Market research report now includes cut and sew manufacturers

The U.S. cut and sew manufacturing industry has seen increased competition and a fall in demand, which is causing shrinking profit margins and inconsistent revenue, according to a recently released IBISWorld report.

The recession had a significant impact on the industry in the past five years. The apparel industry as a whole has suffered as per capita income in the United States increased just 0.1 percent annually, on average. Import penetration also grew by just 1.9 percent per year.

“While the domestic economy is showing signs of improvement, IBISWorld does not expect this industry to fare much better,” said IBISWorld industry analyst Nikoleta Panteva.

The increasing price competition from imports has decreased operator margins over the past five years. Cut and sew profits declined from 6.2 percent of revenue in 2007 to 2 percent in 2008, which was its lowest point.

IBISWorld predicted revenue to continue declining, but less severely, over the next five years. The industry is fragmented and currently focusing on luxury consumers.

Cost savings are likely to be important in the cut and sew realm as well as for apparel retailers. Men's apparel companies Men's Wearhouse and Joseph A. Bank both fell short of expectations for first-quarter earnings, according to Reuters.