Apparel Industry Profile
Definition of the Industry
Apparel manufacturing comprises establishments primarily engaged in manufacturing clothing including establishments producing: knitted clothing from yarn, manufactured clothing from knit fabrics made in the same establishment, manufactured clothing from fabric made in other establishments, and manufactured clothing or clothing accessories.
The North American Industry Classification System (NAICS) codes are:
- 315: Clothing Manufacturing
- 3151: Clothing Knitting Mills
- 3152: Cut and Sew Clothing Manufacturing
- 3159: Clothing Accessories and Other Clothing Manufacturing
|Economic Indicators||2004||2005||2006||2007||2008||% Change
|Source: Statistics Canada, Trade Data Online.
CAAGR: Compound Average Annual Growth Rate
Apparent Domestic Market = Shipments plus Imports minus Exports
Manufacturing Intensity Ratio (MIR) = Gross Domestic Product (GDP) divided by Shipments
Import Penetration = Imports divided by ADM
Export Orientation = Exports divided by Shipments
Domestic Market Share = Shipments minus Exports divided by ADM
Labour Productivity = GDP divided by Employment (in thousands of $ CAD)
|Apparent Domestic Market||10,182.0||10,065.5||10,450.0||10,517.0||10,301.6||-2.0%||0.3%|
|Gross Domestic Product||2,906.0||2,549.0||2,358.0||2,095.0||1,622.8||-22.5%||-13.6%|
|Manufacturing Intensity Ratio||46.6%||48.2%||47.3%||48.4%||49.4%||1.9%||1.5%|
|Total Imports||6,084.4||6,509.0||6,976.9||7, 391.6||7,910.0||7.0%||6.8%|
|Trade Balance||-3 940.9||-4 775.9||-5 469.0||-6 191.6||-7 013.6||13.3%||15.5%|
|Domestic Market Share||40.2%||35.3%||33.2%||29.7%||23.2%||-21.9%||-12.8%|
The Canadian apparel industry has experienced significant declines in shipments, gross domestic product (GDP) and employment. The rate of contraction increased between 2007 and 2008 with shipments dropping 24.0 percent, compared to a 13.2 percent drop between 2006 and 2007. GDP exhibited a slightly less steep decline in 2008, dropping 22.5 percent from the previous year (down 11.2 percent between 2006 and 2007). The relatively slower pace of contraction for GDP impacted the Manufacturing Intensity Ratio (MIR — the quantity of shipments which is comprised of a product's GDP) which rose from 46.6 percent in 2004 to 49.4 percent in 2008. While not a large percentage increase, it does suggest a steady increase in the proportion higher value-added products for Canadian apparel manufacturing. Employment had similar declines, although slightly less significant than those of shipments and GDP. Drops in these three indicators are largely attributable to the off-shoring of Canadian manufacturing, a situation to which the Canadian apparel industry is particularly sensitive as the majority of this sector is comprised of cut and sew activities. Regionally, Quebec accounted for 58.1 percent of Canadian apparel production in 2008, followed by Ontario at 24.7 percent.
Apparel imports have grown consistently over the 2004 to 2008 period at a time when the apparel domestic market showed a very modest average annual increase of 0.3 percent. This underscores the pressure being felt by Canadian apparel producers in that they are accounting for a declining percentage of a non-growing market. Imports from China represented the majority of apparel import increases, rising from $2.0 billion to $4.2 billion in the 2004 to 2008 period. Despite the challenges facing the apparel industry, its 2055 active firms remain strong in the production of mens suits and trousers, women's sportswear, jackets and skirts, and outerwear, and have been exploring and adopting new strategies designed to take advantage of the apparel global value chain.
The liberalized trade environment and increased global competition continue to be major issues for the apparel manufacturing industry in Canada. The increase in apparel exports from low-cost countries has led to the displacement of Canadian exports to the U.S. thereby impacting the competitiveness of the Canadian apparel industry (in 2008, Canada supplied 1.0 percent of the U.S. market, down from a 2.2 percent share in 2004), a situation made worse by the economic slowdown. Import penetration (the percentage of the domestic market comprised of imports) increased to 76.8 percent in 2008 from 59.8 percent in 2004, indicating that domestic manufacturers have been significantly crowded out of a market which is sensitive to product pricing.
Skills development is also an issue for the industry. The document The Canadian Apparel Industry: The Shape of the Future (PDF, 889 KB, 145 pages), conducted on behalf of the Apparel Human Resources Council and Human Resources and Skills Development Canada, identified a strong need to:
- improve management competencies through training on strategy development and new business models;
- work to "close the gaps between the needs of evolving companies and the training provided by the education sector"; and,
- provide additional human resource advisory services through the Apparel Human Resources Council to address the need of smaller apparel companies which do not have sufficient internal human resource capabilities.
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