Apparel Knitting Mills in the US Industry Market Research Report from IBISWorld has Been Updated
This declining industry has significantly underperformed most other sectors of the economy, due to massive increases in competing imports from plant closures and downward pressure on pricing levels. In the next five years, operators will rely on new designs and niche markets to gain a competitive edge in the industry, and because most outsourcing has already occurred, future declines will be less drastic than those of the past five years. For these reasons, industry research firm IBISWorld has updated a report on the Apparel Knitting Mills industry in its growing industry report collection.
Companies in the domestic Apparel Knitting Mills industry do very little actual apparel knitting. Instead, they take on high-value designing and branding activities to earn profit while relying on low-cost imports from Asia and South America for the production of the apparel itself. While the industry's major players have sustained operations successfully, aggregate revenue has declined at an average annual rate of 17.0 percent over the five years to 2012 to total $528.5 million. Revenue has continued to shrink over 2012, falling 5.9 percent from 2011. The economic recession delivered an additional blow to America's apparel knitting mills. "Consumers, low on disposable income and discouraged from making discretionary purchases like clothing, limited their demand for knit apparel," says IBISWorld industry analyst Nikoleta Panteva. "This drop in demand trickled back to the manufacturing sector, pushing revenue down even further."
Industry profit has followed suit, falling drastically over the past five years. As a result, the industry's size has shrunk from 847 firms in 2007 to 633 in 2012. Some of the unsuccessful companies have integrated into more high-value segments of the supply chain, while others have merged operations to take advantage of economies of scale. For example, major player Fruit of the Loom undertook the activities of athletic apparel company Russell in 2006. Still, other unprofitable players have completely exited the Apparel Knitting Mills industry. The industry has a high level of market share concentration, with the four largest firms accounting for a large share of industry revenue. "Larger players are increasingly diversifying their operations to include more high-value activities like designing and marketing while outsourcing many of their labor-intensive tasks to low cost countries," adds Panteva.
IBISWorld does not project that an industry turnaround will occur over the next five years, but declines are forecast to be less severe than the double-digit drops of 2008 and 2009. Most outsourcing has already taken place and despite the economy's expected rebound in the next five years, the Apparel Knitting Mills industry is anticipated to decline through 2017. The entire industry will likely take on a new structure where domestic firms focus on high value-added jobs like designing, marketing and branding. As is the trend with most declining industries, operators that continue to knit apparel domestically will try to find an untapped niche in the market. For example, industry player American Apparel uses its "Made in Downtown LA" tagline as a marketing tool. This and similar tactics will become even more commonplace over the five years to 2017, helping to reshape the domestic Apparel Knitting Mills industry.
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