Recession woes plague industry with little relief in sight.

Recession woes plague industry with little relief in sight

Apparel industry executives and economists all agree that the trade is suffering through a recession, but there is great debate on when it will end.

Reeling from the economic slowdown, "[apparel] business at all levels of the chain from fibers to retailing was poor for most of 1990, and the outlook for 1991 is grim," reported a survey conducted by Kurt Salmon & Associates Inc., an Atlanta-based management consulting firm specializing in the garment industry.

These sentiments were echoed by Los Angeles Area Chamber of Commerce's Chief Economist, Jack Kyser, in his 1991 economic forecast for the Los Angeles five-county area.

In 1990 "the apparel industry will have to struggle to hold even. Retail bankruptcies should move up and stores will continue to keep lean inventories," Kyser predicted.

But economic consultant Michael Bazdarich said he was much more optimistic about the economy. "There is a good chance that garment sales will pick up by the late second quarter," said Bazdarich of the economic consulting firm MB Economics in La Crescenta.

Bazderich said he bases his prediction on the fact that the Federal Reserve Bank has been easing interest rates in the last five months and there is strong pent up demand for clothes because retail sales have been declining since late 1989.

According to U.S. government figures, retail garment sales have declined 3 percent in the last year, said Bazderich. He added that he thinks sales will bottom out in the second quarter and start to pick up late in that time period.

A local garment manufacturer said the Persian Gulf is further complicating the recovery because buyers seem hesitant to invest in new orders. "Nobody is committing to orders and we have found it more difficult to bring buyers to market," said Kristin Hoffman, co-owner of Los Angeles-based Kristin J Corp., a Los Angeles-based specialty women's manufacturer.

But manufacturers who responded to the Kurt Salmon's survey were in disagreement on when the recession will end. The majority of respondents predicted that the recession will end either in the third or fourth quarter of 1991.

However, 19 percent of the survey respondents reported they were extremely optimistic and said the recovery will begin in the second quarter of 1991 and 16 percent were pessimistic and doubted that the things will turn around before the beginning of 1992.

"The recession has been worse than expected," said Joe Scheines, a Salmon spokesman. He added his company does not expect a recovery until the second half of 1991.

"After reviewing all the depressing data," the survey concluded, "it would be irresponsible to suggest that soft goods can do much better than hold its own in the year ahead."

Many local garment industry officials said they think that the Los Angeles garment manufacturers are weathering the recession better than their East Coast counterparts.

"Los Angeles has much more of a contractor base," said Ken Wilkes, Kurt Salmon's Western region director. "Manufacturers [here] have much more flexibility because they can turn on and off their contract usage. But, of course, the contractors are not as happy, but it gives manufacturers a nice buffer."

A local manufacturer representative said he agreed with that assessment. "We are very fortunate because we represent the upper end of women's fashion and our business is good to excellent," said Les Appel, president of sales for Les Appel for Rex Center Inc., "No one is coming and crying the blues to me."

Retail woes have been plaguing the garment industry during the past year, said Kyser, but in 1990 the Los Angeles garment industry "evidently held its own."

For the state, apparel employment changed 2,000 workers to an average of 132,000 and in Los Angeles County employment was flat at 95,000. But Kyser said that when the State Employment Development Department does its final garment employment tally for 1990, Los Angeles County may show a slight increase.

Manufacturers' sales, however, grew at a 2.1 percent in 1990, climbing to $6.3 billion from $6.1 billion.

Kyser said that one favorable industry trend is that some apparel production was pulled back from Asia, due to the drop in the value and retailers' desire to shorten the supply pipeline.