CHINATOWN’S UNCERTAIN FUTURE
Byline: Scott Malone / Joshua Greene
NEW YORK — Chinatown is under threat more than ever.
Now that the smoke over lower Manhattan has lifted and the National Guard has largely pulled out, things are uncommonly quiet in the neighborhood, which is less than a mile from the site of the former World Trade Center. There is little work for the garment contractors in the area, some of which haven’t reopened since the terrorist attacks. The economic distress may serve as a knockout blow for a neighborhood that already was struggling against high rents and waning demand from designers and other apparel companies.
The neighborhood was thrown into turmoil in the weeks following the Sept. 11 attacks. Its approximately 250 garment contractors were forced to close for one to three weeks, as power outages prevented sewing machines from running and roadblocks made it impossible to get fabric in or dresses out.
Manufacturers, union officials and industry observers estimate that the volume of orders to Chinatown’s factories has been off by about 50 percent over the past three months. Sources said that about 15 percent of the area’s garment workers have been put out of work since Sept. 11. Factories that haven’t laid people off are running on reduced schedules, which puts the workers in the hard-to-measure category of the underemployed.
In testimony to the New York State Assembly early this month, Garment Industry Development Corp. executive director Linda Dworak said about 2,000 Chinatown garment workers have lost their jobs since the attacks and up to 70 percent of the neighborhood’s remaining 12,000 workers are coping with reduced hours.
Citywide manufacturing employment in all sectors in October was down 7 percent from its level of a year ago to 227,100, according to a report released this month by the city’s Office of Management and Budget.
Dworak cited a recent report by the Fiscal Policy Institute, a New York State think tank, which projected that a 30 percent decline in apparel manufacturing in the city over the course of a year could cost 20,000 garment jobs.
Teddy Lai, executive director of the Greater Blouse, Skirt & Undergarment Association, a Chinatown contractor group, said, “Right now, most of the factories are running at 50 percent of capacity. If they were working five or six days a week, now they have two or three days, which means that their workers have some work, but they don’t qualify for unemployment.”
Estimates on the number of factories that have closed vary. Lai put the number at 30; Dworak said 40. All sources interviewed agreed that the toll has been higher south of Canal Street, which was the site of a major roadblock for weeks after the attack. Access to streets below Canal Street was limited to residents of the area, and delivery trucks not related to the cleanup activity were not allowed in or out, making it impossible for the 50 or so factories in that area to operate. Another 200 garment shops are north of Canal Street.
Some observers wondered how much longer the factories that have remained opened, despite shortened schedules, will be able to last without a pickup in the economy. At least one held out hope that some might snap back if they are able to drum up some orders.
“These contractors, they’re tough, they’re trying to hang in there,” said Bruce Raynor, president of UNITE. “Sometimes the shops shut because they have no work. It doesn’t mean they’re out of business, they’re just hustling some work.”
He said that, at this point, the slowdown in retail traffic and the absence of any major fashion hits this holiday shopping season are taking the greatest toll on contractors.
“New York production in particular has been seen as a short-lead-time situation, when you are chasing production, when you had a great number that hit it big and you need to chase it so you can get a quick fulfillment,” Raynor said. “Unfortunately, there is less of that business right now.”
Within the Chinatown business community, there is a fear that the entire garment trade might be lost.
Shun Siu, owner of the Made In New York Group, which produces the Lafayette 148 brand and also does contracting for the military at a factory in Chinatown and another location in Brooklyn, said he can see the decline of the industry from the windows of his building just above Canal Street.
“There are empty floors where there used to be factories,” he said. “A lot of workers are losing their jobs.”
Siu said his business has held up since the attacks, largely because about half of his orders come from long-term Defense Department contracts. Still, he said his shop had to close for a week after the attacks, which took a toll on business.
But to Siu, the most telling change in the business climate was that there appear to be few people willing to get into the contracting business in Chinatown anymore.
“Before, when someone didn’t want to run a shop anymore, they could sell it to someone else,” he said. “Today, they can’t even sell the machinery. You have to rent a dumpster and throw everything away. It costs a lot of money to close.”
He said garment companies that would have sold for $100,000 to $350,000 a decade ago could now be had for $10,000 to $20,000. Even at those prices, he said, there appear to be few takers.
Chinatown got a small dose of good news early this month, as reported, when the U.S. Labor Department said it was designating $1 million out of a $25 million national emergency grant to help the neighborhood’s displaced workers.
A spokeswoman for the New York State Department of Labor, which has been charged with administering the grant, said her agency will meet with local organizations over the next few weeks to determine where the money will go.
“We contract with city agencies to provide services because they know best how to meet local needs and we are in the process of reviewing what services are needed,” the spokeswoman said.
The money would likely be used to offer the area’s former workers training in interview techniques, career counseling and resume services, she added.
While industry representatives expressed gratitude for the grant, they wondered how much could be accomplished with a relatively small sum of money.
Lai of Greater Blouse suggested that some government funds should be provided to help the neighborhood’s employers.
“When I have spoken with the owners of the factories, what they really want is some organization to help them out, to take a month or two of their overhead costs, the rent, the electricity bill, the water bill, things like that,” he said. “If they could get that off their shoulders, then they could focus on how to rebuild their industry.”
Siu, the factory owner, added, “I don’t think the Labor Department can help the shops. What will help us is when the economy comes back. A million dollars between a few hundred shops, what can you get? But it’s good that they’re doing something.”
While the condition of the broader U.S. economy has become the biggest worry facing most people in the apparel business these days, New York industry officials are taking steps to try to spark demand in garments made in this city.
As reported, an alliance of fashion vendors, industry organizations and UNITE has been formed to promote a “Proudly Made in New York” campaign intended to spur buying of apparel made in this city. Most recently, the group released 250,000 shopping guides to help consumers identify brands that manufacture their clothing in New York and retailers that sell them.
One supporter of that campaign is Bud Konheim, chief executive of New York-based Nicole Miller, which produces about 65 percent of its apparel in this city and half that amount in Chinatown.
“What we’re trying to do now is to put some substance behind the Made in New York idea,” he said. “Not just, ‘Oh, help us, we’re from New York and we got bombed.’ We don’t want a sympathy label. We want it to stand for strength and quality and fashion, because it’s done right and delivered on time.”
Raynor of UNITE said the alliance behind the campaign plans to start airing TV commercials on national networks promoting New York-made goods. He said the campaign is taking a page from the playbooks of European manufacturers.
“There is a sense of quality and style that comes with the moniker ‘Made in Italy,”‘ he said. “There clearly can be a sense of quality and patriotism on ‘Proudly Made in New York.”‘
Paul Lau, executive director of the Sportswear Apparel Association, another contractor group, said more designers need to be convinced to do production in New York.
“I try to spread the message to convince the top designers to allocate some production here.The Calvins and the Donnas should be leading the pack,” Lau said. While high-end designer names, along with knock-off houses, do represent a healthy chunk of the apparel made in Chinatown, designers largely use the neighborhood’s factories for emergency re-orders.
“Other countries have special agencies to promote the textile industry, but we don’t have it in our country. Everything relies on itself,” he continued. “The word must go out to make a commitment and allocate 10 to 20 percent of their manufacturing here.”
The most significant pressure that Chinatown contractors have seen ease since Sept. 11 is the threat of rising rents. Prior to the attacks, landlords in the neighborhood were trying raise what they charged for space, to capitalize on Manhattan’s hot real estate market. Garment contractors throughout Manhattan were faced with a threat of moving or closing their shops if they couldn’t afford to renew their leases.
With some businesses now pulling out of lower Manhattan and growth in the technology sector cooling fast, sources said landlords have let up in their campaign to raise rents, at least for the time being.
Factory owner Siu said that in May his company gave up its space on the third floor of its building and moved its fabric warehouse and cutting room to the Brooklyn Army Terminal in the Sunset Park section because he didn’t want to pay the higher rent that landlords were asking.
Lai of Greater Blouse said that pressure has eased.
“Now [landlords] want the factories to stay, forget about raising rents,” he said. “The lofts in Chinatown are decent lofts and a nice size, so the landlords thought they could rent them out to other types of businesses, like dot-coms. But that business was affected, too.”
However, Sportswear Apparel’s Lau said that relief is only temporary. Landlords are renewing leases at current rates, but only for a year or two, not for the 10-year or longer periods that are common in commercial real estate.
“Right now, manufacturers pay anywhere from $10 to $12 per square foot and landlords are willing to extend the leases because no one can pay $25 per square foot,” he said. “But we need to work with the manufacturers, because if they don’t have any work, they won’t be able to pay.”
Despite the current softness in the real estate market, some observers said they believe the combination of rising costs in Manhattan and continued pressure to cut prices to compete with imported garments will one day mean the end of garment manufacturing in Chinatown and elsewhere in Manhattan.
“All the manufacturers and the contractors, I don’t think they are going to survive too long,” said Siu. “Sooner or later, one day, it will all totally disappear. Maybe there will be some sample shops left. I don’t know that anyone can do anything to stop this.”