Garment manufacturers see tough times ahead

Saipan’s largest industry told Commonwealth government leaders this week that they expect rough times ahead as decreases in orders from garment buyers, rising costs of doing business, and labor difficulties are making business extremely tough for Saipan’s garment factories.

These concerns were raised in a round table forum between members of the Saipan Garment Manufacturers Association (SGMA), Gov. Pedro P. Tenorio, Senate President Paul A. Manglona, and Speaker of the House Benigno R. Fitial.

At times emotions ran high in the meeting attended by nearly 60 garment company owners and resident managers. SGMA’s new Board Chair Gonzalo Santos opened the meeting by saying, “We all know we are under scrutiny from Washington D.C. and we also have to continue working toward a good image in the local community.”

Moses Fejeran, resident manager of Neo Fashion, Inc. questioned rising government fees for water well testing for all private well owners and whether such costs should be the responsibility of the local government or private businesses. Mr. Fejeran noted that $80 million in direct taxes are paid by the industry and said he felt this should cover basic infrastructure like water.

Gov. Tenorio said he recognized the substantial economic contributions and significance of the industry, but responded that both business and government need to work in partnership on the water monitoring to be sure the quality of the environment and public safety is protected.

I.T. Choi of Pang Jin Sang Sa Corp. noted that Saipan is perhaps the most highly monitored place for garment factories in the world, and this makes it difficult for factories, buyers and retailers which purchase goods made on Saipan. He also asked government leaders for assistance in better controlling and apprehending alien workers who either run away or file false labor complaints against their employers simply as a reason to stay on Saipan when their employment ends and it is time to return to their native countries.

Kidong Choi of Advance Textile Corp. compared Saipan to other countries, stating that the standards of labor compliance here are higher. At the same time, the costs of doing business are increasing, as compliance requires upgrades and additional investment. Rising costs are making Saipan an increasingly less attractive place to do business. In addition to compliance costs, basic infrastructure such as electricity and water is far more expensive than other manufacturing locations throughout the world.

There are over 500 Korean-owned factories now producing apparel in Central America, some with the same ownership as in Saipan, where production is rapidly eroding Saipan orders.

Everyone agreed that the ability to employ skilled alien workers on Saipan is one advantage for the industry, but it is also expensive.

SGMA executive director Richard A. Pierce reported that he has forwarded proposed draft regulations to the CNMI Department of Labor and Immigration, whereby employers, under the newly-enacted Omnibus Labor Reform Act, can more easily transfer employees. This will benefit not only factories, but also hotels and construction companies during seasonal conditions, special events and projects.

Workers can maximize their earnings and the net effect should be less additional nonresident positions necessary across the board.

Speaker Fitial noted that garment industry employers are the most affected by U.S. federal attempts at control aimed at the CNMI. He called upon the garment leaders to work in partnership with the CNMI government in Washington D.C. At the same time, he urged everyone in the CNMI to take care to ensure they elect leaders, in both the primary and the general elections, who will work to protect local control over immigration and minimum wage.

Given the large number of issues to discuss, Senate President Manglona suggested that other forums be scheduled with specific agendas including labor, immigration and infrastructure. He and the other government leaders thanked SGMA for the opportunity to create some mutual understanding on the issues.