March 24, 1999
News Release 99-034
U.S. APPAREL INDUSTRY CONTINUES TO RESTRUCTURE
The U.S. apparel industry continued to restructure between 1993 and 1997 as a result of
growing competition in the domestic market, reports the U.S. International Trade Commission
(ITC) in its Industry & Trade Summary Report: Apparel.
The competitive pressures facing the industry reflect not only the large number of suppliers in
the apparel market, but also the confluence of changing consumer preferences, rising import
penetration, and growing buying power of large retailers, which have led to considerable
downward pressure on prices.
The ITC, an independent, nonpartisan, factfinding federal agency, recently released the report
as a part of an ongoing series of reports on thousands of products imported into and exported
from the United States. Following are highlights of the report:
The foregoing information is from the ITC report Industry & Trade Summary: Apparel
(USITC publication 3169, March 1999).
- Imports supply just over one-half of the U.S. apparel market and are likely to continue
growing as U.S. quotas are phased out under the Uruguay Round Agreement on
Textiles and Clothing (ATC), which went into effect as part of the World Trade
Organization (WTO) agreements in 1995. The ATC replaced the Multifiber
Arrangement system of quotas and provides for the elimination of the quotas over a 10-
year transition period ending on January 1, 2005.
- U.S. producers' apparel shipments grew by an annual average of less than 1 percent
during 1993-97, the period covered by the report, reaching an estimated $55 billion.
Apparel employment declined by 176,000 jobs in the period to 813,000 workers, or
4.4 percent of U.S. manufacturing employment. Preliminary 1997 data show that
apparel firms accounted for 9 percent of all business failures (27 percent of total
liabilities) in the manufacturing sector.
- Despite the relative decline of the apparel industry overall, several large, publicly held
producers or wholesale merchandisers of apparel have posted significant sales growth.
From 1993 to 1997, sales of 15 large apparel firms rose by 27 percent to $35 billion.
These firms rely heavily on imports for their product mix and have strong brand-name
recognition, significant market shares, strategic alliances with major retailers, and
quick response manufacturing and distribution systems.
- To stay competitive, many U.S. apparel producers have expanded their use of assembly
operations in Mexico and Caribbean countries, facilitated by U.S. programs that
provide preferential market access for imports of apparel assembled from fabric made
and cut in the United States. Producers have consolidated operations, formed strategic
alliances with retailers, and acquired brand names that complement their existing
product lines and widen their channels of distribution.
- The U.S. apparel trade deficit widened by $11 billion during 1993-97 to $40 billion as
an increase in imports outpaced an increase in exports. Imports during the period grew
by $14.6 billion (43 percent), reaching $48.5 billion, while exports grew by
$3.6 billion (74 percent) to $8.4 billion. The trade deficit was driven mainly by trade
with developing countries in Asia, which accounted for almost 70 percent, or
$27.8 billion, of the 1997 trade gap. The largest bilateral trade deficit in apparel in
1997 was with China ($7.4 billion). The combined apparel trade deficit with Mexico
and Caribbean countries widened by $4.5 billion during 1993-97, to $7.2 billion.
- U.S. consumer spending on apparel grew by an annual average of 5.5 percent in real
terms (adjusted for inflation) during 1993-97, compared with a 2.8 percent gain in
consumer spending overall. Favorable economic conditions and demographic trends,
coupled with competitive prices, contributed to the growth in apparel spending.
ITC Industry and Trade Summary reports include information on product uses, U.S. and
foreign producers, and customs treatment of the product being studied; they analyze the basic
factors affecting trends in consumption, production, and trade of the commodities, as well as
factors bearing on the competitiveness of the U.S. industry in domestic and foreign markets.
The report will be available on the ITC's Internet server at www.usitc.gov. A printed copy can
be requested by calling 202-205-1809 or by writing to the Office of the Secretary, U.S.
International Trade Commission, 500 E Street, SW, Washington, DC 20436. Requests may
also be made by fax to 202-205-2104.
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