In the Name of Fashion: Exploitation in the Garment Industry
Figueroa, Hector
As you read this article, there is a good chance that you or someone close to you is wearing clothing imported from Latin America. A quick check of the label may reveal that it is a shirt from...
...It is likely to be marked by increased wage 30% of Central America's exports to the United States...
...Jobbers design garments, acquire fabric, and arrange for the sale of finished clothes, but they carry out production by cutting fabric and hiring contractors to assemble the clothes...
...As international competition in the industry intensified and labor costs in Puerto Rico began to rise during the 1960s, U.S...
...clothing market in 1992 compared to only 28% in 1973...
...7. Standard and Poor's Industry Survey...
...market in 1973 to 21.7% in 1992.2 The share for garments imported from Latin America under special duty-free tariff programs has increased from 3.9% of the U.S...
...The fortunes made T-Shil in this business come largely at the at a ma expense of the workers, the majority of whom are women and children who in El work as many as 50 to 80 hours a week at a miniscule wage...
...400,000 people AtcAinoi r an -- ldA today in the United States than at any other time in the nation's history...
...5 These sweatshops represent a reemergence of organizational forms and working conditions reminiscent of Victorian capitalism...
...cities with large immigrant populations such as New York and Los Angeles offer another source of low-wage labor...
...Indeed, sweatshops are simply companies under contract with larger manufacturers that try to produce a dress or other garment for as little as $3 a piece, using child, undocumented, and sometimes slave immigrant labor...
...In the United States, 30% of all wholesale clothing sales is produced by just 20 companies with household names like Fruit of the Loom, Liz Claiborne, Phillips Van Heusen and Oshkosh B'Gosh, Inc...
...International T and cutbacks of state sup- U.S...
...They contract out work when demand suddenly peaks...
...They also tend to own their own facilities overseas, and use contractors largely to respond to sudden growth in demand...
...ur- These joint ventures, while still numbering only a ter handful, are growing rapidly...
...Mandatory employee benefits and rights were weakly enforced...
...Offshore garment assembly in the region mushroomed, first in Dominican Republic and Costa Rica, and later in Guatemala, Honduras, El Salvador, Colombia and Jamaica...
...The U.S...
...Today, Mexico's maquiladora ng the sector employs about 100,000 workers in the apparel industry, and to a nt earns lesser extent in textile production...
...Long-term contractual relationships with large buyers and product designers offer another competitive advantage...
...Cone Mills and CIPSA are in the process of ar- building the world's largest and most modern denim an complex in northern Mexico, which will incorporate all ble segments of the fashion chain from textile manufacturth...
...In addition to natural fibers, textile manufacturers in the United States, Mexico and Brazil produce man-made or synthetic fibers such as polyester and nylon...
...t-Assembly Industry in Latin America sports to the United States in millions $) 1985 1987 1989 1991 1993 282 380 460 143 234 390 62 92 172 80 97 116 28 84 115 22 30 57 17 27 50 6 20 42 6 13 20 725 547 254 101 131 82 107 117 44 1,075 896 374 65 251 113 236 218 103 Percentage change 1985-1993 +381 +626 +603 -80 +896 +513 +1,388 +3,633 +1,717 tade Commission...
...Meanwhile, countries that have g ment-assembly enclaves such as the Dominic Republic and Guatemala are faring better [see tal below], but not in ways that suggest long-term grow In fact, these countervailing trends are often presi within the same country...
...Textile and garment production in the Americas is increasingly a decentralized but highly integrated chain of commodity, capital, and labor flows...
...8. Standard and Poor's Industry Survey...
...As a result, apparel employment grew from a few thousand jobs to more than 50,000 over the course of a few decades...
...The above figures represent the duty-free value of otwear imports for consumption under Harmonized Tariff Schedule 80...
...This translates into a 70 cents per hour wage, to compared to average wages of $10-15 an hour in the U.S...
...A number of companies have set up operations in Florida and other low-wage states in the U.S...
...ing to the production of finished clothes...
...Profits could be easily repatriated from Puerto Rico, federal subsidies were abundant, and profits were not subjected to taxation when they arrived back in mainland coffers...
...companies began in Puerto Rico during the 1940s and 1950s...
...apparel companies, by some of their competitors like Korean-owned contractors, and, above all, by large clothing buyers such as Wal-Mart and Macy's at the expense of low-wage labor in Latin America...
...A quick check of the label may reveal that it is a shirt from the Gap made in Honduras, a pair of Lee Ryder jeans made in Brazil, Bali underpants made in Guatemala, a Levi's golf shirt made in the Dominican Republic, or a Haggar sports jacket made in Colombia...
...Likewise, textile imports have grown from 5.8% of the U.S...
...Penney, Federated Department Stores (including Macy's), and May Department Stores-account for about 77% of department-store sales by the top-ten apparel companies...
...At that time, Puerto Rico became a preferred source of garment since it offered low-wage labor (209/ di rt f h ir S 30Vo of me u.S...
...Department stores like J.C...
...Mark Rosenberg and Jonathan T. Hiskey, Annals of the American Academy (May, 1994...
...But the the- tor...
...1 0 Neoliberal free-trade policies are largely to Garmeni blame for the sorry state (In of Latin America's domestic textile and apparel industries...
...To match that level of globalization, trade unions will have to establish new forms of international cooperation and solidarity that parallel the The maquilas offer certain advantages to the coun- changes in how the industry operates...
...Contractors are companies that receive already cut garment in bundles from the jobbers and process it into finished clothes...
...also Gereffi and Korzeniewicz, eds., Commodity Chains...
...As long as global commodity chains conof the region is shaky at best...
...In El Salvador, for examp textile production declined by 40% and clothing mar facturing by 55% between 1975 and 1991, while clothing sector as a whole grew 12% from 1985 1991, largely due to export-oriented assembly...
...1 2 of tens of thousands of jobs...
...As a consequence, average profit margins for apparel manufacturers are around 2% below manufacturing as a whole...
...dollars to service large foreign debts, induced Central American governments and domestic elites to invest in the maquila sector...
...garment contractors pay less than the minimum wage, fail to pay overtime premiums, or violate labor laws in some other way...
...It is also the product of trade policies and political decisions adopted by the U.S...
...James Wilkie, ed., Statistical Abstract of Latin America, 1995, and Teresa Rend6n, La empresa maquiladora textil y de confecci6n en Centroamerica (Mexico: UNAM, 1995), unpublished manuscript...
...This portion of the fashion industry in the Americas is located primarily in larger, more industrialized countries such as the United States, Mexico, Brazil, Chile, Argentina, Colombia and Venezuela...
...8 They are also buying clothing from different retail outlets, depending on their income group...
...More than half of all clothing stores in the Unit States today are expected to go out of business by t year 2,000.9 Mergers and consolidations among U retailers have cut even further into the number of ret outlets...
...textile, apparel and fo port have increased the (HTS) Subheading 9802.00...
...They granted tax exemptions, special exchange systems, free utilities, and complete profit repatriation for companies that set up businesses in these areas...
...The complex ent will employ some 3,500 workers...
...Labor organizing was inhibited through repression, as trade unionists were black-listed and even assassinated...
...Textile production is the most capital-intensive segment, the most concentrated (at the level of production), and the least internationalized (as far as direct ownership or control...
...Because clothing manufacturing remains a laborintensive process, the cost of labor is an important consideration...
...If resources are scarce or proximity to the final retail market is vital, U.S...
...nts Throughout Latin America, numerous companies that As produced for local and regional markets are being rn- wiped out by lower-cost imports of new and "secondch hand" garments from the United States and East Asia as well as, in the case of South America, more industrialur- ized neighbors such as Brazil...
...uiladora firms a powerful incentive to locate labor-intensive manufacturing processes alvador in Mexico, where they could benefit from cheap labor, geographical prox- or $12, imity to the U.S...
...The contracting subsegment of the apparel chain allows companies in the fashion industry to expand production to meet increased demand, avoid large capital outlays, and prevent workers sitting idle when demand drops off...
...Likewise, while garment-assembly enclaves in the Caribbean Basin and Central America are booming, older apparel NACIA REPORT ON THE AMERICAS 34REPORT ON TRANSNATIONAL INVESTMENT industries that served the domestic market are dying off throughout Latin America...
...Moreover, the maquiladora industries offer few sphere are not likely to improve...
...companies also began to take advantage of special trade and investment arrangeie Bauer ments with neighboring Mexico in the 1960s...
...For details, see Kurt Petersen, The Maquiladora Revolution in Guatemala, Occasional Paper Series 2, Center for International Human Rights at Yale Law School, 1992...
...Geographic proximity to Latin America makes it relatively easy for these firms to send cut fabric to maquiladoras and receive finished garments within a few days...
...In the clothing-production segment of the fashion chain, it is useful to distinguish between national brands and small brands...
...6 These department stores and, more recently, fast-growing discount mass-merchandise retailers like Wal-Mart and Kmart constitute the most important single determinant of continent-wide production patterns...
...For example, a Liz sells Claiborne jacket made at the Doall while tl maquiladora plant in El Salvador's Progresso Free Trade Zone sells for mak $178, while the workers making the garment earn just 56 to 77 cents per hour...
...The much-publicized Border made Industrialization Program gave U.S...
...Penney and Sears Roebuck-followed in the 1980s by Kmart and WalMart-set up stores in Puerto Rico...
...Clothing production, the middle segment of the fashion chain, is the most fragmented, least technologically sophisticated, and most geographically dispersed...
...municatons technology as wenl as organizational changes in corporate management have dispersed the production of clothing across an unprece- dented number of developing and Northern industrial- ized countries...
...Imported clothing represented 66% of total sales in the U.S...
...By contrast, textile and apparel imports under the Caribbean Basin Initiative increased by 396.3% over the same period...
...Employers, though, Vol XXIX, No 4 JAN/FEB 1996 39 Vol XXIX, No 4 JAN/FEB 1996 39REPORT ON TRANSNATIONAL INVESTMENT were quickly organized in exporters' associations like backward linkages with the local economy which might Fusades, representing contractors in El Salvador, and spur wider economic development...
...Cone Mills, the United States' leading texn's tile exporter, is among the world's largest producers of of denim fabric...
...Retailers are caught in a Darwinian battle for s' vival...
...ny, CIPSA...
...This allows the remaini retailers to exert considerable pressure on manufact ers, demanding lower prices, faster delivery, and bet service...
...apparel companies began to move elsewhere in search of cheaper labor...
...Declining prices of traditional exports such as cotton, coffee and bananas, combined with the need to obtain U.S...
...Alternative economic-development strategies will sis that maquilas are a first stage in the industrialization also be needed...
...Average retail clothing prices in the United States are growing at rates that are less than inflation, and are sometimes even falling...
...In this cut-throat business, companies are anxious to find ways to cut costs...
...The companies which produce these garments are closely integrated with the manufacturing of fabrics...
...aquiladoras in Central America were established in the 1970s, but .. v a. only registered significant growth during the mid-1980s...
...The region is dotted with embattled, small-scale textile industries that produce natural fibers for internal as well as external consumption...
...Maquiladoras in export processing zones in Mexico, Central America and the Caribbean Basin now employ over 300,000 workers...
...For example, workers with falling wages are shopping at stores like Wal-Mart, while upper-income groups buy from specialized outlets like Anne Taylor and Banana Republic...
...Fashion and seasonal garments, by contrast, have a very short life cycle (from a few months to a couple of weeks, to even days in the case of event-related sportswear...
...ronically, in spite of the increased number of U garment imports from Latin America, the regio industry as a whole is in severe crisis, with much its productive capacity idle...
...CINDE, representing contractors in Costa Rica...
...Fiscal austerity Source: U.S...
...These fibers are generally produced in large, sophisticated chemical facilities by large transnational or domestic companies with state-of-the-art equipment...
...4. For a detailed analysis of the apparel commodity chain, see Gary Gereffi and Miguel Korzeniewicz, eds., Commodity Chains and Global Capitalism (London: Praeger, 1994) and Peter Dickens, Global Shift: The Internationalization of Economic Activity (New York: Guilford Press, 1992...
...Stores like Wal-Mart have managed to lower their operating costs substantially more than competitors throu organizational innovations such as low-cost invento control methods, and through "outsourcing" garme to contractors who pay less than subsistence wages...
...per shirt...
...He is a former research associate at the Amalgamated Clothing and Textile Workers Union...
...The horrible conditions in which gar- ment assembly workers work and live have become the subject of increasing public outcry [See "The Gap an( Sweatshop Labor in El Salvador," p. 3( The history of offshore garment assembly by U.S...
...South...
...Nonetheless, the relatively abundant supof cotton in the hemisphere, the lower level of capirequired to produce cotton fabrics, and formerly proted domestic markets sustained small cotton-producn industries in countries such as El Salvador, Paraguay I Ecuador...
...Fewer stores means fewer markets for appa makers to sell clothes to...
...manufacturers and retailers quickly disappeared...
...Because Puerto Rico is a U.S...
...They will be pre,le, dominantly young men and women who, if paid at curnu- rent local wages, will earn about $38 for a 48-hour the week...
...Latin America's tradition textile and apparel industry has notably declined sir the late 1970s...
...Because they are generally large and technologically Vol XXIX, No 4 JAN/FEB 199635 Vol XXIX, No 4 JAN/FEB 1996 35REPORT ON TRANSNATIONAL INVESTMENT sophisticated, these companies can establish more favorable, long-term contracting relationships with big retail buyers...
...In the process, domestic apparel manufacturers not linked with U.S...
...market, and lax envie worker ronmental, health and safety regulations...
...It is the product of a search for higher profits by U.S...
...Increased market integration-in the wake of neoliberal economic restructuring and "free-trade" accords-means that a particular country's role in the industry is determined to a large extent by the size of its domestic market, its level of industrialization, and its access to modem technology...
...a result, these retailers have been able to offer c( sumers relatively less expensive clothing, whi nonetheless includes a substantial markup...
...Only companies with access to both ail modern technology and export markets, usually rel through joint ventures with U.S.-based transnational ng corporations, have been able to survive...
...As the United States regained political and military hegemony in the region, Nicaragua and Panama followed suit...
...Synthetic fibers are used not only in apparel, but also in household and industrial goods...
...Small brands account for the other 70% of all wholesale apparel sales in the United States...
...Prices are also being kept down because of brutal competition from the mass-merchandise discounters...
...in some instances, they even own their own textile-mill plants...
...The United States, however, clearly dominates textile production in the continent...
...NACLA REPORT ON THE AMERICAS 38REPORT ON TRANSNATIONAL INVESTMENT The most dynamic part of the region's apparel industry are the offshore garment-assembly operations...
...middle class in this country is reflected in department stores' shrinking market share of the retail business...
...clothing market in 1970 to 16.7% in 1993.3 The industry throughout the Americas is undergoing significant changes, which have produced clear winners and losers...
...About 23,000 establishments produce these small brands...
...The importance of marketing and of being able to respond rapidly to changing fashion trends gives apparel buyers enormous power over producers...
...While these domestic ted textile and apparel industries were often outdated and the inefficient, they nonetheless employed tens of thou.S...
...Large modem textile mills are prospering, as they continue to invest in new, capital-intensive technologies...
...and Latin American governments...
...and Teresa Rend6n, La empresa maquiladora...
...Wool is another important natural fiber in me region, particularly in Southern Cone countries like Argentina, Chile and Uruguay...
...In an effort to drive down costs, clothing manufacturersprimarily from the United States but also East Asian and some Latin American ones-have increasingly opted to work with subcontractors in low-wage areas...
...Meanwhile, smaller, older mills, unable to withstand the competition from cheap fabric imports, are being wiped out across the hemisphere...
...One of its most important customers is nal Levi Strauss, with whom the company has a close partIce nership...
...apparel manufacturers and retailers, and Mexican retail outlets...
...2. Standard and Poor's Industry Survey 3. American Apparel Association, "Apparel Industry Trends," April, 1995...
...Meanwhile, imports of U.S...
...In the process, workers throughout the Americas are placed in competition with one another, deprived of their labor rights, and forced to accept the discipline of low wages and the market...
...companies following their major customers...
...Revolution and political instability in Central America combined with low-wage competition from Asia prompted the Reagan Administration to initiate the Caribbean Basin Initiative in 1983...
...textile industry...
...Most sought out contractors in East Asia...
...clothing market, one of the most attractive in the world, has become the final destination for an increasing amount of apparel assembled overseas, much of it in Latin America...
...This universe of apparel companies is characterized by manufacturers, jobbers and contractors...
...Garments produced in Latin America and imported into the United States represent a growing segment of the U.S...
...Manufacturers carry out the whole process from design to finishing to marketing...
...The future of the clothing industry in the hemisphere Textile and apparel now account for looks bleak...
...cost of imported fabrics, gh equipment and other essential inputs for garment prory- duction...
...sands of workers...
...Retailers have grown in importance as well as in concentration...
...More than 50% of U.S...
...In the end, this industrial capacity to produce both natural and man-made fibers divides countries into those with the potential for a diversified textile industry and those likely to see their domestic industry radically transformed, if not disappear...
...These policies opened up previously closed domestic markets, Mexico exposing national indus- Dominican Republic tries to fierce global competition...
...7 These price reductions have been prompted by the slow growth of apparel demand associated with declining average wages and household incomes in the United States and increasing income inequality...
...protectorate, many companies found it appealing to set up their own manufacturing operations as well as a network of contractors, many of which were small U.S...
...clothing market...
...and Asian fabrics and clothing are taking away business from Mexico's domestic apparel and textile manufacturers...
...Companies bring these workers into competition with one another by relocating production from high-wage areas to lowwage ones, by contracting out-the industry term is "outsourcing"-aspects of production to companies already operating in low-wage areas, or by forcing the movement of low-wage workers to high-wage areas in conditions where they cannot demand higher pay...
...As industry analysts, business people and, increasingly, workers, realize, such a development is by no means accidental...
...The clothing industry is marked by ferocious competition between big retailers, and among apparel manufacturers vying for these retailers' business...
...tries where they are located: they generate jobs and for- These new organizing strategies have already begun to eign currency...
...Mass-produced garments-such as underwear, men's and boys' clothing, and sportswearare subject to less variation in demand and style...
...5. "In a Sweat Over Sweatshops," Business Week, April 4, 1995, and Joanna Ramey, "NY Labor Raids Show Hotter Competition," Women's Wear Daily, May 5, 1993...
...There are two general categories of clothes: mass-produced (staple) garments and fashion garments...
...Most of these companies manufacture or contract out the manufacturing of more than one brand-name product...
...They directly or Hector Figueroa is assistant research director at the Service Employees International Union...
...consumers are buying less clothes ($11 billion less annually) today than in the early 1980s...
...The fashion chain has three major segments: textile production, clothing production, and retail sales...
...Profit margins in these activities are An Ed normally three times higher than the industry's average...
...Control of production and tinue to discipline and direct the region's economies to distribution ultimately rests in the hands of a few pow- satisfy the needs of powerful transnational corporations, erful U.S...
...Parallels have been drawn between emerge in the struggle against the North American Free industrial development in East Asia, in which the assem- Trade Agreement (NAFTA), against neoliberal econombly of garments and electronics for export supposedly ic policies, and for worker rights in the maquiladora sec"kicked-off' the growth of modern industry...
...Sub-contracting is also done more and more by large retailers like the Gap that sell their "own" brands...
...4 Competition favors producers and distributors that can operate in a consistent way at lower costs, particularly those who can sell at prices that are substantially above costs (due to technical and commercial advantages...
...Over the past decade, retail markets have been characterized by significant price slashing...
...In the Name of Fashion 1. Standard and Poor's Industry Survey "Textile, Apparel and Home Furnishings," September, 1994...
...6. Standard and Poor's Industry Survey...
...minimum wage) as well as unlimited access to the U.S...
...The United States is the second-largest producer-after China-and a tjor exporter...
...government which wanted to promote economic stability there after its military invasion of the island in 1965...
...National-increasingly international--brands are heavily concentrated...
...9. Standard and Poor's Industry Survey...
...retailers and brand-name manufacturers or the working conditions of people throughout the hemijobbers...
...Austerity mea- Costa Rica sures imposed by the Haiti International Monetary Jamaica Fund (IMF) and World Colombia Bank exacerbated the Honduras region's already pronounced income inequality, decimating domestic El Salvador markets...
...Most local retailers found it difficult to compete with the large chains and, just like many of their manufacturing counterparts, went out of business...
...Perhaps the most dramatic example is the joint venture between North Carolina's Cone Mills and Mexico's top denim compa.S...
...Many companies have gone bankrupt or have turned emselves into merchandisers, working as intermediaries between U.S...
...The decision whether to use subcontractors in the United States, overseas, or in both places depends largely on the type of garment and the type of company behind the brand name...
...Clothing is big business...
...Cotton accounts for about one-third of natural-fiber production...
...U.S...
...f we think of the fashion chain more as a train than a chain, the engine would be located at the retail end...
...The declining U.S...
...The textile-apparel industry can be pic chain in which difi ments of production and d are integrated to form a f product-an article of Advances in transportation In this cut-throat business, workers throughout the Americas are placed in competition with one another, and deprived of their labor rights...
...market without tariff restrictions...
...These governments passed laws and decrees establishing new free-enterprise or export processing zones (EPZs...
...Proximity to large markets saves transportation costs and reduces turn-around time...
...For example, four department-store chainsSears Roebuck, J.C...
...Between 1983 and 1990, traditional garment imports from Latin America, not eligible for Caribbean Basin Initiative special tariffs, declined by 165.2...
...The accord established special tariffs and quota arrangements to promote imports of clothing made with U.S.cut fabric...
...Others set up operations in the Dominican Republic under the auspices of the U.S...
...In the United States, wholesale apparel sales were $78.4 billion while retail sales were $211 billion in 1994.1 There are about 30,000 clothing manufacturers in the United States, which employ over 800,000 production workers in this country (down 30% from the mid-1970s...
...These garments are manufactured by thousands of small companies, mostly contractors and smaller retail chains who rely on low-wage labor...
...Large retail buyers have been able to take advantage of the availability of a global pool of workers whose wage rates differ for historical, institutional and economic reasons-and, in some cases, because of the outright repression of labor rights...
Vol. 29 • January 1996 • No. 4
