'Guess' Again: Not All Apparel Jobs Flee US
Like many US apparel companies, Carole Little California Fashion began moving production south of the border a few years ago. The lures: lower costs, Mexico's looser labor laws, and the North American Free Trade Agreement.
More recently, however, the upscale Los Angeles dressmaker rethought its strategy and decided to keep more jobs in the US. "There's an economic advantage for sure, but we found we needed a quicker turnaround for some items," says company chairman Leonard Rabinowitz.
At a time when many apparel companies have fled abroad, such decisions are the stuff of survival for America's garment industry. As import restrictions have fallen and consumers have spent less on clothing, the apparel-sector has shrunk by half a million jobs: from 1.4 million in the 1970s to 900,000 today.
Los Angeles County is one of the only places in the United States to buck this trend. Here the industry, rising from 98,000 jobs in 1992 to a current 114,000, is the economy's third-fastest growing sector. But the rate of growth has been slowing. And now come signs that politics and sometimes-sensational media coverage, as well as economics, may spoil the success story.
Guess Inc. sends jobs south
Consider Guess Inc., which announced in January that it will move hundreds of contract-labor jobs - two-thirds of its production - from L.A. to Mexico and South America. The company was lauded in December 1995 by the US Labor Department for its labor-monitoring practices. But Guess has been under pressure in the past year from the national garment labor union UNITE. It claims an array of abuses and has been campaigning to organize Guess contract workers, picketing outlets, and filing lawsuits.
This activity was most vigorous last August, when the company sold stock in an initial public offering. The high-profile labor controversy was a factor in the IPO's poor reception.
Some observers say the lost jobs are victims of a misguided union campaign. What's needed, says one analyst who asked not to be named, is for regulators to go after the many "underground" manufacturing shops that employ illegal immigrants for low pay and in poor conditions. Instead, the analyst says unions and politicians often target firms like Guess because they make fiery press.
"The word 'sweatshop' gets painted on every garmentmaker there is, and that's 4,000 employers," says Else Metchak, executive director of the California Fashion Association. "We had the former labor secretary [Robert Reich] saying 90 percent of garmentmakers run sweatshops, and he knew the department's statistics didn't say anything of the kind. At a certain point, these bigger companies are just throwing up their hands and leaving the pressures behind."
UNITE, arguing that its grievances are legitimate, has called the Guess move an act of "desperation."
Whichever side is right on the labor-practice issues, the economic forces behind the job exodus are strong: Production is about 10 percent cheaper abroad than at home, after factoring in transportation, customs, and other costs. And consumers don't spend as much on clothes as they once did. "Nobody ever buys anything at full price anymore," says Allison Wolf of the American Apparel Manufacturers Association in Washington. New clothes accounted for 5 percent of overall US consumption in the 1970s, versus 4 percent today. That percentage point makes a big difference where billions of dollars are involved, she adds.
Competing on timeliness
Still, other forces may keep some garment job base in the US. One advantage of domestic production is timeliness. As trends change, fashion houses don't want to wait for goods to be transported across land, sea, and through customs offices.
"You can always produce denim and things that don't go out of style in Mexico, but clothes with baubles, buttons, embroidery and fringe, you've got to make that here," says Los Angeles fashion consultant Bill Glaser. "Mexican production teams have come a long way in terms of quality and speed, but for a lot of designers there's still a long way to go."
At Carole Little, Mr. Rabinowitz keeps tabs on offshore shops: "Every year I've seen them get more and more sophisticated ... and this is certainly going to improve. We'll be watching that."