Closing Saipan
Michigan Inc. will close its Saipan garment factory on March 30, the 13th garment factory in Saipan to shut down since the end of quota in Jan. 2005. This might not sound like a big deal, until you consider that there were only 27 total garment factories on the island to begin with.
Saipan, part of the Commonwealth of the Northern Mariana Islands, and a U.S. territory, has been a controversial hub of garment production since the mid 1990s, when a series of exposés, followed by a series of lawsuits, brought attention to the working conditions of Chinese imported workers manufacturing apparel goods for major US retailers. The legal action resulted in a settlement agreement that provided for monitoring the compliance of garment factories to US labor law and Saipan laws governing non-resident workers. However, the reform efforts were no match for ensuing competition once the protections accorded by the Multi-Fiber Agreement had faded away.
Now, the Saipan garment industry is struggling to remain internationally competitive against low-wage countries like China. According to a recent GAO report on Saipan, "indicators point to a severe financial crisis in fiscal year 2006." Overwhelmingly reliant on just two industries, garment manufacturing and tourism, Saipan has been hit hard in both sectors. The value of garment shipments to the United States dropped by more than 16 percent between 2004 and 2005 and by an estimated 25 percent in 2006.
Some of the island’s largest factories have been among the casualties, including Concorde Garment Manufacturing Corp. When Concorde closed in December 2006, it reimbursed workers for recruitment fees they paid in China, as well as their tax rebates, cutting checks to some 800 workers for a total payout of $910,068. Concorde also committed to paying workers through February 2007. Workers who cannot find new employment are being repatriated to China. From 17,000 workers, the Saipan garment industry now has only 8,000 resident and nonresident workers mostly from China.
Adding to this crisis situation, US Democrats in Congress are including Saipan in the federal minimum wage bill that would raise the wage to $7.25. Saipan, currently with a legal wage of $3.05, has previously been exempt from the wage applied to the U.S., as are other island territories such as American Samoa, Guam, and Puerto Rico, who has an "FLSA-exempt" class of workers. Why focus in on Saipan for the wage increase? According to a Washington Post article, Democrats say they hope to end abusive sweatshops in the garment industry.
WHAT garment industry? one might ask at this point. While a handful of US retailers continue to source in Saipan, it doesn’t take a genius to figure out that the garment industry there is on its last legs. As for the abusive sweatshops, I do have a thing or two to say on that front, too.
During the 1990s, I visited many of the now defunct garment factories in Saipan. While conducting social assessments of the working conditions, my colleagues and I would stop by the factories around 10pm, when most workers were walking home to their dormitories. We would walk with them and ask about their lives on the island and in the factories. Sometimes we would sit in their dorms and talk and other times we would walk to the grocery store with them and chat along the way. The facilities I visited did have problems – sometimes there was off clock-work or safety violations - I even recall visiting the island during a mass food poisoning event in a large factory. Yet I can still recall observing with interest that the primary concern of every worker we spoke to was simply to be paid in full and on-time. They were there because in Saipan they could earn in 1 hour what it took 1-2 days to earn in China. And compared to Chinese factories, these operations were newer, cleaner, nicer. Some even had air conditioning.
Where were the "sweatshops"? By that time, the worst offending factories – the sources of the sensational stories about forced abortions and such – had been closed or weren’t being used by my clients. Compared to the non-existent protection and enforcement regime in China, these workers were now in an environment subject to constant scrutiny by federal labor inspectors, local labor inspectors, industry monitors from the Saipan Garment Manufacturers Association, internal monitors from US retailers, and independent monitors as well. While things weren’t perfect, they were getting better. And that was 7-8 years ago!
Is Global Fashion in Honduras still accused of child labor because of the Kathie Lee scandal in 1996? Is Mandarin Garment in El Salvador still accused of illegal firings because of the Gap scandal in the mid 1990s? What is the statute of limitations on historical labor scandals? At this point, so many years after the initial scandals, I think certain lawmakers would be well advised to re-visit the current conditions of the garment industry in Saipan, or what is left of it, as it struggles to compete with the lower wage countries around it.
