California Apparel News

California’s apparel manufacturing base has dropped dramatically in recent years, and the tough economic times are forcing the state’s contractors to wage a game of tug of war with local apparel makers for lower prices.

The number of registered apparel manufacturers and contractors in California has decreased by roughly 20 percent over the past six years, according to the Department of Industrial Relations’ Division of Labor Standards Enforcement (DLSE).

Apparel employment in the state has also dropped, from 110,392 apparel jobs in 2001 to 92,950 apparel jobs in 2003. In Los Angeles alone, employment fell 15 percent, from 84,143 jobs in 2001 to 71,770 jobs in 2003, according to Tino Serrano, a spokesman at the U.S. Department of Labor.

Those numbers are disturbing because they reflect the general decline in apparel production employment in the state, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “If you’re in a narrow-margin industry, you’re facing import competition and being hammered on by your customers for lower costs. It’s not a pretty picture,” he said.

Kyser pointed to other forces confronting apparel business owners, including the declining value of the U.S. dollar, a heavily promotional retail environment and offshore suppliers that can compete at a lower profit margin.

And more challenges are on the horizon, including the global quota-free trade agreement scheduled to be implemented by 2005, Kyser said.

California’s Los Angeles and Long Beach seaports imported roughly $10.7 billion in goods for the fiscal year ending Sept. 30, 2003—a 19 percent increase, or $1.7 billion more than the prior fiscal year, according to the U.S. Customs Department in Long Beach. Overall, U.S. imports totaled $61 billion in 2003—a 7 percent increase from the year prior, according to the U.S. Department of Commerce.

Industry under pressure

The pressure has forced some companies out of business. The list of Los Angeles apparel companies that recently shuttered their operations includes Teddi of California, LA Gal, New Chock’s Manufacturing, Syrup Manufacturing and Stitches.

Strict regulations and a competitive business climate were part of the reason garment contractor Donald Owen closed his doors in January. Owen, who founded California Joy Inc. in Burbank, Calif., in the early 1970s and advocated for a better business environment through his membership at the Garment Contractors Association of Southern California (GCA), sold his 35,000-square-foot facility and production equipment to a private contractor who will take over the business.

California Joy produced women’s swimwear and related apparel for a number of local swimwear manufacturers. The contractor employed roughly 130 sewers, cutters and warehouse employees, who will remain employed under the new management. Until a few years ago, the contractor counted Apparel Ventures Inc., Beach Patrol Inc. and the Authentic Fitness Corp. as customers. Then each company shifted swimwear production to Mexico, South America and China, respectively.

The sudden decrease in production was devastating, Owen said, adding that the hardest of times occurred after Apparel Ventures— which made up 85 percent of his business— moved its production to Mexico eight years ago. “Each time a swim manufacturer moved overseas it took a toll on our business,” Owen said.

Joe Rodriguez, executive director of the GCA in Los Angeles, said approximately 30 GCA members shuttered their operations last year. He said the apparel registration numbers in the coming years will fluctuate according to the number of upstarts that enter the business each year. “I think some companies register thinking they will have work, but then they don’t find work and end up going out of business,” Rodriguez said.

For that reason, Rodriquez said the actual number of registered contractors does not accurately reflect those businesses that are actively in production. “There are many contractors who don’t have work right now, but they’re still registered,” he said.

In recent years, the Korean American Garment Industry Association in Los Angeles has seen a steady decrease in membership. Last year, the association’s membership declined almost 18 percent, from 450 to 370 members, said KAGIA President Mike Lee. Lee said a competitive job market in the garment contracting industry is another reason for the decline. Many garment contracting business owners are taking work regardless of whether or not they will be able to profit from the job, he said.

It is not uncommon for garment contractors to participate in fierce bidding wars to produce a garment for $3 when it actually costs $4 to produce. “There is no profit on the garment, but they do it in order to continue their business and survive,” Lee said.

Some apparel companies have changed their business models to reflect a more global apparel industry economy by reducing the number of domestic apparel businesses on their resource lists.

“It’s far easier to manufacture apparel overseas than it used to be,” said Randy Harris, executive director of San Francisco Fashion Industries. “Companies that choose to be strictly importers have the option to do all of their pre-production offshore. Therefore, they have no need for California-based production services.”

According to the DLSE, an apparel business that conducts all its operations––including cutting, sewing, dyeing, finishing, trimming and labeling––offshore is not required to submit registration. In other words, a domestic manufacturer can operate as a design business and patternmaker without being registered.

Local advantages

It’s common for manufacturers that ship more than $10 million of apparel to retailers to outsource their production, said California Fashion Association Executive Director Ilse Metchek.

“That part of their line that can be made more effectively and cheaper will be made in another country,” Metchek said. “It could be a sweater, T-shirt, jeans, sweat shirt—all of these commodity items just aren’t made here any more.”

But the tide could be changing.

“Speed to market is a key reason for domestic production,” said LAEDC’s Kyser. “If you’re dealing with very quick change in fashion, high-quality upper-end fashion where quality control is important, then it does make sense to do it here.”

Los Angeles–based juniors apparel makers such as Hot Kiss Inc. and Eyeshadow, which in previous years relied on offshore production for mass volume apparel, are rediscovering the benefits of working with local garment makers.

“We always try to produce here first, and when it’s to our advantage, we do,” said Tony Litman, co-owner of the Stony Apparel Corp., which produces juniors and juniors plus-size apparel under the Eyeshadow label. “When price and delivery are the major issue, we produce domestically through contractors. When we can’t meet the price, then we take it offshore.”