Apparel
SIC 2300
NAICS 315
Usually from purchased textiles, apparel makers cut and assemble fabrics into all types of finished clothing. Footwear is not discussed here. For discussion of leather apparel, see Leather Goods and Accessories, and for more information on textile production, see Textile Mills.
Apparel has long been made in locations around the world, and the global clothing market represents a substantial area of consumer spending, but in the last decades of the twentieth century there was a pronounced migration of its mass production from higher-wage industrial economies to lower cost labor markets in the developing world. Through the mid- to late 1990s and into the 2000s, apparel manufacturers in industrial nations continued to seek countries with low-cost labor for production. Developing economies in Asia and South America received the bulk of these production contracts. Simultaneously, apparel companies in developed economies began reducing their domestic workforces as a direct result of sourcing labor from low-wage countries. Meanwhile, apparel firms that could not compete with low-cost manufacturers either merged with larger companies, diversified, or closed.
In the mid-2000s, the European Union, the United States, Japan, and Canada remained the world's leading import markets for clothing. China (including Hong Kong), the United States, South Korea, Japan, India, the United Kingdom, Italy, and France make up some of the world's key clothing producers, importers, and exporters. World trade in apparel was highly regulated through the late twentieth century, but the movement away from trade barriers in the 1990s and early 2000s profoundly affected the industry, paving the way—in the view of many analysts—for China to become the world's dominant player. In 2002, according to the Miami Herald, 70 percent of all growth in apparel imports to the United States came from China and Vietnam. According to the American Textile Manufacturers Institute (ATMI), China's share of the U.S. import market, averaging about 9 percent in the 1990s when quotas were in effect, skyrocketed to 53 percent in 2003 after several categories of clothing were removed from quota requirements. This trend intensified after 2005, when remaining trade quotas expired. Indeed, in January 2005 alone, the value of Chinese apparel exports to the United States increased by more than 41 percent, and the value of its clothing exports to the European Union in the first four months of 2005 grew by 80 percent. The U.S. government reinstated the quotas on two categories of textile imports (body-supporting garments such as bras and synthetic filament fabric) from China in July 2005, after the two countries failed to reach an agreement following four rounds of talks in Beijing. In December 2005, a tentative agreement was reached that placed quotas on 34 different textile products imported from China, effective through 2008.
Due to various anti-sweatshop campaigns, many major apparel retailers and brand name manufacturers became increasingly aware that ensuring decent working conditions in production facilities could affect their reputation in the eyes of consumers as well as the corporate bottom line. Leading categories in the global apparel industry include outerwear; men's shirts; women's blouses and shirts; men's pants; and women's coats, jackets, suits, skirts, and vests. In 2007, a group of U.S. senators proposed a bill to ban the sale in the United States of imported goods made in sweatshop factories.
The international apparel industry has three primary sectors: designers or jobbers, manufacturers, and retailers. Designers or jobbers develop apparel items by purchasing materials, designing concepts, developing prototypes, and hiring manufacturers. Manufacturers mass produce the apparel items based on the samples created by the designers. Finally, retailers market the clothing to the public. A host of different relationships and arrangements may exist among these three sectors. For example, a designer may produce only clothing concepts and prototypes and then contract manufacturers to mass produce them. The designer might sell its products directly to a number of retailers. On the other hand, a designer might not only produce concepts and prototypes but also operate a retail or direct marketing business and therefore outsource only the manufacturing. Major companies may include divisions corresponding to all three of these sectors.
The International Apparel Federation (IAF) is one of the leading clothing associations dedicated to the advancement of the apparel industry worldwide. In addition, leading apparel-producing countries have their own trade associations, many of which are also members of the IAF. Two of the major associations are the American Apparel Manufacturing Association (AAMA), which promotes and enhances the production and marketing of U.S. clothing, and the European Clothing Association (ECA), which works with European apparel producers to improve manufacturing and sales. The ECA also includes the Union Française des Industries de L'Habillement (UFIH), France's apparel industry association.
To ensure fair trade around the world, the international community, including leading apparel producers, importers, and exporters, has implemented multilateral trade agreements. Two of the most important ones for the global apparel industry are the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA). GATT, a renegotiation of an existing trade pact by the same name, resulted from the Uruguay Round talks from 1986 to 1994 and took effect in 1994. The agreement mandates the reduction and gradual elimination of tariffs that hinder foreign competition. In particular, GATT required the phasing out of textile and apparel import quotas by 2005. Further, GATT replaced the Multifiber Arrangement (MFA), which permitted quota restraints, with the Agreement on Textiles and Clothing (ATC). The ATC allows countries to select the quota categories they want to phase out. GATT also established the World Trade Organization to serve as a permanent organization for the development of fair, systematic global trade policies.
Founded in 1995 the World Trade Organization (WTO) governs trade between nations participating in the Uruguay Round of Multilateral Trade Negotiations. The organization's objective is to liberalize trade and ensure stable and fair trading conditions for participating members. Based in Geneva, Switzerland, the WTO allows any country to challenge the trade policies of any other country before its tribunal, the Dispute Settlement Body. The WTO consists of 148 members, including countries from all around the world as well as leading apparel producers such as the United States, the European Union, Japan, India, and Singapore. China joined the WTO in December 2001.
Implemented in 1994, NAFTA gradually reduced and ultimately eliminated tariffs among North American countries, making way for substantially freer trade by 2005. NAFTA consists of agreements between the United States and Canada as well as bilateral agreements with Mexico. Besides phasing out tariffs, NAFTA also established temporary trade quotas to protect the participating countries from price dumping and other disruptive practices while the agreement was being implemented.
The African Growth and Opportunity Act (AGOA), which went into effect in 2000, created a special trading agreement between the United States and 37 sub-Saharan African nations that allowed these countries duty-free access to U.S. markets for several categories of consumer goods, including apparel. As a result of AGOA, U.S. imports of clothing from sub-Saharan Africa grew by 43.9 percent in 2003 and another 35 percent in 2004.
By the mid-1990s, new factors began to influence the success of clothing manufacturers. Producers contended that worker productivity does not solely determine a company's competitiveness. Instead, according to WWD, competitiveness is determined by the overall productivity and efficiency of the company. Therefore, industry observers expected to see significant restructuring in the apparel industry, including the implementation of information technology, in order to achieve this kind of productivity.
Manufacturers in the...
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