Tracking L.A. Employee Trends �� Beyond the Numbers - Statistical Data Included

Los Angeles still faces mounting apparel industry job losses, but recent survey results suggest some manufacturers may be adding jobs in non-blue-collar areas.

Like other global apparel-producing hubs, the Los Angeles, CA, area has not been immune to major sourcing shifts. Yet even as thousands of its sewing jobs have gravitated to Mexico and other lower-cost locales, the L.A. apparel industry has shown signs of increasing its level of "knowledge-based" positions.

Analysis of post-NAFTA employment data and the results of a recent survey indicate that many of these jobs have been created to support the very NAFTA alliances that have sucked sewing positions south of the border.

A Decade of Change

Less than a decade ago, the L.A. sewn products industry was a locally focused sector, from product development and design, to production and distribution. The overwhelming majority of manufacturers outsourced production to local contractors, who, in turn, comprised a large and thriving apparel manufacturing base concentrated in the heart of Los Angeles. "Globalization" meant sending sporadic, small production runs of basic items to Mexican border maquiladoras or, more rarely, importing finished garments from Asia.

What a difference a decade makes. Today the majority of mid-sized to large L.A. manufacturers are sourcing at least some, if not most, production outside of the United States, with Mexico being their principal sourcing locale for non-fashion-sensitive apparel. (See Figure 1.) Since 1994, the passage of NAFTA has generated a surge of cross-border strategic alliances in which Mexican contractors are increasingly taking on full-package production responsibilities for Los Angeles apparel makers.

And offshore sourcing is not limited to Mexico. More and more L.A. firms are looking to Asia to meet their production needs. Meanwhile, trade enhancements granted to the Caribbean Basin Initiative (CBI) countries under the new Trade and Development Act of 2000 will open up yet another offshore production region to an L.A. industry that is becoming increasingly savvy in global production strategies.

What does this signify for the United States' largest garment manufacturing center? One clue to the answer is that the 56-block area once known as the Los Angeles garment district has been renamed the Fashion District. Once known for its large, thriving garment manufacturing base, Los Angeles is now being defined as much for its fashion production as its garment manufacturing. Spearheaded by the California Fashion Association and the Los Angeles Economic Development Corp., Southern California industry leaders -- mindful of NAFTA's impact on the region -- are working to change the face of the industry from one of low-wage manufacturing to high-end fashion creation and production coordination.

As Los Angeles struggles to redefine its new role in the global apparel industry, the composite of its apparel work force is likewise changing. In comparing August 1997 with August 2000 employment statistics, Los Angeles was down approximately 14,000 apparel-related jobs, following the path of declining employment in other major apparel-producing regions in the United States. Offshore production, accelerated by NAFTA, has been responsible for most of the job losses. To better understand the nature of the industry's transformation, however, we need to look beyond the aggregate employment numbers.

NAFTA and the Redistribution of Jobs

Depending on whom you listened to back in 1993, NAFTA would result in either significant job losses to Mexico or the creation of new employment opportunities in the United States. On a macro level, the United States appears to have broken even thus far. Nevertheless, a cluster of labor-intensive industries has been particularly hard hit during the seven years since NAFTA's inception. Almost everyone would agree that NAFTA and the general trend toward geographic decentralization of production processes have been major factors in the decade-long steady decline in apparel-related employment. However, much less attention has been paid to the employment-generating effects of NAFTA in the fashion industry.

Consider the implications of unpublished data from the California Economic Development Department (EDD), which based its findings on a three-year survey of Los Angeles apparel manufacturers. The EDD's survey results indicate that between 1995 and 1997 (the most recent year for which disaggregative employment data are available), overall apparel industry employment in Los Angeles increased by 5,000, even though the region lost more than 13,000 sewing operator jobs. During this period, the Los Angeles apparel industry picked up more than 17,000 nonsewing operator jobs, according to the EDD. (As shown in Figure 2, non-sewing operator positions increased between '95 and '97 although not in numbers equal to the decline in sewing jobs.)

Some interesting conclusions can be drawn from these findings. For one, L.A. sewing operator jobs have been disappearing much faster than the aggregate employment numbers would suggest. Secondly, the findings suggest that Los Angeles likely began losing direct production jobs to Mexico and elsewhere much earlier than had been previously thought. In other words, assumptions based on year-end aggregate employment datasuggest that there was a minimal to moderate decline in L.A. apparel jobs beginning after 1997 (see Figure 3), while the EDD's results clearly indicate an exodus of sewing jobs beginning up to two years earlier.

Some industry observers suspect that the very forces responsible for the low-wage (sewing) job drain -- NAFTA and. more generally, the globalization of production -- may also have contributed to the increase in other apparel-related employment.

L.A.'s New Jobs

A survey last year of 81 Los Angeles County apparel firms (with annual revenues of $5 million or greater) found that knowledge of NAFTA and expertise in U.S.-Mexico production alliances have become criteria for hiring in a number of apparel-related occupational categories in Los Angeles.

Almost half of the firms surveyed that are currently sourcing in Mexico reported that they have advertised for and/or hired personnel in Southern California with NAFTA and Mexican production expertise. Additionally, more than 40 percent said they have increased their Southern California-based personnel as a result of production relocation to Mexico. These added jobs have been in such occupational areas as production management and supervision, quality control, import-export management and data entry.

Moreover, not counted in the overall apparel employment statistics for L.A. is the area's burgeoning fashion-and production-related high-end service sector. All but six manufacturers who participated in the survey said they outsource their legal, financial, quality control, compliance or international sourcing services to firms with headquarters in Southern California. Notably, 17 percent reported using international production consultants based in L.A.

By contrast, 16 manufacturers reported reduced hiring (or increased terminations) as a result of offshore sourcing in Mexico and elsewhere. Noteworthy, of the 16, half reported job reductions in the blue-collar occupational categories of sewing, shipping/receiving and other warehousing areas. Although relatively few Los Angeles manufacturers (contractors were not included in this survey) employ workers in cut, make and trim (CMT) operations, terminations and layoffs have been concentrated in the labor-intensive, semiskilled occupational categories. This trend parallels the more dramatic loss of sewing operator jobs in Los Angeles over the past several years.

The survey results also indicated that NAFTA was not the only factor to affect employment trends. Implementation of new technologies in design, production, supply chain management and distribution resulted in both job loss and employment creation, sometimes within a single occupational category. Companies reporting strong sales and growth (mostly larger firms) said they increased hiring across the spectrum of occupations, with the exception of semiskilled, blue-collar work. By the same token, and not surprisingly, companies reporting contraction and fluctuating sales (mostly smaller firms) said they had undertaken across-the-board layoffs and reductions in hiring.

Los Angeles Against the Backdrop of U.S. Trends

U.S. apparel imports have more than doubled in the past decade, from $23.7 billion in 1991 to almost $50 billion in 1998. Mexico alone increased its apparel exports to the United States from $831,7 million in 1991 to $6,7 billion in 1998, assuming the position of the single largest provider of apparel to the United States. As employment in Mexico's apparel maquiladoras increased astronomically, U.S. industry employment declined, from 1.03 million in 1991 to 835,219 in 1997.

Particularly hard hit was El Paso, TX, which experienced a precipitous drop in apparel employment from 23,581 in 1993 to 13,201 in 1999. Likewise, New York state lost more than 25,000 jobs -- more than 25 percent of its apparel work force -- between 1990 and 1997, with most of the decline concentrated in the state's New York City apparel hub. Apparel strongholds throughout the southeastern United States experienced similar declines.

Until recently, it appeared that Los Angeles had bucked the nationwide trend. Although it has been well documented [**] that a significant amount of production relocated south of the border between 1992 and 1997, aggregate apparel employment continued to increase in Los Angeles County during this time, from about 98,000 in 1992 to close to 112,000 in 1997.

L.A,'s apparent divergence from national trends can be explained, in part, by its unique role in both fashion design and apparel production. Los Angeles has long been a center of both fashion creation and garment manufacturing, and the two coexist shoulder to shoulder.

Defined by its casual and trendy "California look," the Los Angeles industry has been very successful in the juniors and activewear markets, especially in the budget price point and moderate price point categories. This production is increasingly being sent to Mexico. However, many large L.A. firms, such as Max Azria's BCBG and Karen Kane, and a plethora of smaller companies, have also turned their attention to more fashion-sensitive lines in higher price categories.

The consequent blur of fashion cycles and need for quick turn times has required geographical proximity between design and production. The need for close contact between product development and manufacturing has helped to attenuate the job drain from L.A.'s garment manufacturing base in the era of global production strategies.

Garment districts such as El Paso's offer a stark contrast. Known for its denim manufacturing and stonewashing capabilities, El Paso was a thriving garment manufacturing center on the eve of NAFTA. Strong in CMT, but with little to no product development and fashion design infrastructure, the El Paso area was particularly vulnerable to NAFTA's effects. Most of El Paso's apparel jobs, lab or-intensive and concentrated in direct production activities, were easily transferable to Mexico.

The Future Face of L.A.

As the Los Angeles apparel industry becomes more deeply economically integrated with Mexico and the rest of the Western Hemisphere, we can expect to see an increase in the demand for a variety of "knowledge workers," such as sourcing executives, designers, systems specialists and import-export coordinators. However, given the much greater loss of low-wage manufacturing jobs, it is also likely that aggregate apparel-related employment in Los Angeles County will continue to decline in the foreseeable future.

Los Angeles contractors are fiercely competing for smaller and less predictable production orders, while their employees face shorter workweeks and smaller paychecks. As CMT workers leave the industry, contractors try to manage with less work and a paradoxical shortage of experienced workers.

As Los Angeles transforms from a garment manufacturing city into a center of fashion creation and production coordination, it will continue to boast a substantial, although trimmer and more versatile, apparel manufacturing base. The era of big basic-item orders is over for all but the few contractors who can access the substantial start-up capital needed to computerize and automate their production lines.

For the most part, L.A.'s contractors of the future must reorganize their workplaces to be able to take on a large mix of smaller fashion-forward and mass-customized runs. As the contracting base shrinks, an inevitable reality, the relative supply of experienced sewing operators should expand. And opportunities will continue to grow for college- and vocational school-educated apparel workers with training and skills to match the new Los Angeles -- a center of design and hub of coordination for global production.

Judi Kessler is a sociologist and member of Bobbin's Editorial Advisory Board. She is currently a visiting scholar at The Center for U.S.-Mexican Studies at the University of California, San Diego.

(*.) Author's Note: This article is based on findings from three surveys of Los Angeles, CA, apparel manufacturers. The first was conducted in 1992 by Edna Bonacich and Richard Appelbaum, the second in 1997 by author Judi Kessler and the third in 2000 by Kessler and Linda Wong. Other valuable sources of background material include the study "North American Free Trade and Changes in the Nativity of the Garment Industry Workforce in the United States" by David Spener and Randy Capps, and the recently published book Behind the Label: Inequality in the Los Angeles Apparel Industry by Bonacich and Appelbaum.

(**.) Editor's Note: Other Bobbin articles by Judi Kessler that offer insight into Southern California's and Mexico's apparel industries include: "New NAFTA Alliances Reshape Sourcing Scene," Bobbin, November 1999, and "Southern California: Transition Takes Hold," Bobbin, October 1999.

                Sourcing Trends of L.A. Apparel Firms with
              $10 Million or [greater than] in Annual Revenue
                            Percentage of Firms
      100%   Some  Offshore Mexico Asia Other U.S. Cen. Amer. Caribbean
     So. CA So. CA
1992  60%    93%     25%     17%    3%      NA         NA        NA
1997  31%    96%     65%     48%   27%      NA         4%        4%
2000  25%    95%     75%     56%   37%      7%         5%        2%
      Other
     Offshore
1992    NA
1997    8%
2000    4%

Notes: So.

CA = Southern California.

Cen. Amer. = Central America.

NA = Not Available.

Sources: Independent surveys conducted in 1992, 1997 and 20C0 by researchers Edna Bonacich and Richard Appelbaum; Judi Kessler; and Kessler and Linda Wong, respectively.

                    Los Angeles County Apparel Industry
                  Employment: Sewing and Non-Sewing Jobs
                  1995   % of   1997   % of   Change   1999   Change
                         Total         Total  95-97            97-99
Total Employment 106,500  100  111,000  100   4,500   101,200 (9,800)
Sewing Operators 61,660   58%  48,520   44%  (13,140)   NA      NA
All Other Jobs   44,840   42%  62,480   56%   17,640    NA      NA
Notes: Employment figures are for the SIC
23 (apparel) job classification.
NA = Not available.
Source: California Employment
Development Department
                            Los Angeles County
                             Apparel Industry
                            Employment: Annual
                                 Averages
1983  72,800
1984  75,300
1985  75,800
1986  83,200
1987  91,500
1988  90,200
1989  93,000
1990  95,900
1991  96,700
1992  98,300
1993  92,500
1994  98,300
1995 106,500
1996 110,900
1997 111,900
1998 106,300
1999 101,200
2000 100,057
Notes: 2000 yearly average is for
employment data through July 2000.
Source: California Employment Development

Department

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