Labor concerns increase as apparel orders decline

Commonwealth officials expressed concern that Saipan factory conditions, wage and hour payment practices, and what’s generally classified as labor abuse primarily from untimely wage payments, may escalate as a result of the continuing decline in apparel orders for the 15 remaining certified Saipan garment manufacturers.

Richard A. Pierce, Gov. Benigno R. Fitial’s special assistant for trade relations and economic affairs, said the current situation had reminded him of a conversation he had with former U.S. Labor-Wage & Hour Region IX Administrator Dr. William Buhl and his counsel, Frank Conte, years ago in San Francisco.

“I’d asked how they [Buhl and Conte] felt about raising minimum wage to what was the U.S. standard at the time. Conte thought it a good idea to help get locals into factory employment. Buhl, on the other hand, said it would create far too many wage and hour cases for U.S. Labor, if factories were no longer able to compete,” recalled Pierce.

He added, “What we saw originally in the industry, with respect to compliance issues, was ignorance of U.S. and local laws governing wage and hour and safety statute. Most enforcement offices then acknowledged better practices, and understood failure to pay workers on time a matter of, for the lack of better words, unfortunate circumstances, not willful noncompliance. There were subcontracting issues, such as just too many hands that money passed through to get to the hands that made the clothing. Today there’s far fewer subcontracts, it’s just not being able to compete, bankruptcies, and the lack of orders.”

Commonwealth Customs Division Director Jesus C. Muna reported April factory sales figures totaling $38.37 million and user fee collections at $1.42 million. March was at $37.35 million and $1.38 million, respectively. These totals are 25 percent (April) and 35 percent (March) down from last year’s sales and collections.

Saipan factory sales had their peak in 1999 and 2000 at over a billion dollars. Last year’s sales were at $703 million. Government and industry leaders project sales in 2006 of $520 million to $540 million, a decline of another 25 percent over one year.

Two more factories have notified the CNMI government they will cease operations in approximately two months and relocate to Vietnam and China.

CNMI officials surveyed factory performance last month for order characteristics and trends. Orders are smaller, price points are down, there’s far fewer Certificates of Origin being issued, and styles and categories have changed to get orders normally ignored due to the degree of work required.

Factories on Saipan, government officials and businesses dependent upon the industry for their sales revenue pin hopes on the CNMI’s attempt to seek federal government approval to amend General Note 3(a)(iv)(A) of the HTS for a healthier industry and local economy. S. 1954, the “Insular Possessions Act of 2005” is pending in the U.S. Senate. (PR)