Saipan apparel exports dip 10%

In what appears to be a painful realization of the projected decline on the island’s apparel production, fewer garment products have been exported by Saipan manufacturers to the mainland United States in the first three months of the current fiscal year.

Government records showed garment exports to the mainland U.S. dipped 10 percent in the first quarter of the financial year 2000 to $238.92 million from the quarterly average $265.55 million worth of outbound apparel products in 1999.

A report submitted by the finance department for the Quarterly Economic Review of the commerce department’s Central Statistics Division, disclosed an unusual fluctuating pattern in apparel exports since the third quarter of FY 1999.

Prior to the third quarter of FY 1999, the apparel manufacturing sector has consistently shown growth amid slump in the CNMI’s other biggest revenue-generating economic activity — the tourism industry.

In the April-June 1999 period, the volume of garment exports to the mainland U.S. amounted $262.16 million. The onset of the holiday seasons which triggered a slight increase in orders from the sector’s buyers pushed outbound apparel inventories to $275.68 million from July to September 1999.

Industry players and government finance managers anticipate the downward trend to persist as they project that the sector will now feel the adverse effects of the billion-dollar class action suit against Saipan manufacturers.

In fact, the CNMI government is anticipating an average five percent reduction in annual earnings from user fees collected from garment exports beginning this year primarily because of the controversies created by the class action suit.

Even without the controversial lawsuit, however, the Saipan apparel manufacturing industry is still expected to uproot from the island when the agreements that created the World Trade Organization takes into effect in 2005.

Special budget and finance consultant Michael Sablan previously said the CNMI government is concerned about the departure of the garment factories from Saipan because it is sure to entail massive layoffs in all the other industries on the islands that are directly or indirectly supported by the sector.

Traffic at the Saipan International Harbor are mainly consigned to garment manufacturers, and that 43 percent of seaport’s annual revenues are generated from apparel-related activities in the facility.

Also, at least 23 percent of the earnings generated by the Commonwealth Utilities Corporation are derived from power use by apparel manufacturing companies and the staffhouses they provide to their nonresident workers.

Primarily because of the class action suit, government revenues from apparel exports suffered a modest fall in the first eight months of the Fiscal Year 2000, dropping by 1.5 percent from last fiscal year’s $25.5 million to $25.1 million.

The CNMI government has consistently projected reduction in earnings from apparel exports since the billion-dollar class suit was filed in early 1999.

In Fiscal Year 1999, user fee collection from garment export certification soared by $2.5 million to $39.3 million from the previous year’s 36.8 million, according to records obtained from the Central Statistics Division of the commerce department.

However, actual user fee collection was still lower than the original government projections of $41.1 million for FY-1999. The FY-1999 figure represents an average of $9.825 in direct quarterly government revenue from garment export certification, up from the year-ago’s average quarterly collection of $9.2 million.

In 1998, the CNMI government generated some $36.8 million from user fee collection. Department of Finance records indicate an increasing trend in fees collected from garment export certification since 1996.