Garment exports down by $67-M in third quarter

In what appears to be an indication of another round of economic uncertainties in the CNMI, garment exports from Saipan to the mainland U.S. dropped by nearly $70 million during the period covering July-September 1999 compared with the previous year level.

Government records showed that Saipan garment factories exported $263 million worth of apparel products in the third quarter of 1999, down from $329.6 million during the same period of the previous year.

However, a closer look at the total amount of apparel exports from the Northern Marianas during the first three quarters of 1999 revealed that the figures remain higher than the $250 million quarterly average in 1998.

The Saipan garment manufacturing industry exported close to $1 billion worth of apparel products to the United States in 1998.

A possible impact of the class suit filed against garment factories and their mainland buyers, apparel exports from the Northern Marianas started dropping during the second quarter of last year.

The Quarterly Economic Review prepared by the Central Statistics Division of the commerce department noted that garment exports amounted $267.6 million in January-March 1999. The figure fell to $258 million the following period.

Garment exports took a major leap in 1997, increasing by $235 million from $513.7 million in 1996 to $748.6 million. By end-1998, apparel exports from Saipan totaled $994.6, marking a $246 million increase from year-ago figures.

The Saipan Garment Manufacturers Association previously revealed that the industry currently deals with slow business resulting from buyers’ apprehension of placing orders from Saipan garment manufacturers.

Government records indicated that apparel orders from mainland buyers have dropped by as much as 30-40 percent, with GAP reported to have completely refused doing business with Saipan garment companies.

The reduced orders from mainland buyers has been blamed on the billion-dollar lawsuits filed against Saipan apparel makers in two federal courts in Los Angeles and Saipan, and another in a San Francisco state court

At least 22 garment factories on Saipan were named defendants in the class action suit filed in the District Court here. It is the biggest court action facing the local garment industry.

Among the companies named in the suits were The Gap, Cutter & Buck, Dayton Hudson, J. Crew Group, J.C. Penny, Sears Roebuck & Co., The Limited, Oshkosh B’Gosh, The Gymboree, the Associated Merchandising Corp., the May Company, Lane Bryant, Wal-Mart, Tommy Hilfiger, and the Warnaco Group.

The Saipan garment manufacturing industry has positioned itself to be a significant contributor of direct annual revenues for the government, or nearly 25 percent of all tax earnings, generating close to $40 million annually in direct revenue.

Similarly, an economic study funded by the US Department of the Interior’s Office of Insular Affairs (OIA) revealed that at an average of $1,800 income taxes per person, the apparel manufacturing industry which currently employs about 15,000 foreign workers, contributes $27 million in income taxes alone.

Aside from contributing to the public coffers through income taxes, each garment worker spends on consumer products. Based on foreign workers’ average $50 weekly expenditure, all 15,000 garment workers cumulatively spend $750,000.

This figure represents $36 million in total annual amount circulating within the local economy. Considering its multiplier effect, two nonresident garment workers actually create an employment opportunity in the economy.