SIC 2337
WOMEN'S, MISSES, AND JUNIORS' SUITS, SKIRTS, AND COATS



This category covers establishments primarily engaged in manufacturing women's, misses', and junior's suits, pantsuits, skirts, coats (except fur coats and raincoats), and tailored jackets and vests, from purchased woven or knit fabrics. These garments are generally tailored and usually lined. Establishments primarily engaged in manufacturing fur clothing are classified in SIC 2371: Fur Goods; and those manufacturing raincoats are classified in SIC 2385: Waterproof Outerwear. Knitting mills primarily engaged in manufacturing knit outerwear are classified in SIC 2253: Knit Outerwear Mills.

NAICS Code(s)

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

315234 (Women's and Girls' Cut and Sew Suit Coat, Tailored Jacket, and Skirt Manufacturing)

Industry Snapshot

Following the 20-year trend of declines in apparel purchases, sales made sharp declines throughout the early 2000s. Reasons included the events of September 11, 2001 and the ensuing economic recession. Apparel also had more competition for consumer dollars, with increasingly cost conscious Americans spending on travel, recreation and services more frequently than goods such as apparel. More consumers—including upper-end consumers—also preferred shopping for apparel in discount channels, lowering the value of purchases. Spending on apparel didn't appear to be picking up anytime soon, either: analysts expected further decreases throughout 2002 and 2003. After 2003, spending on apparel was expected to plateau until 2006 before dropping once again. The value of shipments of women's, misses', and juniors' suits, skirts, and coats totaled $2.18 billion in 2001, down from $2.24 billion in 2000. Overall purchases of women's apparel fell 5 percent in value in 2002, to $59.3 billion from $62.3 billion in 2001.

One piece of good news for the women's apparel industry was the rise of sales on the Internet. During the 2002 holiday season, online sales of apparel and accessories rose 39 percent from 2001, with $1.3 billion. The sector was the seventh fastest-growing, nontravel e-commerce category, accounting for 59 percent of such consumer purchases. The rising number of women online, estimated at 60 percent, was the reason for the rise in sales of apparel on the Web.

Organization and Structure

The apparel industry is composed of three types of producers: contractors, jobbers, and manufacturers. Contractors are independent firms performing specialized work, such as sewing a garment, for a number of competing firms. Contractors were hired by producers who either did not have their own sewing apparatus or whose own capacity had been exceeded. Contractors are not involved in the retail sale of merchandise. More than 50 percent of the plants making women's coats and suits are run by contractors.

Jobbers are design and marketing businesses that are hired to perform specific functions. For example, jobbers might purchase materials, design patterns, create samples, cut material, and hire contractors to manufacture the product. Most jobbers, however, do not sew garments, but instead hire contractors to sew and finish the products. These contracted sewing-machine operators complete specific parts of the garment, which are provided by the manufacturer. Through this system of piece work, operators can work more quickly and efficiently because they do not need to switch or adjust their machines.

Jobbers often have their own design staffs to create seasonal lines, or they hire freelancers to do design work. A jobber buys the materials needed to produce the pieces and then creates the patterns for different sizes. The cut material is then sent to contractors to be sewn and finished. Orders are taken for the garments, and the finished garments are then shipped to retailers.

Manufacturers are those establishments performing all functions involved in creating apparel from purchased materials. The manufacturer has a staff that produces designs, or it buys work from freelancers. The manufacturer then purchases the needed materials (fabric and trimmings). Generally the cutting and sewing of the garment is done in the manufacturer's factory. However, when demand for an item exceeds the manufacturer's ability to supply it within shipping deadlines, outside contractors are hired. The manufacturer's own sales and shipping staff takes orders and sends them out.

When a manufacturer handles all stages of a garment's assembly, it clearly has greater control over the quality of the product. Nevertheless, the advantages to using contractors are numerous. For example, those companies without the capital to update machinery find the system advantageous. Manufacturers who rely on contractors also avoid the responsibility of hiring and training workers. And the contractor system is flexible—providing manufacturing capacity when needed at busy periods without needing to meet payroll obligations at off-peak periods.

Background and Development

The growth of the U.S. women's apparel business began in the mid-nineteenth century when certain garments that did not need to be fitted, such as cloaks and mantles, started to be mass-produced. Small quantities of women's suits and skirts were turned out in a limited number of factories, but most women still made their own clothing at home.

Early in the twentieth century, the number of apparel manufacturers grew as more women chose to buy their clothing. New York City became the center of the women's apparel business for a variety of reasons. For example, manufacturers were able to take advantage of the inexpensive labor found in newly arrived immigrants—most of those working in the industry were young Jewish and Italian women. New York City also formed an ideal location for the industry due to its position as a port city and its proximity to the textile mills in New England and the South.

Soon, many manufacturers began to outgrow their quarters in an industry that was expanding rapidly. A consortium of apparel makers, investors, and a real estate developer came up with the idea of moving to an undeveloped area of New York City. Between 1918 and 1921, approximately 50 clothing makers moved to the area along Seventh Avenue, which came to be known as the garment district.

Because the garment industry was unregulated, the employees in these days often worked in crowded, unsafe, and poorly lit "sweat shops" for low pay. Early efforts to organize the workers into unions were met with industry-wide resistance—as one shop became organized, business would then simply shift to an unorganized one.

The Triangle Shirtwaist Factory fire in 1911, in which 146 employees were killed, was a tragedy that galvanized the industry. After much resistance from business owners, industry-wide minimum standards for worker safety were put into place. In the 1930s and 1940s, federal legislation made it easier for the unions to organize, and more labor standards were established. Two unions largely represented U.S. apparel workers, the International Ladies' Garment Workers' Union (ILGWU) and what eventually came to be known as the Amalgamated Clothing and Textile Workers Union (ACTWU). For many years they were able to negotiate contracts with yearly pay increases and benefits.

By the 1960s apparel manufacturers started to move their production facilities out of the United States to markets where the labor was plentiful and cheap. Apparel manufacturing became a global industry. Manufacturers from the United States first looked largely to Hong Kong and Taiwan but, as labor costs grew, manufacturers moved to other Asian nations and the Caribbean. Apparel imports into the United States increased from 9 percent in 1967 to 62 percent in 1992. The value of imports of women's suits, coats, skirts, and jackets reached $2.8 billion in 1995.

Another important development emerged in the 1960s—many textile companies that produced the materials and retailers that bought the finished products grew into huge companies. The apparel manufacturers responded in kind, as many merged to create large, publicly owned corporations. Historically, women's apparel companies were small businesses, often family-run. Although the new corporations were large, they sometimes lacked the flexibility needed in the ever-changing fashion industry. However, the larger companies were armed with the capital needed to upgrade machinery and modernize equipment to compete more effectively with imports.

Another trend that led to profound change in the industry was the dramatic increase in the number of women in the workforce, which began in the 1970s. As a result, the demand for professional women's wear skyrocketed.

Personal-consumption expenditures on clothing nearly doubled during the 1980s, and women's apparel was an important part of that increase. As recession hit the industry in 1989, however, the spending splurge ended; manufacturers responded by cutting costs. The women's apparel industry adjusted to the recession, and the larger manufacturers grew stronger as the industry continued to consolidate. Some big manufacturers were able to take advantage of the weakened position of many smaller firms and strengthen their already dominant positions.

Other factors changed the women's apparel industry as well. For example, manufacturers began to sell their own products as the line between manufacturer and retailer blurred. Manufacturers were often unhappy with the way the retailers displayed their products or with the performance of sales staff. By opening their own retail spaces—either complete stores or free-standing "shops" within department stores—manufacturers could exert direct control of the sales, service, and environment. Another popular tactic was for manufacturers to sell through catalogs, again jumping over the middleman and appealing directly to the consumer. By marketing their own goods, manufacturers could avoid retailers who were looking to increase their profit margin at the manufacturers' expense.

Manufacturers responded to the surge in imports in a variety of ways. Some sold off their manufacturing facilities, hiring contractors to make products to their specifications; others contracted for their apparel to be produced almost exclusively offshore and then reimported. By contracting out, manufacturers could reduce their overhead and their inventories would be more flexible. Those who kept their facilities in the United States often stressed their reliability, on-time delivery, and quality.

The value of women's wear shipments declined gradually through the 1990s. One of the many reasons included a leveling-off of the number of women entering the workforce. Historically, women's apparel accounted for half of all clothing sold, and it was sold primarily to working women, who by 1990 comprised 45 percent of the U.S. workforce. In addition, office wear became more casual, and this particularly affected the sales of women's suits. And as the U.S. population aged, people often became less concerned with up-to-the-minute fashions than with saving for mortgage payments and children's educations. The market stabilized in 1996 and 1997 as manufacturers adjusted their lines to meet the demands of the more casual workplace. Nearly 63 million women were in the labor force in 1997, and they represented almost 50 percent of managerial and professional positions

Retailers themselves sought to cut costs and become more efficient as the market became more competitive. Retailers often looked to the larger apparel manufacturers that were providing merchandise that consumers recognized and respected. By limiting the number of manufacturers supplying them, retailers could reduce overhead expenses—thus favoring the larger manufacturers over the smaller ones.

Mass merchandising was the focus of the 1990s. The dawn of a new century improved upon this concept by incorporating the Internet into numerous stages within the industry process. This electronic commerce, sometimes called e-commerce or e-tailing, was a strategy that benefited both manufacturers and customers by moving goods to destinations almost instantly. A 1999 ApparelNews.net article reported that e-commerce represented only a sliver of annual sales, but the trend eventually found greater acceptance. These Internet-based transactions revolutionized the apparel trade in terms of turnaround and timelines. Access to this up-to-the-minute information, as well as the borderless venue, allowed for all parties to dramatically broaden their business reaches.

Current Conditions

Overall purchases of women's apparel fell 5 percent in value in 2002, to $59.3 billion from $62.3 billion in 2001. Junior apparel was the only sector to actually increase, rising more than 9 percent in the first nine months of 2002. In 2001, the value of shipments of women's, misses', and juniors' suits, skirts, and coats totaled $2.18 billion in 2001, down from $2.24 billion in 2000. Skirts and divided skirts led the sector with 55.9 million units sold valued at $849.0 million. Tailored suit-type jackets followed, selling 20.9 million units with a value of $673.7 million. Coats and capes sold 11.65 million units with a value of $516.3 million. The nontailored jackets sector sold 5.6 million units valued at $126.8 million, and separate vests came in last with 1.04 million units sold, valued at $15.2 million.

Apparel had suffered slumping sales for the past two decades. Projections showed the trend would continue, with sales dropping in 2002 and 2003. Apparel sales were then expected to plateau for the next three years, before dropping again in 2006. An economic recession in a post-September 11, 2001 climate accounted for much of the steep declines in the early 2000s. Another reason noted was that aging baby boomers with already full closets had fallen into a wardrobe replacement pattern of buying. With the majority of disposable income, baby boomers buying patterns negatively affected apparel sales in this way. This sector was also affected by the ongoing trend to casual clothing in the workplace and in general. Suits were not the office staple they once were, although in 2002 and 2003 there were indications that offices were going back to a more polished, professional look. This trend could benefit the struggling industry. Finally, low-cost imports and custom-made suits—enjoying a resurgence in popularity in 2002 and 2003—were cutting into manufacturers dollars.

Outsourcing of production to low-cost markets continued to affect the tailored apparel industry. Whereas large apparel companies are already ahead of this trend, mid-sized companies will soon join the ranks of overseas production of garments to reduce costs. Certain high-end producers that are continuing domestic manufacturing with a staff of skilled employees utilizing high-quality construction techniques are expected to find other ways to cut costs to stay competitive with Italian and Canadian makers.

Industry Leaders

Liz Claiborne, Inc. was the number one maker of clothes and accessories for career-oriented women, especially suits. One reason for its success was the company's strategy of advertising products as designer but pricing them to attract a broader market. Sold under size-segmented brands like Lizsport, Liz & Co., Elisabeth, and Dana Buchman in department, retail, and outlet stores, the Liz Claiborne label is also licensed for cosmetics, shoes, sunglasses, watches, and home furnishings, as well as men's clothes. Headquartered in New York City and employing more than 7,000 people, the company's 2001 sales topped $3.4 billion, up from 2000 sales of $3.1 billion.

Specializing in moderate to high-priced women's and career and casual sportswear, suits, dresses, and footwear was the Jones Apparel Group sold under such names as Jones New York, Jones & Co., Evan-Picone, Rena Rowan and others, including several labels licensed by Polo Ralph Lauren. Based in Bristol, Pennsylvania, with more 16,690 people on its company payroll (and with products sold throughout department, retail, and outlet stores across the nation), Jones Apparel reported overall sales of $4.3 billion in 2002, up 7.2 percent from the previous year.

Polo Ralph Lauren Corporation—one of the world's best known designer labels boasting such subsidiaries as Polo, Lauren, Chaps, and Club Monaco—designs and markets a variety of products such as men's and women's apparel and suits, accessories, fragrances and home furnishings. Its design strategy centers around overseeing the work of its many licensees (like its largest, Jones Apparel Group) and controls manufacturers in Asia and the United States. Its New York City-based operations, with 10,100 employees, reported 2002 sales of $2.36 billion, an increase of 6.2 percent over 2001.

Workforce

As imports increasingly replaced American-made clothing, the number of employees in the industry predictably declined. The International Ladies' Garment Workers' Union (ILGWU) reported that from a peak in 1973, 34 percent of production worker jobs (nearly 25,000) were lost in 20 years in the women's and children's apparel industry, a process that accelerated in the 1980s.

U.S. Census Bureau figures for 1997 reported 20,378 workers involved in the manufacture of women's suits, coats, skirts, and jackets, down from 40,400 two years earlier. Hourly wages averaged $10.63, a $5.24 increase from 1995. Average weekly earnings of production workers in this sector rose to $428.76 in 2003.

New York was the state with the largest number of employees in the women's apparel industry, while California, New Jersey, Texas, and Massachusetts also had significant concentrations of workers.

America and the World

The U.S. women's apparel industry was dominated by imports by the early 1990s, and this trend continued into the early 2000s. Imports were attractive to consumers because they were often less expensive than domestically produced clothing and they had increased in quality over time. The industry began to lose market share to imports in the 1960s. The process began to accelerate in the 1970s and, by the early 1990s, imports reached all-time highs. From 1980 through the early 1990s, apparel imports tripled when measured in square meters. Also contributing to the industry's decline in the United States was the reliance of manufacturers on offshore assembly of pieces cut domestically.

Manufacturers in the Far East represented a significant source of women'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 experience from those traditional 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 U.S. market. By the early 1990s, China replaced Hong Kong as the greatest supplier of imported clothing to the United States. China, Hong Kong, Taiwan, and Korea represented only 28 percent of apparel imports in 1995.

The North American Free Trade Agreement (NAFTA), which created a free-trade zone between the United States, Mexico, and Canada by gradually eliminating tariffs over 15 years, took effect January 1, 1994. Since a similar agreement was already in effect between the United States and Canada, analysts expected NAFTA to increase trade with Mexico. Apparel-industry executives supported NAFTA. The ILGWU and the ACTWU, by contrast, sought to stem the loss of jobs in the apparel industry by limiting the imports allowed into the country. However, their arguments did not succeed in challenging the free-market philosophy that ultimately triumphed in the passage of NAFTA.

Any agreement to come from the negotiations of the General Agreement on Tariffs and Trade (GATT), started in 1986, would possibly have wide-ranging impact on the U.S. apparel industry. GATT was first established in the 1960s, and it created the Arrangement Regarding International Trade in Textiles, known as the Multifiber Arrangement (MFA). The MFA regulated apparel that was imported into the United States and other member nations, and it was renewed every three years. Proposals involved in the GATT negotiations would reduce the tariffs on imports into the United States by half over time, without guaranteeing U.S. products access to markets in other countries. Some countries that exported heavily into the United States (e.g., China) did not allow corresponding access to their home markets. The MFA would be superseded by any agreement reached in the GATT talks, but if no agreement was reached, the MFA would be extended. The textile industry estimated that one million U.S. textile and apparel jobs would be lost under the provisions of GATT.

More and more imports entered the United States under provision 9802 (formerly known as Section 807) of the Harmonized Tariffs Schedule of the United States. This provision allowed clothing assembled abroad—from pieces cut in the United States—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. Many U.S. manufacturers took advantage of the provision and moved assembly operations to the Caribbean. They noted that they could reduce costs and more successfully compete against imports from Asia. More complex items could be assembled and turned around more quickly than if created in Asia. Disadvantages included sometimes cumbersome and time-consuming logistics considerations. By 1992, apparel assembled in the Caribbean comprised 14 percent of imports. The passage of NAFTA, however, led some observers to expect that the Caribbean would become less desirable than Mexico as a manufacturing destination.

U.S. women's apparel exports grew rapidly starting in the late 1980s. In 1995 exports of women's suits, coats, skirts, and jackets reached $259 million, more than double the value of these exports in 1989. U.S. clothing seemed to grow in popularity in Europe, perhaps due to the adoption by European women of a lifestyle more in line with the easy-care, comfortable clothing purchased by women in the United States. The weak U.S. dollar helped increase shipments to Japan and Canada, as well as Europe and the Middle East.

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 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.

The large firms in the women's apparel industry had the capital to invest in new technology, but many of the smaller firms, struggling against the tide of imports, were not in a position to do so. Nevertheless, the intrinsic "soft" quality of material made it difficult to use automated equipment widely, and 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 production cycles, reducing inventories, improving productivity, and relaying information regarding consumers' preferences quickly back to manufacturers. By using computers to track inventory and sales, as well as consumers' responses to particular items, U.S. manufacturers could respond quickly to market demand—and thus get a jump on foreign producers. Department stores and manufacturers worked together to find ways to speed deliveries and increase efficiency. Mass merchandisers were among the first to implement the quick response concept.

Research and Technology

E-commerce, the industry strategy employing computer-based tools like the Internet and the World Wide Web to streamline numerous facets within the trade, continued to evolve but was not without its occasional hiccups. The American Textile Manufacturers Institute noted that successful e-commerce required a solid infrastructure, especially in the areas of customer service and order fulfillment. Obstacles such as cost and lack of expertise prompted many vendors to created new processes or restructure old ones to help ensure operations with favorable outcomes. However, others chose to treat e-commerce as a separate channel partner by outsourcing their role to Web-savvy professionals who provided them a buffer, as well as direction. Ultimately, their goal was seamless execution of sales and marketing efforts on all levels to all customers.

Women's apparel made great strides on the Web in the early 2000s. During the 2002 holiday season, online sales of apparel and accessories rose 39 percent from 2001, with $1.3 billion. The sector became the seventh-fastest-growing, nontravel e-commerce category, accounting for 59 percent of such consumer purchases for the week. With an estimated 60 percent of women online, rising sales of apparel on the Web was one bright spot in the lagging industry.

Further Reading

Abend, Jules. "The Outsourcing Revolution." Bobbin, May 2001.

Conces, Elaine, and Margaret Brantley. "Textiles, Apparel Shoes and Accessories Industry." Austin, TX: Hoovers Online, 1999. Available from http://www.hoovers.com .

"Custom Built; The Recession-Proof Sector of the Clothing Business, Custom Tailoring is Growing Strong." Daily News Record, 4 November 2002.

D'Innocenzio, Anne. "McNaughton: New Directions." Women's Wear Daily, 20 March 1996.

Dolbow, Sandra. "Dressing Up." Brandweek, 16 September 2002.

Hill, Suzette. "E-tailing: The Internet Meets SCM." Roswell, NM: Apparel Industry Online, 1999. Available from http://www.aimagazine.com .

"Men's Outpaces Women's Through Most of 2002; Still, Latest NPD Data Shows Dollar Sales of Men's Wear Slipping 1 Percent in First Three Quarters, As Unit Sales Fell 5 Percent." Daily News Record, 6 January 2003.

Nieder, Alison A. "Textile Presence on Web Grows as Sites Market E-Yardage." Los Angeles: ApparelNews.Net, 1999. Available from http://www.apparelnews.net .

Schneiderman, Ira. "Apparel Sales 'Challenging'." Women's Wear Daily, 27 November 2002.

Seckler, Valerie. "A Shrinking Share of Wallet." Women's Wear Daily, 12 June 2002.

——. "Apparel Sales Rising on the Web." Women's Wear Daily, 19 December 2002.

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

U.S. Census Bureau. Current Industrial Reports: Apparel, 2001. U.S. Department of Commerce, Washington, D.C.: GPO, July 2002.

"Women's and Misses' Suits and Coats, SIC = 2337: Average Weekly Earnings of Production Workers, SA." Economagic.com, March 2003. Available from http://www.economagic.com .



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