By  on June 14, 1994

NEW YORK -- Despite a turbulent two weeks, officials of The Leslie Fay Cos. insist that the strike against their company by the ILGWU has not and will not hurt the firm.

Joel Cohen, an outside labor council to Leslie Fay, said the strike has had "absolutely no impact on its business," either from a production or shipping point of view.

"Let's just say we were prepared for the worst once our proposal to close the [U.S.] plants was put on the table, and nothing happened that came as a surprise," Cohen said.

The main issue in the strike is the company's proposal to shut its U.S. production facilities in favor of more overseas sourcing, a move that would mean a loss of 1,200 factory jobs. In just the last week or so, the controversy has precipitated:

  • A field hearing of the House subcommittee on labor-management relations.
  • The largest union rally in the garment district since 1958, when an industrywide strike was called.
  • A campaign by the union for a consumer boycott against Leslie Fay products, and union leafleting in front of 20 Saks Fifth Avenue stores across the country.
  • Participation in the boycott by the 13.3-million-member AFL-CIO.
  • The announcement by North American Knitting Mills Co., a Mansfield, Ohio, contractor for Leslie Fay, that it intends to close down on Aug. 15.
In addition, the Securities and Exchange Commission said it understood the need for it to "conclude its investigation involving The Leslie Fay Cos. as expeditiously as possible." The SEC probe was prompted by the massive accounting scandal that was disclosed by the firm in February 1993 and that led to its Chapter 11 filing two months later.

Explaining the company's point of view, Cohen said: "The sewing factories in Pennsylvania are closed today not by our decision, but by the union's decision to go on strike. However, those are dress factories that we have said before lose money because of the high costs associated with manufacturing there. Since it is our intention to not do work there, we're not crying over it nor is it having any impact whatsoever."Donald Ochs, Leslie Fay's senior vice president for global sourcing and manufacturing, said, "For the most part we have already taken the steps to shift the production from those facilities to other resources." These include 807 production facilities and other offshore production sites, he said. According to the company, its own domestic production accounted for about 28 percent of its business in 1993.

Cohen claimed that Leslie Fay distribution facilities in Wilkes-Barre, Pa., the traditional base of the company's production, Secaucus, N.J., and Morrow, Ga., have felt "no effect" from the strike, and have been operating with a combination of management personnel, "a couple of replacement workers" and a "significant number of union workers crossing the line."

Jeff Hermanson, national organizing director for the ILGWU, said Monday that those comments were "utter falsehoods," and that the picket lines were active and becoming "increasingly effective."

Hermanson said in Georgia only three or four out of 50 employees have crossed the line, a few had crossed in Secaucus and none had crossed in Wilkes-Barre. He said the company has the support of the Teamsters, and that those trucks that have crossed the line "have been given the message about the ramifications of their actions," and added that "shipping has been greatly impacted."

Cohen pointed out that Leslie Fay was not a trailblazer in overseas production, noting that 67 percent of all apparel sold in the U.S. last year was imported. However, he said Leslie Fay's decision to end domestic production was reflective of a mood in the market in which "most unionized companies are shifting all or part of their production offshore."

"The fact that we are refusing to continue to pay the union millions of dollars in liquidating damages has many in the industry -- who are sick and tired of paying a tribute to the union -- rooting for us," Cohen said. "This has always been an industry of lemmings who have let the union get away with making them pay fees on their imports. The fact that we're in Chapter 11 has forced us to take on this unfair stipulation."

Cohen noted the company has sued the union over the liquidating damages, claiming it is a violation of labor law, and plans to pursue the case.Hermanson said the liquidating damages were an "enforcement mechanism that has been accepted by Leslie Fay and the industry for years."

One unionized manufacturer, speaking on condition of anonymity, said, "The real story is that Leslie Fay really wants to get out of the union and a lot of manufacturers are looking at this as a test case."

Ochs said he believes that while there will always be a small percentage of manufacturers that will produce domestically for Quick Response needs, much of the remaining 33 percent of apparel produced domestically will go abroad, especially "as 807 countries and Mexico develop and are able to better service the industry."

Ochs sees no way that Leslie Fay will return to domestic dress production.

At last week's congressional hearing, held in Wilkes-Barre, Irwin Kahn, a professor of manufacturing management at the Fashion Institute of Technology, said Leslie Fay's decision to close domestic production is "worse than a crime; it's a mistake."

"Not only is it possible to manufacture apparel profitably in this country, but for a company in Leslie Fay's fashion niche, maintaining a significant domestic production capacity is a strategic necessity," Kahn said.

By investing in technologies such as Quick Response, electronic collection of point-of-sale information and modular manufacturing, Kahn said Leslie Fay could continue to operate profitably in the Wilkes-Barre area.

While the Leslie Fay executives acknowledge that there are those who believe that as U.S. manufacturing disappears it will hurt the country's economic base, they say if U.S. companies learn to compete better globally, manufacturing jobs will be replaced by higher paying service-sector jobs.

The company thinks many manufacturing jobs eventually will be replaced by an expanded work force at its distribution centers, once its business improves.

Reflecting an opposing view at the hearing was Rep. Paul McHale (D., Pa.), who said, "We will continue to export jobs and not products if we don't create a level playing field." Similarly, Rep. Ron Klink (D., Pa.), who chaired the hearing, asked, "If American companies continue to move the manufacturing off shore, who will be left to buy their products?"Cohen insisted that if the union would allow the rank and file to vote on its proposed contract -- which includes maintaining the present work force of 1,800 until May 1995, creating a quick-turn facility that would employ 150 people and offering a severance package for early retirement -- they would agree to it "overwhelmingly."

"The people are voting with their feet," countered Hermanson, referring to support on the picket lines and at last week's hearing and rally. "There may be some dissension. No strike is popular and these workers are making big sacrifices."

Cohen said that while the strike has had no impact on the company, "it would be easier for the company to get where it wants to get" if the two sides could reach an agreement.

Ochs further said the comments made at last week's hearings concerning the working conditions at contractors the firm uses in Guatemala and Honduras "were simply not true," and that "those factories mentioned are outstanding facilities."

"Contrary to what was said, the workers are not forced to work excessive hours, there is no child labor, workers are not locked in and there is no sexual harassment of any employees," Ochs said. "Those charges are total nonsense. They are the words of employees who have sour grapes against the company, and have become part of the union's propaganda machine."

Ochs was referring to the testimony at last week's hearing by Flor de Maria Salguero de Laparro, a member of the Guatemalan Apparel Workers' Union, and Dorka Nohemi Diaz Lopez, a Honduran apparel worker.

Laparro said that as part of her job, she had conducted interviews with thousands of women who work in the maquiladoros in her country, including 51 employed in 11 factories that are contractors for Leslie Fay. She said these women average about $2 a day, which is less than one-third the amount the government says is required for subsistence. She also said there is "massive and systematic violation of our child labor laws."

Laparro told the committee that in 10 of the 11 factories, normal work shifts were 9 1/2 to 12 1/2 hours and that compulsory overtime often resulted in workers being locked in the factories overnight.Lopez said she was fired from Global Fashions, a Leslie Fay contractor, six weeks ago because she was trying to organize a union. She said a typical work week is 58 hours, for a salary of $23.82.

Ochs said the company has a "very clear, well-defined policy on human rights and safety conditions" and "we stick to it."

Cohen noted that the company had no problem with one union contract proposal: the code of conduct for the industry that the union developed.

Cohen said as a general rule he thinks U.S. firms should be responsible for the conditions at places where they manufacture, but added, "We cannot expect every country in the world to live by our standards."

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