SIC 2335
WOMEN'S, JUNIORS', AND MISSES' DRESSES



This entry describes establishments primarily engaged in manufacturing women's, misses', and juniors' dresses (including ensemble dresses), from purchased woven or knit fabrics, including woven or knit fabrics of paper, whether sold by the piece or by the dozen. Establishments primarily engaged in manufacturing girls', children's, and infants' dresses are classified in SIC 2361: Girls', Children's, and Infants' Dresses, Blouses, and Shirts. Knitting mills primarily engaged in manufacturing knit dresses are classified in SIC 2258: Lace and Warp Knit Fabric Mills.

NAICS Code(s)

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

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

Industry Snapshot

At the onset of the twenty-first century, American manufacturers of women's, juniors', and misses' dresses had seen an immense drop in presence, production, and profits. In 1993, for example, 3,500 companies comprised this industry segment, but as of the late 1990s, a mere 750 remained. California and New York kept their places as the top two locations for dress manufacturing activity with 288 and 259 establishments, respectively. Next in line were Florida with 36, Texas with 30, and Pennsylvania with 22.

The clothing industry, particularly women's apparel, is sensitive to changes in economic conditions. When the economic boom of the late 1990s began to wane, consumers became increasingly concerned with value and savings. At the same time, consumer preferences continued to shift to more casual basic apparel at home, as well as at work. Between 1997 and 2000, the value of industry shipments declined from $4.0 billion to $2.7 billion, and employment decreased from 147,419 to 67,925.

Organization and Structure

The American Apparel Manufacturers Association (AAMA) is the central trade association for the U.S. apparel industry. Throughout the 1990s, the AAMA represented three-fourths of the industry and provided its members with guidance and support through publications, statistical reports, and trade negotiations. In addition to the AAMA there are regional associations that focus on local issues and policies.

Business Centers. The industry's central business locations are New York City, Los Angeles, and Atlanta; each of these is supported by an apparel mart. These marts house showrooms in which manufacturers display their lines, and buyers and sellers converge at these marts to conduct the business of selling clothes. The selling periods for women's, misses', and juniors' dresses are typically condensed into monthly "market weeks." Retail buyers visit manufacturer showrooms to buy product for the coming season. In 1992, the women's apparel industry garnered retail sales of $64.5 billion. In 1995, domestic dress production reached $4.6 billion, and consumption of women's apparel grew by 1 percent; in 1996, consumption increased 5.1 percent.

The apparel industry operates under the principles of clustering. Clustering requires makers of similar products to congregate their operations in a small geographical location. This facilitates communication between buyers and sellers, increases the speed of innovation, and promotes a business culture that nourishes and supports an industry. Clustering is well-established in New York City and Los Angeles, thus ensuring their prominence as fashion centers for the United States.

Manufacturing Process. The manufacturing process requires an average of 6 to 8 months to move a particular line from design to sale. The process typically begins with a designer's sketch, which is turned into a pattern. Fabric is selected and a cost sheet is established to detail expenses. A wholesale price is determined by using the cost sheet as the base. The production department grades a pattern to accommodate the required size range and then cuts the fabric according to the patterns. The materials are then sewn and finished, and finally, the garments are pressed, then they are packed or hung on racks for shipment to the retail customer. Normally, design was the only process that manufacturers handled in-house. The ability of a manufacturer to maintain control of the remaining processes was a function of its size and capital equipment. The most frequently outsourced process was sewing and finishing. This process was given to small contractors, typically employing immigrant labor in sweatshop-like factories. The nature of the contracting business has made the tracking of operating businesses and gross sales nearly impossible.

Financial Structure. According to Bobbin magazine, two-thirds of apparel manufacturers factored their receivables in the early 1990s. This accounting method entails a contract between manufacturer and factor regarding credit approval for retailers. The factor, essentially a lender, buys the manufacturer's receivables for 80 percent to 85 percent of value, and in turn sells them to a retailer. This allows manufacturers to decrease risk and increase capital turnover.

Background and Development

The 1830s marked the emergence of the women's ready-to-wear dress industry in America. Manufacturers were able to keep pattern making and fabric cutting on their premises, typically in the tailor shop, with the pieces contracted to workers who would sew and finish the product at home. By mid-century, several variables emerged that pushed this nascent business towards an industry of mass production: (1) strengthening of domestic textile manufacturing techniques, (2) invention of a treadle-powered sewing machine by Isaac Singer, (3) influx of large numbers of immigrants, and (4) methods developed during the Civil War for the mass production of garments.

The easy availability of cheap immigrant labor encouraged the development of large sweat shops typically housed in lofts. Not until the turn of the century did the workers begin to mobilize and organize to promote better working conditions. Their actions resulted in the 1910 Protocol of Peace, which abolished home work, ended inside subcontracting, limited the work week to 54 hours, and created an arbitration process for complaints. These benefits were granted at the expense of the workers' right to strike. The terrible images of 146 young women who died behind locked factory doors in the Triangle Shirt Waist fire of 1911 resulted in further reforms. By World War I, the International Ladies Garment Workers Union was one of the most powerful labor organizations in America.

New York City was the undisputed center of the women's ready-to-wear apparel industry. The city's dominance was secured during the 1920s when New York developers consolidated the industry around a group of buildings along Seventh Avenue that were designed to house workrooms and showrooms for apparel manufacturers.

The apparel industry was not immune to the effects of the Great Depression of the 1930s. Many manufacturers ceased operations as a result of bankruptcy; however, the manufacturing boom during World War II quickly reversed the fortunes of the industry. There were tremendous profits to be earned in servicing the needs of a fully employed population.

The labor intensive aspect of garment manufacturing requires an ongoing search for cheap sources of labor. It was this requirement, in addition to the increasing congestion and expense of doing business in New York City, that began the movement of manufacturers away from New York towards the South and West. The rise of large-scale manufacturing operations could benefit from economies of scale not possible in the small spaces typically found in New York. This led to the wholesale manufacture of staple garments such as jeans.

The unending search for cheap labor eventually led to an increase in imported goods. Under the terms of Tariff Item 807, now called 9802, a U.S. company can send semifinished garments overseas for incidental work, such as sewing and finishing. The company can then import the items back to the United States and pay duty only on the value-added portions of the garments. By the 1980s, the rise in imports was dramatic; 1985 imports were $15 billion, seven times that of 1972. By 1989, that number jumped to almost $24 billion. Manufacturers were pitted against retailers in their attempts to get protectionist legislation passed through Congress. The retailers argued that such legislation would result in an increase in domestic clothing prices. As a result, textile and apparel manufacturers established the Crafted with Pride in the U.S.A Council, designed to encourage consumers to buy American products.

Consolidation. Changing consumer buying patterns and the continuing increase in imported goods contributed to a decrease of 800,000 apparel and textile jobs during the 1980s. They also forced the industry to consider the increased usage of automated manufacturing processes. Although the industry was still labor intensive, computer integrated manufacturing principles and the useof electronic data interchanges for "quick response" in inventory and ordering had become increasingly popular among manufacturers. However, the capital outlays required for the transition to a more automated environment and increased economies of scale were often too costly for smaller manufacturers.

This led to an atmosphere of consolidation wherein heavily capitalized companies introduced automation, expanded their operations, and increased their access to a wider strata of retailers through the acquisition of other labels. Consequently, small, independent companies were squeezed by the ever-increasing import market and these large, domestic apparel corporations. For example, Liz Claiborne, Inc. diversified its holdings by purchasing several brands from Russ Togs Inc., and continued to sell its garments to department stores while these new brands allowed the company to do business with such high growth mass merchandisers as Sears Roebuck and Co. and J.C. Penney Company, Inc.

Licensing. Brand licensing was a strategy employed throughout the industry to increase market share or avoid the necessity of automating a manufacturing process. Through licensing, the brand owner can reap the benefits of its name without the attendant problems of manufacturing or contracting out the goods. Likewise, the licensee views a licensed brand as an opportunity to expand its line of offerings without the risk of financing a product launch. In a December 1992 Bobbin article, Craig Kalter, vice president of marketing and licensing for French Toast, noted that, "the advantage to the licensee is that it is able to benefit from a name that has a high degree of awareness and penetration in the marketplace."

NAFTA. The North American Free Trade Agreement (NAFTA) presented new challenges to the apparel industry. The agreement carried the possible threat of U.S. workers losing jobs to Mexico's cheaper labor source. However, the advocates asserted that businesses only moved to Mexico production that was no longer viable in the United States. In its study of NAFTA, the Office of Technology Assessment commented that "Mexico has so far been a minor supplier of garments to the United States and will have difficulty dislodging established Asian producers. The threat to U.S. apparel jobs is global, not regional." Further, the American Apparel Manufacturers Association (AAMA), which supported NAFTA, argued that without NAFTA, such production would have moved to the Far East, thus completely eliminating U.S. involvement in the manufacturing process. A 1993 survey of AAMA membership indicated that despite NAFTA, only 3 percent of respondents expected an employment decline in the coming year. A full 50 percent expected no changes in their work force, while 46 percent of the manufacturers anticipated increasing their domestic employment.

The apparel industry in general, and women's and misses' dresses in particular, were very sensitive to economic and demographic changes. The economic conditions in the 1980s, boosted by the increase of women in the workplace, led to an average yearly business growth of 10 percent in terms of value of shipments for this category. During the recessionary climate of the early 1990s, however, the industry averaged only 2 percent growth. Thissensitivity was further noted in the growth in sales for discount mass merchandisers at the expense of specialty boutiques and department stores. Manufacturers had to hold down costs and provide high quality garments to increasingly demanding and careful customers.

A report issued by the U.S. Department of Commerce projected moderategrowth for the U.S. apparel industry through the mid-1990s. This forecast, based on a favorable long-term outlook for consumer spending, housing starts, and new car purchases, also noted the increasingly competitive nature of the industry as foreign producers work to increase their share of the U.S. market.

Overseas markets had become increasingly important to U.S. apparel manufacturers, particularly in the developing markets of the former Soviet Union and Eastern Europe. An economic newsletter published by the American Apparel Manufacturers Association paid particular attention to trends in Asia that suggested opportunities for domestic apparel manufacturers. Japan, for example, had huge stores of foreign exchange but the public's living standard is below that of U.S. citizens. The cultural climate in Japan was changing in the early 1990s and Japan's citizens were beginning to enjoy more leisure. It was anticipated that this would lead to an increase in the consumption of personal goods and services. Likewise, the opening of trade with China and the increasing interest in Western goods offered tremendous growth opportunities for U.S. apparel manufacturers.

Although overseas production dominated the industry, demand to fill American closets with smart, polished garments prevailed, and dress departments of the impending millennium revealed an inclination toward finery. Industry analysts reported Americans were looking for greater opportunities and occasions to literally dress up in the economic booms of the late 1990s. While casual clothes remained a wardrobe staple, elegant attire found a rebirth among dress manufacturers. This trend influenced some brand expansions and corporate acquisitions despite rampant facility reductions. This industry segment also benefited from the latest computer tools and technologies like the Internet, as well as improved processes like e-commerce and just-in-time merchandise delivery.

A new World Trade Organization (WTO) was established in 1995, and the Multifiber Arrangement (MFA), which allowed importing countries to limit the flow of imports from lower cost developing countries was replaced by the Agreement on Textiles and Clothing (ATC), which required the phasing out of MFA quotas over a ten-year period. According to Linda Shelton in an Industry, Trade, and Technology Review report, "The elimination of MFA quotas likely will have a significant impact on the U.S. textile and apparel sector given the level of protection that such restrictions have provided domestic producers over the past two decades." Since the United States has until 2005 to implement the ATC, the legislation's impact on the women's apparel industry may not be realized for several years.

Current Conditions

Tremendous changes took place in the apparel industry, including women's, juniors', and misses' dresses during the final decade of the twentieth century. In the late 1990s the growing acceptance of casual clothes in the workplace undermined dress sales, although this trend was offset somewhat by prosperous economic conditions, which fueled renewed interest in elegant clothing, including dresses. When the U.S. economy weakened in 2000, the industry suffered further. That year the value of industry shipments declined to $2.7 billion, compared to $4.0 billion in 1997. Similarly, employment declined to 67,925, compared to 147,419 in 1997.

Industry Leaders

Founded in 1976 and based in New York City, Liz Claiborne, Inc. grew into the leading manufacturer of dresses in the late 1990s. Industry analysts credit its success to the company's strategy of advertising its products as designer, but pricing them to attract a broader, more diverse market. Sold under size-segmented brands like Lizsport, Liz & Co., Elisabeth and Dana Buchman in outlet, retail, and department stores, the Liz Claiborne label is also licensed for cosmetics, shoes, sunglasses, watches, home furnishings as well as men's clothes. Employing 7,000, the company's 1998 sales topped $2.5 billion and boasted a net increase of $1.6 million for the year.

Leslie Fay Companies, Inc., which include the Leslie Fay Classic, Leslie Fay Collection, Albert Nipon, and Nipon Boutique lines, was founded in 1946 and had sales of over $800 million in 1992. A New York-based publicly traded company, Leslie Fay responded aggressively to consumer demands for moderately priced, value-oriented fashion by cutting prices in several of its dress lines. Due to their "everyday value" pricing strategy, the company gained the leading market share in the moderate-price dress category. Despite this market edge, the company's stock, which took a tumble in 1992, continued its downward trend, mirroring the sluggish women's apparel industry. In 1993, the company filed for Chapter 11 bankruptcy reorganization and continued its Chapter 11 operation through 1996.

Kellwood Co., the fifth largest apparel maker in the United States, grew rapidly during the mid-1990s. Despite a stagnant retail environment in 1995, the company's women's wear division grew at 11 percent.

Workforce

The U.S. Census Bureau for 2000 reported almost 30,000 employees worked in the manufacture of women's, juniors', and misses' dresses, a paltry showing compared to 100,000 employed in 1993

America and the World

Exports of apparel grew from 2 percent of total U.S. product shipments in 1987 to more than 7 percent in 1992. Total U.S. exports in that year were nearly $4 billion. Although much of this growth represented expansion of existing or new markets, a large portion of this gain was due to semifinished garments sent abroad for finishing and then returned to the United States under the provision of Harmonized Tariff Schedule of the United States (HTSUS) code 9802, formerly 807. Although section 807 existed since the Tariff Act of 1790, it only gained importance during the 1980s, as apparel imports dramatically increased. In the decade from 1980 to 1990, apparel imports increased 202 percent.

The 9802 program allows a manufacturer to pay duty only on the value added to the garment abroad, not the total value of the product. In 1992, HTSUS 9802 trade was slightly more than 14 percent of total imports, and nearly $900 million worth of HTSUS 9802 imports were produced in the Dominican Republic. Mexico produced approximately $700 million, followed by Costa Rica with $400 million.

Apparel trade is governed by the Arrangement Regarding International Trade in Textiles, also known as the Multifiber Arrangement (MFA). This agreement provides guidelines for member nations regarding international trade in textiles and apparel. Apparel is further controlled under the auspices of the General Agreement on Tariffs and Trade (GATT). The Uruguay Round of talks regarding GATT, begun in the late 1980s, were also expected to have an impact on the industry.

The largest suppliers of apparel to the United States were China, Taiwan, Korea, and Hong Kong, with almost $12 billion in sales for 1992. This represented nearly half of the $26 billion of all garments imported into the United States in 1992. Although labor costs in China, Pakistan, and India averaged only $0.23 per hour, wages in Singapore, Hong Kong, and Taiwan were $3.25 per hour, significantly higher than the $1.17 average hourly wage paid in Mexico. In the mid-1990s conventional Far East importers lost U.S. market share to new players such as Bangladesh, Indonesia, and Thailand. The "Big 4" (China, Hong Kong, Taiwan, and Korea) represented only 28 percent of apparel imports in 1995. This was due, in part, to increased implementation of "quick response" and U.S. apparel manufacturers' ability to react more quickly to fluctuating consumer demands.

Further Reading

Apparel Import Digest. Arlington, VA: American Apparel Manufacturers Association, 1997.

Apparel Industry Trends. Arlington, VA: American Apparel Manufacturers Association, March 1997.

Bonner, Staci. "Kellwood's Vision Pays Off." Apparel Industry, November 1996.

"Dress YOUR Best in 1999." WWD Lifestyle Monitor—Cotton Incorporated, 1999. Available from http://www.cottoninc.com/wwd/homepage.cfm?PAGE+1061 .

Focus: An Economic Profile of the Apparel Industry. Arlington, VA: American Apparel Manufacturers Association, 1996.

Hill, Suzette. "Women's wear makers look ahead to 2005." Apparel Industry Online, 1999. Available from http://www.aimagazine.com/nov99stor07.html .

"Import Growth Slowing, AAMA Says." Apparel Industry, June 1996.

"Leslie Fay Seeks Post-Chapter 11 Lender Facility." Women's Wear Daily, 4 January 1996. Available from http://207.51.71.250/samples/archive/1996/000/069.htm .

Shelton, Linda and Robert Wallace, "World Textile and Apparel Trade: A New Era." Industry, Trade, and Technology Review, October 1996.

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

U.S. Department of Commerce. Statistical Abstract of the United States. Washington: GPO, 1996.

U.S. Department of Commerce, Economics and Statistics Administration. Annual Survey of manufacturers: Statistics for Groups and Industries. Bureau of the Census, 1999. Available from http://www.census.gov/prod/ec97/97m3152k.pdf .



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