THE ECONOMIC, SOCIAL, AND CULTURAL DYNAMICS OF THE LOS ANGELES APPAREL MANUFACTURING INDUSTRY A THESIS Presented to The Faculty of the Department of Economics and Business The Colorado College In Partial Fulfillment of the Requirements for the Degree Bachelor of Arts By Karon Chelsea Herzog May 2011 THE ECONOMIC, SOCIAL, AND CULTURAL DYNAMICS OF THE LOS ANGELES APPAREL MANUFACTURING INDUSTRY Karon Chelsea Herzog May 2011 Economics Abstract Los Angeles is the largest apparel manufacturing region in the United States. The purpose of this thesis is to gain an understanding of the historical, economical, social, and cultural factors that make Los Angeles the most successful apparel production region in the nation and how forthcoming changes in the apparel industry will affect the region. In order to gain an in depth understanding case study methodology is used. KEYWORDS: (Los Angeles, Apparel Manufacturing, Cultural Goods) TABLE OF CONTENTS ABSTRACT iii I INTRODUCTION 1 II THE HISTORY OF TWENTIETH CENTURY FASHION 4 III A BRIEF HISTORY OF THE LOS ANGELES APPAREL MANUFACTURING INDUSTRY 9 IV ECONOMIC DYNAMICS 12 Clusters.................................................................................................................. 13 Sub-contracting................................................. ................................................... 14 Outsourcing........................................................................................................... 18 Immigrant Labor................................................................................................... 22 Consolidation of Retailers..................................................................................... 25 Modification of Taste............................................................................................ 26 Social Milieu……………………………………………………………………. 27 Image Production……………………………………………………………….. 28 V SOCIAL AND CULTURAL DYNAMICS 30 VI ECONOMIC GROWTH 35 Shift-Share Analysis…………………………………………………………….. 35 Solow Residuals………………………………………………………………… 39 VII THE FUTURE OF THE LOS ANGELES GARMENT INDUSTRY 45 SOURCES CONSULTED 51 LIST OF TABLES 4.1 Distribution of Establishments by Employment Category, Southern California, NAICS 315 (Apparel Manufacturing), 2008 …………………… 18 6.1 National and Regional Employment Data for Apparel Manufacturing and All Industries, 1998 – 2008 …………………………………………………. 36 6.2 Employment Change and Percent Employment Growth of Los Angeles and The United States, 1998 – 2008……………………………………………... 39 6.3 The Solow Residuals for Los Angeles Apparel Manufacturing between 1999 and 2007 (%)………………………………………………………………… 42 LIST OF FIGURES 4.1 The Location of Apparel Manufacturing Establishments in Central Los Angeles…………….………………………………………………………….. 15 4.2 U.S. Apparel Market by Source (in Millions of Garments), 1997 - 2008…….. 20 4.3 U.S. Imports of Apparel (in Actual U.S. Dollars), Mexico and China, 2000 – 2008………...…………………………………………………......................... 21 6.1 California’s Apparel Manufacturing GDP, 1998 - 2008……………………… 43 CHAPTER I INTRODUCTION Clothes are worn to protect the body from the elements and the eyes of others. Over time garments have grown to represent society, culture, art, and self-expression. They provide a means through which individuals can self-define, inspire others, and enhance their appearance. Fashion, however, also provides something much less glamorous and talked about: jobs. The women’s apparel industry is one of the last manufacturing sectors left in the United States, and has been providing ample jobs for women and immigrants for centuries. New York and Los Angeles are considered the fashion capitals of the United States. The concentration of the industries in these cities occurred largely because they were national manufacturing capitals that also attracted fashion extremes and immigrants that helped produce them. In terms of production, Los Angeles outshines New York. In 2008 Los Angeles had 372.1% more apparel manufacturing establishments and employed 44,589 more workers in the industry. Garment manufacture has had a surprisingly small role in the history of industrialization in modern cities. Garments attract much more interest for their form than for their fabrication. Society analyzes apparel more for how it is consumed than for how it is produced. Despite its lack of huge factories and smokestacks, apparel manufacture is important to urban industrialization. 1 2 Many case studies delve into the dynamics that make the apparel manufacturing industry in New York successful, but few focus on Los Angeles. Most research describes the cultural products industry in the region as a whole instead of highlighting specific sectors within it. The garment manufacturing industry, being one of the largest and oldest, warrants special attention. There is an interactive community solely dedicated to apparel manufacturing in downtown Los Angeles. It is composed of manufacturers, cutters, sewers, fashion education institutions, trendsetters, stylists, photographers, fashion writers, marketing firms, and merchandisers. Together they create the social and economic atmosphere through which ideas are transferred, knowledge is exchanged, and, ultimately, clothes are manufactured. Apparel manufacturing is a trade based on innovation and constant change. The community of various fashion related firms in downtown Los Angeles is exceptionally good at realizing new, innovative ideas quickly and well. The garment industry in Los Angeles today is very different from the small huddle of firms that existed there after World War I. Using New York as its model, it has become a large, efficient regional industry. It is now a complex, multi-faceted cluster of firms that are constantly interacting and improving. However, as the fashion industry changes in the future, Los Angeles will need to employ new methods in order to cope with changing technology and the shifting role of the consumer in product creation. The playing field for apparel manufacture will even and Los Angeles will have to fight to maintain its competitive advantage. 3 This paper investigates the historical, economical, social, and cultural factors that make Los Angeles the most successful apparel production region in the nation and empirically analyzes its ability to grow and thrive in a changing fashion industry. CHAPTER II THE HISTORY OF TWENTIETH CENTURY FASHION During the twentieth century a slew of social, technological and economic events led to the democratization of fashion. Over the course of the century, the fashion industry changed from catering to the affluent elite to marketing to the middle class. Fashion merged with commerce and culture, shifting away from fine art and other forms of high culture towards more accessible popular culture. Haute couture concepts were decimated, American lifestyle dressing emerged, and the American youth developed the most influence over trends.1 Thornstein Veblen, in his theory on the leisure class, described clothing as a means to visually differentiate between social classes. 2 Early couturiers would only outfit affluent clients and were considered to be great artists. By the beginning of the twentieth century, haute couture designers began to realize they were missing a great opportunity by not tapping in to the middle class market. The invention of new technologies in the 1910s and 1920s allowed the idea of catering towards the middle class to come to fruition. Machine technology called for standardization in the industry. The 1Bonnie English, A Cultural History of Fashion in the Twentieth Century: from the Catwalk to the Sidewalk (Oxford: Oxford International Publishers, Ltd., 2007), 153. 2 Hypertexts, “The Theory of the Leisure Class,” http://xroads.virginia.edu/~HYPER/VEBLEN/veb_toc.html (accessed February 24, 2011). 4 5 only way to manufacture cost-effectively was to standardize sizes, colors, and styles. In the late twenties, sleek, stylized and modern garments began to emerge.3 In the 1960s the fashion industry adopted popular culture in the form of visual arts. Art in the sixties attempted to emulate normal life, and since fashion was taking its lead from art it turned towards the streets for inspiration. Films, music and advertising were successful in bridging the gap between high art and “street art.” As technology continued to improve and fads became more fleeting the idea of disposability came in to existence. Clothes were no longer a lifetime investment, but rather something to wear for a short while and then discard for something trendier.4 The 1970s and 1980s created the still prevalent trend of lifestyle dressing, turning the United States in to the global center for sportswear production. It suddenly became chic to dress casually rather than formally, closing the gap between social classes even more. Anti-fashion became a facet of fashion, coming into existence with the hippie movement and other anti-establishment trends. Fashion became a vehicle through which feminist ideals, alternative sexual attitudes, environmental concerns, and race, gender, and political issues could be expressed. Fashion is an extraordinarily effective tool for relaying socio-political thoughts and stirring up revolutions. When catwalk design fully succumbed to street style, fashion became fully democratized and fashion and anti- fashion united to form the fashion cycle.5 3 Bonnie English, A Cultural History of Fashion in the Twentieth Century: from the Catwalk to the Sidewalk (Oxford: Oxford International Publishers,