U.S. Industry in 2000 Studies in Competitive Performance (1999) / Chapter Skim
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12 Apparel
12 Apparel
Pages 329-362
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From page 329... ...
Some analysts argue that the world is now experiencing a third industrial revolution, based on a combination of new information technologies and modern manufacturing techniques (Greenwood, 1997; Best, 1990; Milgrom and Roberts, 1990~. The apparel industry in the United States participated modestly in the first two revolutions.
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From page 330... ...
With two exceptions commodity products, such as socks and men's underwear that can be mass-produced at low cost using capital-intensive technologies and high-fashion products that are not sensitive to price the prognosis for the apparel industry through the early 1980s was one of continuing decline in market share and jobs. That prediction is now being reassessed (Abernathy et al., 1995; New York Times, 1998~.
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From page 331... ...
Values of shipments are deflated by the producer price indices for all apparel products, men's apparel, and women's apparel, respectively. Source: U.S.
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From page 332... ...
apparel industry, 1950-1996 (thousands of production workers)
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From page 333... ...
Inside shops resemble manufacturers in other industries. They design their products, buy raw materials, produce their goods in company-owned facilities, and then TABLE 2 Employment in the Apparel Industry, 1899-1996 (thousands of Production Workers)
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From page 334... ...
Outside shops serve as contractors for jobbers and inside shops (Teper, 1937~. The apparel industry is labor intensive.
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From page 335... ...
apparel industry, 1899-1995. Sources: 1899- 1939, industry averages, Historical Statistics of the United States; men's and women's, Seidman, The Needle Trades; Bureau of the Census, County Business Patterns.
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From page 336... ...
Source: Bureau of the Census, County Business Patterns (various years)
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From page 337... ...
For TABLE 4 Average Establishment Size in the Apparel Industry, 1899-1995 Year Industry averageMen's clothingWomen's clothing 1899 272131 1914 303630 1925 284121 1935 335231 1939 375736 1946 38N/AN/A 1950 42N/AN/A 1956 428445 1962 4610248 1965 5111652 1970 5713155 1975 5212353 1980 5813655 1985 4813249 1990 4313041 1994 3811331 1995 3810931 Note: Industry averages 1899-1914 are number of production workers per establishment. 1899 to 1914 men' s are for "men' s, youths' and boys"' and women' s are for "women' s and children' s".
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From page 338... ...
338 o ~ o lo To ca o so 4= o ~ ° ca o 4= Cal o be a' a' ·_4 VO Cq Cq ·_4 o C)
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From page 339... ...
The mass demand for military garments, War Production Board regulations limiting the variety of civilian styles that could be offered, and the preferences of consumers for "quality over variety" created opportunities for long production runs of identical products (Disher, 1947~.
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From page 340... ...
340 ca 8 ~ In o o ~ O ca o ~ 4..
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From page 341... ...
The result was the growth of relatively large, highly efficient firms that specialized in the mass production of garments. The war also changed the apparel industry from a "buyer's market" to a "seller's market." Retailers, "anxious for all available supplies," could no longer demand rapid response production as they had in earlier decades.
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From page 342... ...
When lower-cost foreign clothing became available in the 1960s and 1970s, the adaptations that retailers had already made to inflexible domestic mass production predisposed them to view foreign suppliers as relatively easy substitutes for domestic suppliers. The even longer lead times and greater inflexibility of foreign supply channels were only an extension of the inflexible characteristics of the domestic supply chain, and the costs of added inflexibility were more than compensated for by the labor cost advantages of imports.
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From page 343... ...
These extended lean retailing efforts have focused on "basic fashion" products positioned between commodity products and more fashionable women's wear products.
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From page 344... ...
Introducing a quick supply capability into domestic PBS supply channels has involved both a willingness among retailers to pay a cost premium for quick and accurate fulfillment of replenishment orders and to provide the information systems needed to link domestic clothing manufacturing to retail sales data. The main instrument for building just-in-time supply chains has been the transfer of new information technologies from lean retailers to apparel manufacturers.
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From page 345... ...
We also looked at a second baseline period, 1950-1970, when the PBS manufacturing system dominated the apparel industry and when imports were relatively unimportant. Trend annual productivity growth in this period was very close to that for the entire postwar period 3.4 percent between 1950 and 1960 and 3.2 percent between 1960 and 1970 (Table 10~.
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From page 346... ...
Manufacturing value-added is deflated by the producer price index for all finished goods; apparel value-added figures are deflated by the producer price indices for all apparel products, men's apparel, and women's apparel respectively. Source: U.S.
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From page 347... ...
. 20 ~_ Cal oo 18 I~ 1 6 4 ~ 10 > 12 8 6 _~ 1960 1965 1970 1975 1980 1985 1 9gO 1995 FIGURE 7 Real value added per worker hour, men's apparel, 1960-l99S.
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From page 348... ...
Lean retailing has focused on basic fashion products. To the extent that the valueadded of basic fashion products is below the average for domestic production, an increase in replenishment production will also slow the observed rate of productivity growth.
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From page 349... ...
For example, basic fashion has been the product sector where lean retailing should have the greatest effect on domestic productivity. We would expect to see the lean retailing directly raising productivity through its effects on lean manufacturing and its bias toward large firms Conversely, product lines such as fashionable dresses or blouses are least likely to be affected by either lean retailing or
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From page 350... ...
The Reinvigoration of the Large Firm Sector A second way to assess the effects of lean retailing on the apparel supply chain is to examine growth patterns by size of firm. Between the 1950s and 1970, when the inflexible PBS production channel was expanding and before foreign imports and lean retailing were significant, the fraction of large establishments (250 or more employees)
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From page 351... ...
Comparable data for domestic contractors, however, confirm a reduction in the amount of domestic contracting activity by manufacturers. The overall trend away from domestic contracting and toward consolidating production within manufacturing began when import penetration was the main influence on the apparel industry.
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From page 352... ...
The substantial progress that has been made in serving rapid replenishment markets and in improving the performance of the U.S. apparel industry is cause for optimism.
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From page 353... ...
The rationale of building just-in-time supply chains around large firms and basic fashion products may prove short-sighted. Although large firm production channels have made substantial strides in speeding production and delivery to replenishment markets, they may never be able to achieve the response speeds and small order sizes that are reported historically for small firms (Magee, 1930)
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From page 354... ...
Small firms have a proven capacity to produce small lots of fashion garments with short throughput times, whereas large firms are not sufficiently flexible to serve such markets. These advantages of speed and flexibility may also position small firms for a role in serving rapid replenishment markets and may be a foundation for extending rapid replenishment to fashion.
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From page 355... ...
Although these various pieces of evidence point to the potential for positive efficiency contributions from rapid replenishment suppliers in the small-scale sector, it is premature to conclude that this sector can be integrated into lean retailing production channels in the foreseeable future. The weaknesses in infor
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From page 356... ...
Bringing small firms into lean retailing production channels and extending rapid replenishment to fashion products will require new institutions that can link mass retailers to the small firm sector. INSTITUTIONAL OBSTACLES TO RESTRUCTURING APPAREL PRODUCTION CHANNELS Lean retailing is currently providing the motivation and the leadership necessary for efficient restructuring of domestic apparel production channels based upon rapid supply chain response.
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From page 357... ...
Filling Institutional Gaps in Apparel Production Channels Reversing the exclusion of flexible, small-firm production from lean retailing systems requires a reconception of the role of intermediaries in apparel production channels. Historically, the problems in the small-firm sector lack of scale economies, limited managerial capacity, and fragmentation have been offset by various intermediaries between small producers and retailers.
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From page 358... ...
Despite the enormous changes that have occurred in clothing production channels in recent years, minimum orders for fashion fabric averaged about 3500 square yards in 1992, and minimum delivery speeds averaged more than two and one-half months (Abernathy et al., 1995~. These numbers are almost unchanged from 1988.
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From page 359... ...
. Recent developments in trade policy, however, may be undermining the long-term future of rapid replenishment production in the United States by laying the foundation for quick response production channels in Mexico and the Caribbean basin.
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From page 360... ...
Further reforms to speed production and delivery are critical if domestic clothing suppliers are to retain their position in replenishment markets for basic fashion products and if they are to expand into replenishment markets for more fashionable products. Such efforts, however, must be differentiated by type of product, size of firm, and position in the apparel production channel.
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From page 361... ...
. "Apparel Production Channels: Recent Experience and Lessons for Policy from the U.S., UK, and France," Geneva: International Institute for Labour Studies, Business and Society Programme.
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From page 362... ...
Apparel Industry. Washington, DC: Economic Policy Institute.
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