N.Y. MAKERS GETTING SQUEEZED
Byline: Scott Malone
NEW YORK — After being whittled away by the pressures of the global economy over the last few decades, this city’s manufacturing base appears to have stabilized.
Small cut-and-sew operations, primarily in Manhattan and Brooklyn, have found a place for themselves by producing high-quality samples and turning out fashion goods in season more quickly than overseas competitors with much lower labor costs could, especially if shipping times are taken into account.
But now they’re facing another threat: rising real-estate prices.
The boom of “New Economy” businesses has landlords in a frenzy converting industrial buildings into commercial properties, jacking up rents as much as five-fold in Manhattan, and in the outer boroughs doubling and tripling them in some cases.
For small Manhattan factories who signed leases a decade ago — during the city’s last recession — the end of a lease at best means that the rent is going to skyrocket. Frequently it means that it’s time to move, because the landlord is no longer interested in keeping industrial tenants.
This was the subject of a public meeting held at the Chelsea Market on Thursday evening. Organized by the New York Industrial Retention Network and cosponsored by a handful of local politicians, including state assemblyman Richard Gottfried, who also moderated the event. Speakers included representatives of UNITE, the Garment Industry Development Corp., NYIRN and several local manufacturers.
Speakers noted that manufacturing employment is still important to the city economy and contended that current city and state programs set up to retain industrial jobs need to be rethought to be more effective.
There are still 247,700 manufacturing workers in New York, with 142,841 of those in Manhattan, said Sarah Crean, a representative of the NYIRN. Of those jobs, she said, 40,000 are in the apparel industry, one of the largest sectors of industrial employment in the city. Other speakers put the apparel-manufacturing figure as high as 50,000 to 70,000.
While the number of workers employed in apparel manufacturing in the U.S. has been on the decline for decades, New York City’s share of that employment has actually increased, said James Parrot, of the Fiscal Policy Institute. He attributed that trend to the advantages of being close to Seventh Avenue design houses and major retailers.
“Women’s apparel manufacturing is very competitive in New York City,” he said.
Much of the economic growth in the city over the past decade has been driven by Wall Street’s relentless run-up. Parrot contended that as much as half could be linked directly to that factor.
However, he noted that bullish times in the financial community have not benefited all sectors of the population evenly.
“There’s been a dearth of mid-income jobs,” he said, “and a troubling increase in the number of working poor.”
The number of working poor people in the city — whose income does not lift them above the poverty line — has increased 80 percent over the past decade, he said.
The income gap is also broadening, he said, noting that if you exclude the wealthiest 20 percent of city residents, real income, adjusted for inflation, was actually lower at the end of the Nineties than it had been a decade earlier.
Noting that twice as many city residents work in manufacturing as on Wall Street — many investment bankers prefer to live in the suburbs — he argued that a robust manufacturing sector would benefit a larger segment of city residents than the flourishing financial sector.
He said manufacturing jobs have an “employment multiplier” of 1.77. That means that every new manufacturing job creates 0.77 jobs elsewhere in the economy. That factor is higher than in most other industries, with the exception of motion pictures and the securities industry.
NYIRN’s Crean noted that manufacturing provides well-paid, entry-level employment. She said the average manufacturing wage in the city is $1,200 per week — a number driven up by the wages of highly skilled workers in the printing industry. Manufacturing jobs are also important to immigrant communities, employing 25 percent of immigrant males and 10 percent of immigrant females, she said.
Apparel manufacturing has been a particularly important area of employment for immigrants over the years, added Linda Dworak, executive director of the Garment Industry Development Corp., noting that it’s been “the point of entry into the formal labor market for many immigrants.”
May Chen, vice president of UNITE, noted that the city’s recent strong economy has not provided other areas of employment for immigrant groups.
Noting that the apparel industry has been a key employer of immigrant women, she said, “Where will these women find work to do if these jobs disappear? If the so-called New Economy offered them something better, they would have left long ago.”
The tight real-estate market is only making matters worse for apparel manufacturers, she contended, noting that over the past year 17 buildings in the city turned out their last manufacturing tenants and that UNITE has heard that an additional 30 buildings are planning to do likewise this year.
“At a time when the economy is booming,” she said, “UNITE is especially frustrated at the lack of city support for this industry.”
NYIRN’s Crean said a recent survey of Chelsea-area manufacturers conducted by her organization showed that two-thirds of the neighborhood’s manufacturers would expand their workforces if space were available, and that almost all of them have been told that their leases will not be renewed.
Salina Wong, a representative of Tech-Sew, a maker of women’s dresses and coats and military uniforms based in downtown Manhattan, said that the tight real-estate market in the borough led her company recently to move some of its operations to Brooklyn, where rents are 40 percent lower and the space is better suited to industrial purposes.
However, the company does not want to move all its operations out of Manhattan, she said, because “almost all of our commercial clients” are located in that borough and frequently stop in to check up on the progress of orders. She also added that many of the company’s employees who live in Queens would have a harder time commuting to Brooklyn than to Manhattan.
While the city and state do have programs in place to retain industrial companies, many of those programs focus on building ownership. Since many companies prefer to rent their space, they are unable to take advantage of these programs, speakers contended.
Joyce Healy, an owner of Visual Graphics, a print shop with clients including Polo Jeans and Speedo stores, noted that when her company recently moved, it chose to rent its new space and as a result received no aid from the city.
“Ironically, we could have bought an inefficient small building” and gotten help, she said, “but to get an efficient, large space, we have to rent.”
Adam Friedman, of the NYIRN, contended, “it’s clear that the market for industrial space is not working in this city.”
His group suggested a number of proposals that could help the plight of the city’s manufacturers.
Among them were the creation of a “Trust for Industrial Space,” a nonprofit group that would own and rent out manufacturing buildings. He also suggested that a program be created to help small companies deal with the expense and logistics of moving within the city. He added that the city could also create “Super M Zones” in which only industrial uses would be permitted.
At a time when manufacturing throughout the nation is being threatened by lower-cost competitors, speakers contended, more can be done to help preserve local industrial space.
Dworak, of the GIDC, said, “The tight real-estate market is threatening the future of this industry and the tens of thousands of jobs it provides.”