Can fast fashion save the US apparel industry?

Comparative advantage seems to have doomed the U. S. apparel industry. Apparel is a labor-intensive industry where capital per employee is relatively low, only 14 % of the average for U. S. manufacturing (Murray; 1995; Rothstein, 1989), and most production jobs (90%) are unskilled or semi-skilled (Mittelhauser, 1997). With hourly compensation in China’s apparel industry of less than 1 and only about 2. 50 in Mexico’s apparel industry, the U. S. is at a substantial disadvantage in production costs (USITC, 2004). Since the average U. S. apparel factory has only 27 employees and relies heavily on traditional technology, the industry lacks the substantial scale economies and the new production techniques that have sometimes sheltered other mature industries from global competition (Helpman and Krugman, 1985; Dertouzos, et al. , 1989). It is, therefore, not surprising that imports from labor abundant countries have risen steadily since the mid-1970s and that apparel import penetration ratios have reached 71 % by value and 80 % by volume (AAMA, Focus, 2002). The apparel industry, which once accounted for almost one in ten manufacturing jobs and employed over 1 million workers as last as 1980, currently employs about a third that number (see Table 1) and further decline in output of over 8 % is predicted once quota restrictions on imports are phased out by 2005 Terra, 2001, cited in