Byline: Joanna Ramey

WASHINGTON — Government researchers in a new report take a wide-ranging look at the plight of U.S. apparel production in recent years, and conclude that the impact of increasing retail concentration rivals that of growing imports.
The 27-page report released by the International Trade Commission amounts to a review of the pressures on domestic apparel manufacturing from 1989 to 1993. It is one of a series of periodic reviews of various industries that are used as references by the commission and other government agencies in investigating such matters as unfair trade complaints.
The report makes these points:
Shipments of U.S.-made apparel have been stagnant over the past few years and should remain so in the near term.
Brand names, both manufacturer and private label, are becoming more important on an international scale.
Apparel firms gaining a competitive advantage in this environment are large and well capitalized with a merchandising-oriented — as opposed to production-oriented — strategy.
Discussing the shifting retail scene, the report says, “The restructuring taking place in the retail sector as a result of recent bankruptcies and consolidations has challenged existing apparel producer-buyer relationships and compelled producers to be more responsive to retailer demands.”
It cites as a key factor rapid growth in apparel sales at discount stores and subsequent decline in department and specialty store sales.
“In addition, a number of mostly large retail and direct-mail catalog firms now do many of the functions traditionally performed by producers, such as design and styling. The growing bargaining power of these retail firms tends to reduce the flexibility of apparel producers in scheduling production and negotiating prices and delivery dates.”
As a result, as companies employ a myriad of strategies to stay in the game, they’ve trimmed their payrolls to 932,000 workers (at the end of 1993), down from the 1970 peak of 1.4 million. Still, the government views the industry as significant, providing 5.2 percent of all manufacturing jobs and 1 percent of the nation’s gross domestic product.
Despite improved efficiencies, the report continued, competition from imports and a drop by half in the annual growth of consumer apparel purchases, to 1.5 percent, have taken their toll. Shipments totaled $50 billion in 1993, reflecting no real growth over the previous three years. Prospects for more growth during the rest of the decade are limited, the ITC said.
To counter this, many firms aim to expand their channels of distribution or broaden established brand names and “gain a competitive edge in domestic and foreign markets,” the report states, citing as an example VF Corp., the largest publicly held apparel firm.
What makes the current wave of brand names, including retailers’ private labels, so significant are the lower prices, and the growing U.S. and foreign demand for these products.
“With the global dissemination of U.S. movies and television programming, consumers around the world are aware of and want popular U.S. brand goods,” the report stated.
U.S. suppliers have gained a competitive edge by moving assembly operations to the Caribbean and Mexico, making the region the fastest-growing supplier of imported apparel to the U.S. These imports increased to 16 percent in 1993 from 10 percent in 1989 of total imports of $34 billion and $25 billion, respectively.
Quick Response is another weapon in the U.S. maker’s arsenal, the report said. More apparel manufacturers are using Quick Response because large retailers require faster shipments and more flexible service.
“Apparel firms with QR capabilities, strong brand-name recognition and consumer loyalty will likely gain market share in the coming years as large retailers align themselves with reliable suppliers,” the ITC noted. — Fairchild News Service