N.Y. APPAREL GROUPS QUESTION POTENTIAL OF JOB-SAVING EFFORTS
Byline: Eric Wilson
NEW YORK — Can New York’s manufacturing base be saved?
As production here continues to deflate, industry players are questioning whether two ambitious initiatives to stem the tide of job losses will have enough impact to turn the trend around.
The two ongoing projects — the development of a manufacturing “incubator” in Brooklyn and the Fashion Industry Modernization Center in Chinatown — are scheduled to be in use by early January. While these projects have support among contractors, the union and civic and industry groups, many officials from those groups doubt they will stop the job losses.
Despite such advantages as proximity to the marketplace and shorter lead times — not to mention the political appeal of saving jobs — the problem comes down to one seemingly insurmountable factor: the cost of labor.
In the U.S., apparel workers on average make $9.56 per hour, including fringe and social benefits. Apparel makers in New York average $7.50 to $8.50, before benefits, which can drive up the wage by up to 33 percent.
That’s compared to 49 cents in Haiti; $1.62 in the Dominican Republic; $1.08 in Mexico; and between 20 cents and 68 cents in China, not including bonuses, according to a 1996 survey of salaries by Werner International, a New York-based textile and apparel consulting firm.
At the same time, to slow the rate at which jobs are eliminated, the parties charged with reviving New York’s manufacturing base are placing a renewed emphasis on exporting as a common goal.
The significance of creating demand for upscale “Made in New York” products in the global marketplace has become clearer, representatives of several manufacturing and labor groups asserted, as several attempts to make domestically produced apparel more viable in the U.S. have failed.
The latest example was a proposal by the Fashion Center Business Improvement District to create a Foreign Trade Zone in the garment district. That project was indefinitely tabled last month after several FCBID board members expressed concern that there would not be enough industry support or direct benefits to justify an FTZ here.
In cooperation with those projects, as well as pursuing tax breaks through an Urban Enterprise Zone, Economic Development Zone or Empowerment Zone, and by promoting more exports, some industry members felt an FTZ could act as the linchpin for an ultimate stabilization or a possible turnaround of the downward trend of manufacturing jobs here.
Nationwide, the apparel industry employed 801,000 workers last month on a seasonally adjusted basis, according to the U.S. Labor Department, compared with 822,000 workers at the end of 1996. In New York City, there were 80,800 jobs in August, including 10,200 textile jobs primarily focused on the manufacturing of knitwear, according to the State Labor Department. There were about 90,000 jobs here a year ago.
Apparel manufacturing peaked in New York and the U.S. in 1973, when there were 1.45 million workers nationwide and 400,000 in New York, according to Labor statistics.
The Greater Blouse, Skirt & Undergarment Association, which represents unionized sewing factories in Chinatown, initially approached the FCBID in 1996 to study the feasibility of an FTZ to promote manufacturing in the district. Last October, the FCBID retained International Trade Consultants to execute a $60,000 feasibility study.
An FTZ is a specific area considered by U.S. Customs to be outside its territory, allowing foreign and domestic merchandise to be brought into the zone without tariff. The foreign goods would be exempt from Customs duty until the goods were shipped outside of the zone and sold in the U.S.
The report, which was presented to the FCBID in July, recommended the Fashion Center pursue an application for an FTZ. However, the FCBID’s Economic Development Committee determined there was not enough direct benefit to the community or support from potential users to pursue the application.
The initiative also lacked key backing from UNITE, although Susan Cowell, vice president of the union, clarifying the labor organization’s position, said UNITE is not an opponent of the FTZ concept. Cowell is also on the FCBID board and a member of its Economic Development Committee.
“Our view, which represented the consensus of the BID board of directors, was that an FTZ would do very little to help New York-based firms,” Cowell said.
Part of the problem, she said, is a misconception that an FTZ would permit cutting and sewing operations within the zone. She noted also that of the 435 companies polled in a survey to determine the benefits of an FTZ here as part of the feasibility study, only 40 replied.
“Our view of the study is that many of the companies were responding to a misunderstanding of what the FTZ could do,” Cowell said. “They were responding as if they could use foreign textiles to cut and sew here. That is impossible.”
Charles Wang, executive director of Greater Blouse, acknowledged that there was not enough data accumulated from respondents to indicate an overwhelming support for an FTZ.
“Many key manufacturers did not respond, so we were not able to establish the clear pluses and minuses of a zone,” Wang said.
Wang also said in making an application for an FTZ in the garment district, the FCBID would have to lobby legislators in Washington to permit cutting or sewing, which would require the support of the union. Each FTZ is crafted individually in Washington before the U.S. Foreign Trade Zones Board, and certain privileges appropriate to an industry would be granted if an applicant demonstrated enough industry support.
“Backing away from the FTZ is a prudent step,” said Bruce Herman, president of the Garment Industry Development Corp., a management-labor organization that supports New York manufacturing through worker and management training.
Herman said apparel manufacturers in the Northeast, who are more organized than their California and Texas counterparts, do not have a strong lobbying voice in Washington.
“Part of the reason why getting support in Washington for a trade zone would be difficult is the Southern textile lobby, which has been more effective in getting its needs out of Washington than the New York industry,” Herman said.
The feasibility study asserts that an FTZ increases the potential for employment directly and indirectly based on examples of existing FTZs in other industries.
However, Cowell said the New York industry does not have enough lobbying clout to make production within an FTZ viable and that the report’s job projections were overly optimistic. She also questioned why manufacturers do not take advantage of existing FTZs in Brooklyn and New Jersey.
Cowell and other members of the EDC said the benefits of an FTZ should be reexamined down the road, but for now, the FCBID should focus on strengthening its ties to manufacturers, educating businesses to increase export operations and working with other organizations to develop a New York apparel lobbying voice.
Gerald Scupp, deputy director of the FCBID, said the organization is now focusing on several of those initiatives. For example, it joined an application with GIDC’s Fashion Exports/New York (FENY) program in July for a Market Development Cooperator Program grant under the U.S. Department of Commerce’s International Trade Administration.
The grant is likely to be approved soon, Herman said last week, although he did not know when he would receive official confirmation from the trade administration.
Under the proposal, the International Trade Administration would match the funds put up by the FCBID and GIDC to total $1.1 million over three years.
FENY would use the funds to take New York manufacturers to Japan and emerging markets in Latin America, Herman said.
In another initiative, the FCBID is developing a manufacturing database to match designers with contractors. The project was sparked by a June discussion when several designers said they could not find qualified contractors in New York. At the same time, manufacturers said they could not find enough work to stay in business.
The FCBID is also monitoring the Brooklyn “incubator” and the GIDC’s Modernization Center to see how these programs could work with its initiatives.
In Brooklyn, Borough President Howard Golden’s plan to revitalize garment manufacturing there with the creation of an incubator could be in use by early January. Golden’s plan includes a garment industrial park with $300,000 in capital budget funds to provide reduced-cost space and energy and shared costs between garment firms for services and technology. A technology center is also planned at the site to allow manufacturers to test new systems before making infrastructure investments themselves. In July, Golden said the incubator would be in Sunset Park at Bush Terminal at 43rd Street and First Avenue.
Dominick Massa, president of Harborside Management, which owns the complex, said construction on the site should begin by the end of this month and be completed within 60 days. About 30 companies are targeted to take up operation there once the facility opens, Massa said.
The Brooklyn Chamber of Commerce has hired a consultant to identify firms that would be appropriate for the incubator, such as small sewing operations working out of private residences or companies operating below legal standards, but looking to become legitimate.
GIDC’s Modernization Center in Chinatown is also expected to open by Jan. 1 at 193 Centre Street, Herman said. GIDC has secured about $500,000 in grants thus far to install computer systems and operate workplace and work-force development programs there. The U.S. Department of Labor also granted GIDC $200,000 recently to expand its current training programs.
While several industry organizations said these initiatives should have a positive impact on manufacturing here, some questioned how deep their impact will be.
“We’ve listened about these programs for years,” said Bill Hartman, vice president of Gloria Gay Coats, the wool licensee for Jones New York. “They’re more smoke and mirrors than anything else.”
Hartman, who manufactures outerwear at Bush Terminal, complained that federal, state and local funds have not been allotted to existing garment firms in the form of subsidies, while start-up shops are being encouraged by the incubator and training initiatives.
“We’re like an old wife,” Hartman said. “They just ignore us.”
Hartman also questioned whether the FIMC training center would provide enough benefits to offset the loss of jobs. He said he has been able to remain in business because of the high level of employees who have worked at his firm for many years and are capable of efficient production.
“To some extent, the people we have in our factories now are irreplaceable,” Hartman said. “Once they leave, then the justification for being here will disappear.”
Paul Lau, managing director of the Sportswear Apparel Association, a Chinatown contractor group, said the training center could have an impact on manufacturing by educating workers with more advanced technology.
That could be beneficial to high-end designer firms that want to maintain production here, because while domestic manufacturers cannot compete on cost, they can compete with quality, he said.
Medium-sized, high-end manufacturing positions making merchandise that can be exported under a New York-manufactured label are likely to be the only jobs to remain in the city, Lau said. Of the 225 contractors his association represents, 45 percent are considered upscale.
“And that seems to be increasing. Unfortunately, that’s how you stay in business,” Lau said. “At the lower end, it’s just too hard.”