of the US market. The largest suppliers to the US are Bangladesh, China, Indonesia, Mexico, and Vietnam. Major export markets for US apparel manufacturers include Canada, Mexico, and Japan. Exports account for about 30 percent of US production.
Products, Operations & Technology
Because of the different skills and equipment needed to produce different types of clothes, manufacturers usually specialize in one type. Women's cut and sew apparel contractors, which provide contract cutting and sewing services on materials owned by apparel manufacturers, account for about 15 percent of industry revenue. Women's blouse and shirt manufacturing and women's dress manufacturing each account for about 10 percent of industry revenue.
The industry includes several types of manufacturers. 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 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 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.
