Apparel Manufacturers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 4,100 apparel manufacturers in the US transform fabrics into clothing and accessories. The companies described in this report are known as “cut-and-sew” apparel manufacturers, and produce items such as dresses, suits, shirts, and pants. “Cut-and-sew” manufacturers differ from apparel knitting mills, which produce knit products, such as hosiery, socks, and underwear. Apparel firms design and market apparel, but may outsource their entire manufacturing operations to firms outside the US.
Demand Driven by Trends
The apparel market is driven by constantly evolving fashion trends and fads, many of which can be short-lived.
Complications from Foreign Production
Apparel companies that rely on foreign firms for any part of production are more vulnerable to remote management problems, increases in transportation expenses, and trade-related issues.
Industry size & Structure
A typical apparel manufacturer employs about 12 workers and generates $1-2 million annually.
- The apparel manufacturing industry consists of about 4,000 companies that employ about 48,100 workers and generate $7.4 billion annually.
- The industry is fragmented - the 20 largest companies account for 22% of industry sales.
- Most large apparel companies, such as VF Corporation, PVH Corp., Levi Strauss, and Ralph Lauren, outsource the production of garments to low-cost manufacturers located abroad. Gildan, a large Canadian apparel manufacturer, owns American Apparel, Comfort Colors, and other brands, with manufacturing facilities in the US and overseas.
Industry Forecast
Apparel Manufacturers Industry Growth
Recent Developments
Sep 25, 2024 - Shipments, Orders Fall
- Shipments of apparel declined 1.3% in June 2024 compared to a year ago and fell 3.1% from the previous month, according to the US Census Bureau. Inventories of apparel fell 1.3% in June 2024 compared to a year ago and were up 3.9% from the previous month. Sales for apparel and leather products were $22.2 billion in Q1 2024, an increase of 0.5% compared to a year ago and a 9.6% decline compared to the previous quarter. Wages for nonsupervisory employees at apparel manufacturers fell 3.8% in August 2024, reaching $18.65 per hour, according to the Bureau of Labor Statistics (BLS).
- According to a mid-year analysis from Just Style, US fashion companies are increasingly sourcing apparel from India, Cambodia, Pakistan, Jordan, and Guatemala, which all gained additional market share in the first half of 2024 compared to a year ago. Dr. Sheng Lu, a professor of apparel studies at the University of Delaware, said there are several reasons the countries are gaining new momentum as emerging sourcing destinations. “In addition to production capacity, these countries seem to benefit from their perceived relatively lower social and environmental compliance risks and lesser involvement in geopolitical tensions at this moment,” he said. In the first half of the year, China accounted for 33.2% of US apparel imports, Vietnam accounted for 16.7%, and Bangladesh accounted for 9.6%. Year over year during the period, China and Vietnam increased share while Bangladesh lost share, which Lu said pointed to stronger demand for more personalized, customized, and value-added items.
- US manufacturing activity contracted in August 2024 for the fifth consecutive month after a brief expansion in March, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 47.2% in August, up 0.4 percentage points from the 46.8% recorded in July. A reading above 50% indicates manufacturing expansion. Prior to the uptick in March, US manufacturing activity had fallen below the baseline for growth for 16 consecutive months. August’s New Orders Index was in the contraction zone at 44.6%. The August Production Index was 44.8%, a decrease from July’s 45.9%. Five manufacturing industries tracked by the ISM reported growth in August: Primary Metals; Petroleum & Coal Products; Furniture & Related Products; Food, Beverage, and Tobacco Products; and Computer & Electronic Products. The industries reporting contraction in August were Textile Mills; Printing & Related Support Activities; Nonmetallic Mineral Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Transportation Equipment; Wood Products; Machinery; Paper Products; Chemical Products; and Miscellaneous Manufacturing.
- High air cargo usage out of China by popular shopping apps Temu and Shein is raising freight rates and increasing concerns about a potential capacity issue during the peak shipping season later this year, according to the Wall Street Journal. Shipping volumes from the country’s manufacturing hubs were up about 40% in June compared to a year ago, signaling growing competition for aircraft space. Rates are also increasing, with the average spot rate in late June to ship cargo out of South China to the US by air at $5.27 per kilogram, double the 2019 levels. Temu and Shein are using the air routes to ship low-cost clothing and household products to consumers in Europe and North America. Per Tim Scharwath, chief executive of DHL Global Forwarding, ecommerce shopping companies have expanded so quickly in the past two years that they now consume more than 30% of cargo space on routes out of Asia, per the WSJ. A provision in US statute allows foreign companies like Shein to ship goods directly to US consumers without paying tariffs if the goods are worth less than $800.
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