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 and Ralph Lauren, outsource the production of garments to low-cost manufacturers located abroad. American Apparel is one of the largest US clothing manufacturers that produce goods domestically, but has experienced financial difficulties.
Industry Forecast
Apparel Manufacturers Industry Growth
Recent Developments
Jul 22, 2024 - Sales Slightly Higher Year Over Year
- Sales for apparel and leather products were $22.2 billion in Q1 2024, an increase of 0.4% compared to a year ago and a 9.6% decline compared to the previous quarter, according to the latest data from the Census Bureau. Wages for nonsupervisory employees at apparel manufacturers fell in the first half of 2024, reaching $18.48 per hour in June 2024, according to the Bureau of Labor Statistics (BLS). While wages are trending lower in 2024, wages remain close to 20% higher than before the pandemic. Consumer spending levels were up 0.2% in May 2024, from the previous month, according to the Bureau of Economic Analysis.
- 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.
- US manufacturing activity contracted in June 2024 for the third 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 48.5% in June, down 0.2 percentage points from the 48.7% recorded in May. 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. June’s New Orders Index was in the contraction zone at 49.3%. The June Production Index was 48.5%, a decrease from May’s 50.2%. Eight manufacturing industries tracked by the ISM reported growth in June: Printing & Related Support Activities; Petroleum & Coal Products; Primary Metals; Furniture & Related Products; Paper Products; Chemical Products; Miscellaneous Manufacturing; and Nonmetallic Mineral Products. The industries reporting contraction in June were Textile Mills; Machinery; Fabricated Metal Products; Wood Products; Transportation Equipment; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; and Computer & Electronic Products.
- A new bipartisan coalition has been launched to examine the impact of a trade rule known as the de minimis import loophole, according to Just Style. US textile and garment manufacturers say their industry is being negatively impacted by de minimis, which they say gives an advantage to foreign producers. The provision allows foreign companies to ship goods directly to US customers without paying tariffs if the goods are worth less than $800. The nearly-century-old rule has seen a significant increase in use in recent years. The number of packages entering the US without tariffs under the policy rose from 150 million in the 2016 fiscal year to 1 billion by 2023, according to the New York Times. Half of the packages contain textile and apparel products, with about 30% coming from Chinese fast-fashion retailers Shein and Temu, per the article. The National Council of Textile Organizations (NCTO) supports eliminating the de minimis rule.
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