SIC 2361
GIRLS', CHILDREN'S, AND INFANTS' DRESSES, BLOUSES, AND SHIRTS



This category covers establishments that are primarily engaged in manufacturing girls', children's, and infants' dresses, blouses, and shirts from purchased woven or knit materials. Knitting mills primarily engaged in manufacturing outerwear are classified in SIC 2253: Knit Outerwear Mills.

NAICS Code(s)

315291 (Infants' Cut and Sew Apparel Manufacturing)

315223 (Men's and Boys' Cut and Sew Shirt (except Work Shirt) Manufacturing)

315211 (Men's and Boys' Cut and Sew Apparel Contractors)

315232 (Women's and Girls' Cut and Sew Blouse and Shirt Manufacturing)

315233 (Women's and Girls' Cut and Sew Dress Manufacturing)

315212 (Women's and Girls' Cut and Sew Apparel Contractors)

Industry Snapshot

There were approximately 776 establishments that manufactured the items covered in this category in 1999. As was true for much of the U.S. apparel industry, these establishments tended to be small, family-run businesses, and they faced stiff competition from low-cost imports. Against this backdrop, the baby-boomer generation was having children leading to its own miniboom, and these parents were better educated and had more disposable income than their parents—factors influencing their purchasing decisions for their children's clothing. Also, children's clothing had become more fashionable and trendy than ever before. However, the weak economic conditions of the early 2000s undercut revenues for most segments of the apparel industry, including children's and infant's clothing.

Organization and Structure

Establishments that produce children's clothing are organized similarly to the rest of the apparel industry and are composed of contractors, jobbers, and manufacturers. Contractors are independent manufacturers, hired by various, and often competing, manufacturers. Contractors specialize in sewing garments from pieces provided to them and are hired by producers who either do not have their own sewing facilities or producers whose own capacity has been surpassed.

Jobbers are design and marketing businesses hired to perform specific functions, for example, to purchase materials, design patterns, create samples, cut material, or hire contractors to manufacture the products. The cut materials are then sent to contractors to be assembled.

Manufacturers are those establishments that perform all functions, that is, creating apparel from purchased materials. Manufacturers have staffs that produce designs or buy them from freelancers and then purchase the materials (fabric and trimmings) needed. Generally the cutting and sewing of the garment is done on site. When demand for an item, however, exceeds the manufacturer's capacity or if shipping deadlines cannot be met, outside contractors would be hired. Most manufacturers have their own sales and shipping staff.

Children's clothing sizes are divided into separate categories for specific age groups. Clothing for infants includes newborns up to age one; clothing for toddlers covers ages two to three; clothing for children covers ages three to six; and clothing for girls covers ages seven to 14. Children's apparel manufacturers generally produce one line per season, typically creating four lines a year—winter, spring, summer, and fall.

Background and Development

The children's wear industry developed early in the twentieth century around the same time as the women's apparel industry. As women joined the professional workforce, they turned away from making their own clothes, and they stopped sewing their children's clothing as well. Over time, children's clothing became more durable and the sizes became standardized.

A significant factor affecting the development of children's wear was the growing importance of television in children's lives after World War II. Children could emulate what other children wore on television, and they could be appealed to directly through advertising. Children began to demand a greater influence over the clothing their parents purchased for them and often asked for stylish and fashionable clothing. They became independent consumers themselves and were often very fashion conscious and brand-name aware.

The number of workers employed in this industry dropped throughout the 1980s even as the value of shipments rose. As in other sectors of the apparel industry, increased consolidation and the strength of imported clothing contributed to this trend. The value of shipments grew from $1.4 billion in 1982 to an estimated $5.2 billion in 1997.

The recession that began in the apparel industry in the late 1980s particularly affected children's apparel producers. Domestic manufacturers were hard hit while imports slowed only moderately. Nevertheless, it was expected that children's apparel sales would continue to increase as parents, grandparents, and children themselves purchased clothing manufactured in this industry.

Current Conditions

A solid U.S. economy, growing at a slow, steady pace throughout the 1990s, provided the apparel industry with low unemployment rates, along with low inflation and low interest rates. Consumer confidence and spending was high in the late 1990s, and many industry forecasts called for continued solid growth. However, the economic downturn that began in 2000 precipitated a shift in consumer buying habits to discounters and offprice outlets. Lack of time, due to work schedules and preferences to spend more leisure time with family and friends, led many consumers to increasingly shop through the mail and over the Internet.

Industry Leaders

OshKosh B'Gosh, Inc. was a dominant force in the children's apparel industry in the late 1990s. It operated more than 120 outlet and specialty stores as well as an online shopping site. In 1998 the company reported sales revenues of $423.2 million, an increase of 7.1 percent over 1997. The number of employees for 1998 was 3,800, an increase of 5 percent over 1997. The company made colorful clothing for children and still produced the overalls it had turned out since the late 1800s.

Another leading manufacturer in this category was The William Carter Company, a private company founded in 1864 and acquired in 1996 by Investcorp. The company's estimated revenues for 1998 were $408.2 million, an increase of 12.5 percent over 1997. Carter produced children's apparel under its own name as well as licensed apparel under several brands, including the Christian Dior and Campbell Kids labels. Carter manufactured newborn layette clothing, sleepwear, playwear, underwear, diaper bags, strollers, hair accessories, and shoes. The company operated approximately 145 outlet stores in the United States.

Gerber Childrenswear Inc. also produced clothing for children. Gerber reported revenues of $278.5 million in 1998, an increase of 37.8 percent over 1997. Gerber had 3,250 employees in 1998, an increase of 1.5 percent over 1997. Gerber Childrenswear manufactured sleepers, cloth diapers, bedding, footwear, swimwear, layettes, playwear, underwear, knitwear, and vinyl babypants.

Workforce

The number of employees in this category declined throughout the 1980s. From 1982 to 1995, employment in this category fell from 38,000 people to an estimated 29,720 in 1997. California had the most establishments in this category with 288 establishments employing approximately 11,000 workers. New York had approximately 259 such establishments, employing about 10,000 workers, in 1997. Other states with noteworthy concentrations of workers in this category were Florida, Texas, and Pennsylvania.

America and the World

The U.S. children's apparel industry began to lose significant market share to imports in the 1960s as did other sectors of the apparel industry; imports were attractive to consumers because of their lower prices and acceptable quality. The process began to accelerate in the 1970s and, by the 1990s, imports had reached all-time highs. Also contributing to the industry's decline in the United States was the reliance of manufacturers on offshore assembly of pieces cut in the United States.

More imports entered the United States under Provision 9802 of the U.S. Harmonized Tariffs Schedule (formerly known as Section 807). This provision allowed clothing assembled abroad (from pieces cut in the United States and then exported) to be reimported with duty paid for the value added abroad. Thus, the most labor-intensive part of the assembly process could be done at lower-wage rates but both import and export data were skewed. Many U.S. manufacturers were taking advantage of Provision 9802 and moving assembly operations to the Caribbean, noting that they could reduce costs and more successfully compete against imports from Asia. By 1992 garments manufactured in this manner comprised 14 percent of apparel imports. The passage of the North American Free Trade Agreement (NAFTA)—ratified in 1993 to create a free-trade zone between the United States, Mexico, and Canada by gradually eliminating tariffs over 15 years—however, led some to expect that the Caribbean would be a less desirable manufacturing destination than Mexico.

Asia-based manufacturers represented a significant source of children'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 operations from those traditionally low-wage markets moved to lower wage countries such as Bangladesh, Thailand, Pakistan, Indonesia, Malaysia, Sri Lanka, and India, which became the sources for more of the imports entering the United States. By the early 1990s China replaced Hong Kong as the greatest supplier of imports to the United States. By 1997, Mexico, due to NAFTA, increased its imports to the point of surpassing Hong Kong as the second-greatest supplier of apparel imports to the United States.

The impact of the Asian financial crisis of the late 1990s created great uncertainty in the global apparel market. The five main countries affected by this crisis were Indonesia, Korea, Thailand, the Philippines, and Malaysia, and they were all important apparel producers. Because of the devaluation of the currencies, their products became less expensive, and it placed downward pressure on the pricing of products from competitor countries.

Employment in the apparel industry overall remained on a downward trend in 1997, even though exports had a modest expansion. Although technology improvements increased productivity in this industry, the manufacturing process is labor-intensive. As compared to other manufacturing industries, wages and profit margins were low. The earnings of employees in this industry were approximately 38 percent lower than employees of any other U.S. manufacturing industry. In the late 1990s, the Union of Needletrades, Industrial, and Textile Employees (UNITE) and the Clothing Manufacturers Association reached an agreement on a contract covering 25,000 tailored clothing workers that would provide a pay hike of 65 cents per hour over three years.

In 1997, as a result of concern about working conditions in the apparel industry, President Bill Clinton announced an agreement, the Apparel Industry Partnership, among industry, labor, and consumer and human rights officials that offered a voluntary code of conduct intended to uphold workers' rights in the United States and abroad. This code of conduct included a guaranteed minimum or prevailing industry wage, a maximum 60-hour work week, and a prohibition against employing persons younger than 15 years of age.

Research and Technology

In the battle against imports, U.S. apparel makers tried a variety of stratagems, including increased use of automation, delivering higher quality goods, and trying to more closely keep track of the consumers' needs and desires. Although the intrinsic "soft" quality of material made the extensive use of automated equipment difficult, most of the larger manufacturers tried to invest in newer machinery to improve efficiency. Nevertheless, apparel manufacture remained a highly labor-intensive industry.

One tool that was advocated to better meet the market's demands was "quick response": the idea of bringing apparel to the retailer rapidly by shortening the production cycle, reducing inventories, improving productivity, and sending information regarding consumers' preferences quickly back to the manufacturers, and thus avoiding overstocking. By using computers to track inventory and sales as well as consumers' responses to particular items, the ability to respond quickly to market demand—and thus get a jump on foreign producers often half a world away—domestic manufacturers could minimize their vulnerability to imports. Department stores and manufacturers worked together to find ways to speed deliveries and increase efficiency. Mass merchandisers were among the first to implement quick response systems.

The U.S. government was also assisting the industry with developing and applying new technologies. The American Textile Partnership was a joint venture between the industry and the U.S. Department of Energy to link textile mills, apparel manufacturers, wholesalers, and retailers in an electronic network that would allow all industry segments to respond more quickly to consumer spending patterns.

Further Reading

Baby and Junior: International Trade Magazine for Children's Fashions. Bamberg, Germany: Meisenbach GMBH, 1999.

Conditions in the Women's Garment Industry. International Ladies' Garment Workers' Union.

Earnshaw's Infants, Girls and Boys Wear Review. New York: Earnshaw Publications, Inc.

Fairchild Fact File: Children's Market, Infants', Toddlers', Girls', and Boys'—Apparel, Juvenile Products, Toys/Dolls. New York: Fairchild Publications, Inc.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .



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