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Issue of the Week
 
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The Fraying Of The Garment Industry

by Kevin Strouse

18 September 00

Blowing whistles and chanting, members of the garment workers union UNITE formed their picket line in front of the building at 43rd Street and Fifth Avenue. Inside, on the third floor, was a sample room allegedly run under sweatshop conditions by Elie Tahari. Known as the King of the Jacket for his popular line of women's clothing, Mr. Tahari had been threatened with eviction for violating safety conditions and building codes; a court order has shut down his business until the case is resolved.

This seemingly familiar story, however, takes a strange turn. UNITE was there to support Tahari, the alleged sweatshop owner. "This is a very nice place to work," one of the demonstrators told the New York Times. "We've been here four years. All of a sudden we got dangerous?"

The union supports Tahari in his claim that he is being evicted so that the building owner, Chase Manhattan Bank, can charge rents that are more than 60 percent higher than what he's paying.

Thus is life in the new garment industry, where increasingly manufacturers find themselves in Tahari's situation, squeezed both by an exploding real estate market and by international competition. Garment worker unions--whose strikes were responsible for the federally mandated 50 hour week and overtime payare powerless to confront this industry's problems. For all the city's reputation as the fashion capital of the world, underscored by the activities during this Fashion Week, the garment industry has been in sharp decline in New York for more than two decades. In 1990, there were 139,000 workers employed in the industry. Now, there are fewer than 50,000 directly employed. Even in the world-famous Garment District in midtown, the majority of firms now no longer have anything to do with apparel manufacturing. Economic analysts predict that if current trends continue, the city will lose its last and largest labor industry.

The decline in the manufacture of apparel in New York follows the deaths in the city of other industries long associated with New York whose production are based on physical labor -- including toys, breweries, and, more recently, printing. The story of why the garment manufacturers have suffered, what it means to the city, and what can be done about it offers a glimpse not only of an industry, but also the state of manufacturing in New York.

WHY IT HAPPENED:

1. COMPETITION FOR SPACE

The robust city economy that has accelerated the growth of web businesses has also helped sink the garment trade. Internet companies and other high-tech businesses that can afford higher rent prices for the office space they need are pushing out clothing manufacturers. Most garment producers pay as little as ten dollars per square foot, while tech firms can pay upwards of $60.

FASHION FORWARD

This week is Fashion Week in New York, when designers from around the world come to big tents in Bryant Park to present their Spring 2001 collections. The spectacle is in sharp contrast to the Garment District just a few blocks away, where most garment firms have closed up or moved out.

Odd as it may seem, New York's once-thriving garment industry -- the making of clothes -- is on the decline, while the fashion industry -- the selling of clothes -- is in some ways on the rise. For the first time, there are now more people employed selling clothes than making them.

The Fashion Center Business Improvement District's economic report explains that the wholesaling of clothing in the city (selling a finished product off the showroom; this doesn't include retail) is doing almost four times the business as garment manufacturing -- $16 billion for wholesaling, $4.5 billion for manufacturing.

"[The fashion industry] is holding its own in terms of wholesaling," said Jerry Scupp, Deputy Director of the Fashion Center Business Improvement District. "There has been an increase in sales, but not that big of an increase, taking into account inflation." Indeed, in the last year for which statistics are available, it increased only four percent, which is below the rate of inflation.

Employment in the wholesaling sector also decreased by 2.7 percent over the past year. But, by contrast, employment in the garment industry has dropped 9.3 percent. And while people struggle to figure out how to save the garment industry, the fashion industry is showing some signs that it might have a healthy future. New York has been attracting some major designers, such as Vienna native Helmut Lang, who relocated his headquarters to the city two years ago and surprised the world by showing his Spring 1999 collection in New York -- but not Paris or Vienna -- two months before the European shows. Lang's relocation shows that designers believe they can garner just as much recognition and attention in New York as in Europe.

The retail industry, as well, is expanding. This summer Hugo Boss signed a lease to open its first flagship store in Manhattan (on Fifth Avenue). It will be the largest Hugo Boss retail store in the country. These changes have helped diminish the importance of showing collections internationally. Oscar De La Renta was quoted by the International Herald Tribune as saying "Because the major world press now comes to New York, the advantage of an American designer showing an American collection in Paris is getting thinner and thinner."

Chinatown, long a bastion of garment production, has lost 17 garment factories in the past year alone, and there is some indication that the pace will accelerate. SoHo East, a new real estate lobbying group based in Chinatown, is urging the city to designate the neighborhood as a technology district to attract more tech companies.

This kind of displacement mirrors what happened to the printing district, an area near the Holland Tunnel which for 70 years was home to New York's second largest industry. Printing companies were driven out of the city by advertising agencies that could afford to pay much higher rent.

Since 1987, the city has had special zoning regulations designed to protect garment manufacturers; the mandate limited rent prices and required that a majority of offices in the midtown Garment Center district be occupied by garment manufacturers. However, many manufacturers folded despite these protections. Compounding these problems, money to enforce landlords' compliance ran out in 1993, and many landlords began to ignore the regulations. The landlords who did obey the laws found themselves stranded when garment factories moved out of their buildings and other businesses could not legally take their place. The problem, according to Jerry Scupp, deputy director of the Fashion Center Business Improvement District, is that there "is no other economic incentive to locate in Manhattan."

2. THE SWEATSHOP CONUNDRUM

The crackdown on sweatshops in the city, such as the arrest of four garment shop owners by federal agents in Chinatown last November, has inadvertently decreased the fashion designers' use of New York manufacturers. The fashion industry long has been notorious for relying on sweatshop labor for production, according to anti-sweatshop organizations like the United Students Against Sweatshops, which accuses such well-known brands as Donna Karan and Nike of exploiting labor. The enforcement of anti-sweatshop laws and regulations has harmed many businesses by encouraging designers to contract for labor abroad. Local manufacturers cannot compete with their overseas counterparts, who pay their workers a small fraction of U.S. minimum wage, and often demand workdays of ten hours or more.

New York City spends some $60 million on apparel each year, and at least one set of contracts--to make uniforms for the New York Police Department--has gone to unregulated garment producers in China whose operations are virtually impossible to monitor. Earlier this year, Speaker Peter Vallone introduced a bill that would make sure that all city contracts are with "reliable manufacturers" who "demonstrate current compliance with all applicable wage, health, labor, environmental and safety laws." This law should bring all uniform contracts back to New York City. "The legislation will even the playing field," said Dan Henneffeld of UNITE. "It will not be the savior of the industry. The industry is facing huge problems, but this will salvage a piece of that."

3. GLOBALIZATION

After the North American Free Trade Agreement five years ago, clothing imports into the United States have increased 600 percent. And now as the United States has normalized relations with China and allowed the nation admission to the World Trade Organization, many manufacturers and union leaders are worried that domestic unskilled labor will further suffer with more cheap production from international competitors

WHY IT MATTERS

The garment industry makes up nearly one third of all manufacturing jobs in the city and directly employs 50,000 who might otherwise be without jobs. Many are new immigrants with few specialized skills and little education. Wing Ma, president of the Continental Garment Manufacturers Association, said in testimony before City Council that the garment industry offers such unskilled workers "probably the only means of joining the American mainstream economy." Losing these jobs, proponents argue, would affect not just these workers but also the city's economy as a whole. Despite its decline, New York's sizeable apparel labor force still attracts some 125,000 visits each year from out-of-town fashion designers looking to have their clothing produced, and not just during each season's Fashion Week. These designers reportedly inject some $100 million in the local economy by spending money at restaurants, hotels, and in entertainment.

But it's not just the out-of-town fashion designers that would suffer if the city's garment industry were to fail completely. "There are advantages to having a local manufacturer," says Scupp. "You have to realize that there are a lot of small young designers who want to be able to see their product right away. A lot of the larger corporations don't seem as concerned, but some are."

SUPPORT GROUPS

The city-funded Garment Industry Development Corporation recently announced the opening of the Fashion Industry Modernization Center, located in Chinatown, which it hopes will teach businesses how to use new technologies to increase productivity. But the GIDC may not be getting cooperation from City Hall; its funding has been cut six percent since 1993, with further cuts proposed this year.

Other proposals to salvage New York's garment production have been offered as well. In his testimony Jonathan Bowles implored the City Council to restore funds immediately to organizations like the GIDC and the Business Relocation Assistance Corporation, and asked that the city improve its enforcement of zoning regulations. But even if these improvements are implemented, Bowles and others familiar with the situation know that it will take a comprehensive, long-term plan to adequately address the problems facing the garment industry.

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