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Losing Our Shirts 

An unhappy New Year looms for American apparel makers

Thursday, Dec 2 2004
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Photo by Gregory Bojorquez

Look for the union label when you are buying that coat, dress or blouse.
Remember somewhere our union’s sewing,
our wages going to feed the kids, and run the house.
We work hard, but who’s complaining?

—Garment Union song

At midnight New Year’s Eve, the world will come to an end for many apparel manufacturers and their workers, as the World Trade Organization terminates the 1974 Multifiber Arrangement’s quotas that have stabilized the global clothing industry for 30 years. The end of these quotas for the WTO’s 148 member nations is expected to trigger a flood of cheap, well-made Chinese textiles and clothing into factories and department stores from Manila to Mission Viejo. It’s a flood that could drown some developing countries, destroying already fragile industries while continuing the steady deindustrialization of America’s own economy. The effects threaten to reach far beyond the loss of indigenous manufacturing jobs, seriously damaging economies in poor countries and increasing emigration toward wealthier ones. It is the rag trade’s Y2K, but this time the sky really is falling.

The quota expirations for 98 categories of textiles and apparel mark the final stage of a 10-year phase-out of restrictions on the annual metric tonnage countries could export to North America and Western Europe. Originally designed to protect these continents’ local clothing industries, the export ceilings created new garment economies in places like Haiti, Mexico and Kenya. When, say, Wal-Mart exhausted its quota of pajamas that it had consigned from one country, it would turn to another for more inventory, thus spreading industrialization throughout Eastern Europe and the Third World.






In 2002, the last time specific quotas were abolished, Haiti lost half its U.S. market to China, which packs a triple threat of low wages, modern efficiency and quality merchandise. Since quotas on brassiere exports were phased out in 2002, for example, Haiti’s U.S. exports have plunged more than 94 percent, while China’s initially increased 232 percent; likewise, as China’s unfettered exports of infantwear jumped 826 percent over the same period, Bangladesh’s shrank 18 percent. These statistics, analysts warn, only hint at what lies ahead four weeks from now, when 701 quotas in the U.S. alone will disappear. In addition to the presumed tidal wave of Chinese products, post–January 1 predictions include:

• More offshoring of American apparel companies, since companies that had previously been "shackled" to the U.S. by quotas will have no reason not to set up plants in Third World countries.

• Sub–Saharan African countries, which had benefited from no-tariff agreements with the U.S., will lose trade because the savings they passed on to American retailers from not paying import duties will not match the savings offered by other countries with lower overhead and, now, no quotas. (Tariffs will not be affected January 1.)

• By 2010, according to a federal task force on textiles and apparel, only one-quarter to one-third of the current 50 to 60 exporting countries will be doing business with the U.S.

"When [apparel quotas] came off in 2002, China’s share in those 29 categories went from 9 percent then to over 70 percent today," says Mark Levinson, chief economist for the Union of Needletrades, Textiles and Industrial Employees (UNITE). "When quotas expire in January we expect the Chinese market share in the U.S. to increase from just under 20 to about 70 percent. That’s a huge increase in millions of workers in developing countries [who] will lose their jobs — it’s the largest industrial shift in the last century. Roughly tens of billions of dollars will be shifting to China. This is a monumental issue globally."

Locally, of course, the big question is how January 1 will affect Los Angeles, California’s largest garment-producing center. The L.A. County Economic Development Corporation claims L.A.’s apparel-manufacturing sector generates $24.3 billion annually, making it the city’s single largest industry. Still, it’s an industry in decline. The number of Los Angeles’ cut-and-sew garment workers peaked in 1996 at 97,500, according to the state’s Employment Development Department; there are currently about 62,600 workers employed, the vast majority Latino or Asian women immigrants.

For now the consensus seems to be that there is no consensus. According to Ilse Metchek, executive director of the California Fashion Association, 2005’s first quarter will simply reflect the last months of 2004 — although she believes one immediate effect will be even more gridlock at the L.A. and Long Beach harbors, which are now operating at a crawl as Christmas goods from Asia stream into port.

"You’ve got a lot of nervousness in the industry," she says of the harbors possibly becoming worse chokepoints. "Retailers are afraid they won’t have inventory on the shelf. It will all shake out about the end of April, beginning of May."

One thing Metchek is not counting on is price drops.

"Wal-Mart can’t get any cheaper," she says, claiming the profit margin on clothing is already razor thin. "Apparel is 10 percent cheaper than it was 10 years ago. There’s only so much [retailers] can buy. If any savings are to be had, they will be kept by the stores. The price of labor is not the biggest factor for stores — it’s the cost of transportation."

Kent Smith, executive director of downtown L.A.’s Fashion District Business Improvement District, disagrees.

"The apparel industry is pretty price competitive," Smith tells the Weekly. "It’ll be hard to resist lowering prices. And as the quotas come off we’ll be seeing more wholesalers here, which will drive down prices."

Smith sees both silver linings and safety for the Los Angeles market.

"We have leather jackets made in our districts — China’s lack of quotas will have no effect on us because the craftsmen are already located here. But places like Vernon and northern Orange County will be negatively impacted."

Lonnie Kane, the president of Karen Kane Inc., has his plant, which employs about 200 workers, in Vernon, although he sources about a third of his product with Chinese factories. Kane and his wife, Karen, began their company working out of their Studio City garage 25 years ago and have built it into a respected line specializing in high-end clothing. Like Smith, Kane believes higher-priced American apparel makers, especially in Los Angeles, will survive January 1 without problems.

"The budget end of apparel manufacturing is already gone," he tells the Weekly. "January 1 definitely could be the stake in the heart of moderate manufacturing, of the smaller manufacturer who’s not sophisticated enough to import. And the [textile] guys who make basic fabrics look to be devastated if every khaki and denim product comes out of China."

According to Kane, however, Los Angeles’ rag trade cannot expect any help from city government.

"L.A. is unfriendly to the apparel industry," he says. "It likes the prestige of having a creative industry like Hollywood, but doesn’t want ‘dirty businesses’ like sewing factories. Yet cities tend to lose sight of the fact that we need to have employment at every level and sewing factories provide entry jobs to unskilled and immigrant workers."

Karin Mak, of Sweatshop Watch, a Los Angeles–based garment-worker advocacy group, is equally pessimistic: "The L.A. economy will be devastated as much as the garment industry, because workers contribute to the local economy. Half the industry will stay, and half of it will move — especially if workers try to unionize."

There are, of course, people for whom January 1 is more than a theoretical headache.

"I would sell fruit in the street," says Areceli Ruiz, when asked what she will do if the direst predictions come true. "The worst thing that could happen is that I would be left without a garment job. I’ve cleaned houses, but it’s harder to find those jobs because they want references. I’ve never asked for help from the government even though everyone says we immigrants only want welfare. I pay taxes but get nothing back because I have no Social Security number."

I speak to Areceli and her sister, Alejandra Ventura, through a translator in the Sweatshop Watch offices, a block away from downtown’s bustling Santee Alley retail center — a sprawling market selling low-price clothing, knockoffs and bootleg DVDs. Santee will probably remain untouched by January 1’s quota changes — except that many locally produced garments will be replaced by cheaper imports. The two sisters are Guatemalan immigrants who, along with thousands of others like them, helped build both Santee Alley and the upscale California Mart a few blocks west.

Alejandra, who arrived here in 1986, remembers her early years when she worked side by side with former doctors, nurses and professors — immigrants whose first North American jobs were on sweatshop floors. She knows too well the constant yelling and threats from supervisors, the filthy bathrooms and long hours.

"The bosses think we’re slaves," she says, "that we don’t feel pain or get hurt." Alejandra says her best years came at the end of the 1980s, when she pulled down between $400 and $500 a week, working 10- to 12-hour days. But after the North American Free Trade Agreement, she says, wages in L.A. went down. Today, she only works sporadically, partly because she insists on receiving a taxable paycheck from her employers, as opposed to the lump of cash most prefer to pay. Without a paycheck record, she is ineligible for any kind of government medical care or Social Security benefits.

Areceli and Alejandra live within a one- or two-bus commute from their homes in the MacArthur Park area. Alejandra has five children, two of whom are adults working back in Guatemala, while her sister has one 10-year-old.

Areceli says that when the post-9/11 economy slumped, conditions got worse downtown. Today she makes $243 per week working 10 to 12 hours a day sewing single-needle work on blouses, pants and jackets, plus two and a half on Saturday; she receives one 15-minute break during her workday.

I ask Alejandra what she thinks will happen when the quotas are removed.

"I believe it’s already starting," she says, "because what they pay is less than before. The bosses look for people who won’t speak up, who need to send money back home."

The economic dislocation brought on by the end of textile and garment quotas is only the latest iceberg to appear on the high seas of free trade. Since the Clinton administration inaugurated NAFTA, more than a million and a half American jobs have been offshored as multinational buccaneers move plants and assembly lines to countries whose workers are paid poverty wages. But far from having their living standards raised, workers in the developing world have had what few job safeguards they enjoyed superceded by WTO rules and find themselves competing with workers of even poorer nations.

It reminds one of the close of Bertolt Brecht’s Weimar satire, The Threepenny Opera, in which the privileged and connected characters celebrate their good fortune while London’s beggars shamble off into the shadows:

For some are in darkness

And others are in light.

And you see the ones in brightness

Those in darkness drop from sight.

Capitalism, as Marx famously said, "has set up that single, unconscionable freedom — free trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation." The bittersweet irony is that China, the world’s last Marxist power, will be the cause of so much of the coming misery. Still, as Sweatshop Watch claimed in a "working paper" published last year, it is the multinationals, in their never-ending search for lower labor costs, that have actually taken jobs out of the United States, not China.

"Who benefits from the expiration besides China?" Mark Levinson asks. "Wal-Mart, the Gap — most apparel companies are the big multinational retailers. They want to source product anywhere they can."

Levinson’s organization is the descendant of the International Ladies Garment Workers Union and the Amalgamated Clothing and Textile Workers Union. It merged last summer with the Hotel Employees and Restaurant Employees International Union (HERE) to form UNITE HERE. UNITE has plenty to lose New Year’s Day. Since 1990 the number of American garment and textile workers has declined more than 50 percent; today about half a million workers are employed in what remains of America’s once robust apparel and textile manufacturing industries. Worse, UNITE’s partner, HERE, is engaged in a bitter and protracted contract dispute with hotels in Los Angeles, San Francisco and Washington, D.C. The combined unions claim a membership of 840,000, but more than 400,000 of these are retirees.

"There’s absolutely no question that the end of quotas will result in job loss in the U.S. textile and apparel industry," Levinson says. "We’re trying to protect the numbers we have right now and to expand, but we’re not going to organize in a factory that’s going to be shut down."

Levinson says his union is now concentrating on organizing America’s largest domestic apparel manufacturers — those contracted by the Defense Department.

"Our argument is ‘Look, you don’t want sweatshops making garments for our soldiers.’"

UNITE HERE has joined the American Manufacturing Trade Action Coalition (AMTAC), an industry-labor lobby that is petitioning the Commerce Department through an interagency group called the Committee for the Implementation of Textile Agreements (CITA), to stall the quota terminations or to adopt "safeguard" restrictions on imports.

As of this writing, CITA, which can thwart the removal of quotas if it believes they will cause a serious disruption to America’s clothing and textile industry, has agreed to review eight of the petitions and is considering the remaining three. This is an unprecedented action because such petitions are normally only filed after evidence of economic disruption can be proved, not in anticipation of it. Needless to say, the Chinese, who joined the WTO in 2001, are not happy. Although repeated queries by the Weekly to Chinese trade agencies, as well as to the Chinese embassy and to China’s Los Angeles consulate, went unanswered, Beijing’s China Daily recently made clear its displeasure by quoting a Beijing textile manager as saying "it is ‘ridiculous’ that the U.S. government would decide the fate of Chinese pant producers by pure speculation."

For its part, AMTAC accuses the Chinese of using currency manipulation and state subsidies to create unfair trade conditions. It’s worth noting that China’s command economy, which assigns individual factories their own, internal quotas (apart from the WTO’s), has created a Byzantine system in which factories can "sell" surplus quotas to other factories. For example, if a Los Angeles apparel maker called Teen Seen contracts for 10,000 tank tops from People’s Tank Top Factory No. 1, and the Chinese plant is only permitted to make 9,000 units, it will have to buy 1,000 quota units from People’s Tank Top Factory No. 2. But the cost for the subsequent 1,000 units, which can easily account for 10 percent of the overall tank top cost, is passed on to Teen Seen in Los Angeles. In some cases, the selling of quotas has become bigger business than manufacturing itself and, in the Wild, Wild East of today, creative entrepreneurs have set up dummy factories to make money by selling the quota units they’ve been granted to real factories.

Until the first signs of economic change appear after New Year’s, observers will content themselves with predicting the most likely winners of a world without quotas — China, India and Vietnam, the last of which is poised to join the WTO. And there are the losers, a long list that includes Honduras, Bangladesh, Mauritius and the Philippines — all the former equatorial colonies whose teeming millions live beneath tin roofs, forever at the mercy of foreigners.

It’s unclear what direction CITA is leaning toward regarding the pleas now before it, although a Chinese textile industry spokesman has noted that CITA’s decision to review AMTAC’s petitions was made before the presidential elections and seemed to be more of a political gesture by the Bush administration than a genuine signal of concern. (A spokeswoman for the Commerce Department declined to answer questions directly for this article, preferring instead to give only background information via e-mail.)

He may be right, given the White House’s reluctance even to go through the motions of jawboning with foreign trade partners. Still, maybe there will be a period of adjustment long enough for the world’s apparel and textile industries — and American garment workers — to prepare for the worse. Who knows? Perhaps there is an apparel glut — if not in the stores, then in Los Angeles’ harbors — and China will not be receiving a tremendous number of orders immediately after January 1. Or perhaps China, which is currently racked by severe power outages because of its rapidly growing industrial sector, simply won’t be able to keep up with increased orders in the near future.

For now, local apparel manufacturers appear mildly optimistic — or fatalistic, depending on one’s interpretation.

"Nothing’s the end of the world," says Lonnie Kane. "We saw this with the shoe business — 98 percent of which is now imported. Apparel and textiles have slowly moved offshore. It’s all about price. We don’t have a place for low-wage industries. But I don’t want local manufacturers to go away because I enjoy the flexibility and don’t want to depend solely on imports."

And what happens to the people who formerly worked in those industries — will they all be forced to sell fruit on the street and clean houses?

"When your economy is undergoing massive change," says the L.A. Fashion District’s Kent Smith, "people are unfortunately going to lose jobs. We’re just not masters of our economy anymore."

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