Onwel, UIC garment firms to shut down

Two major garment factories, the United International Corp. and Onwel Garment Manufacturers, will close within the coming months, a key CNMI Department of Labor official confirmed Thursday.

“Labor has received official notice from these two employers that they will be closing,” Labor Director Barry Hirshbein said in an interview, citing letters the companies sent to the department earlier this week announcing their closures. “We have people out at those factories now meeting with management and staff.”

UIC and Onwel representatives did not respond to several requests for comment.

News the two factories will soon shut their doors comes as the entire garment manufacturing industry on Saipan is facing a rapid demise due to rising production costs and a host of regulatory issues. This decline is evident in the diminished tax collections the government sees each year through so-called “user fees,” export charges on shipments of garments, which have dropped by millions since the industry’s height in the late 1990s.

UIC and Onwel, Hirshbein noted, have already told workers about the closures. Onwel’s factory will shut down Aug. 21 but managers plan to pay workers for 60-days worth of work, Hirschbein said. UIC’s notice, he added, says it will close by Sept. 21 but stops short of detailing any plans for paying workers.

The two factories employ hundreds of foreign and local workers. Foreign staff, Hirshbein noted, can apply with Labor to begin the process of transferring to a new job in the CNMI if they can find one and avoid repatriation to their home nations.

“This is going to have a really big impact on the guest workers,” said Irene Tantiado, president of the United Coalition of Workers, a local labor organization. “I just hope the employers make sure there will be no problem like unpaid wages.”

Meanwhile, the Commonwealth saw a 27 percent increase in user fee collections for the month of June over May’s total, according to government statistics. June saw more than $373,000 in fees collected, far less than the $1.03 million seen in June 2007.

June’s increase is due to the seasonal ebb and flow of the garment industry, according to Richard Pierce, chief trade advisor to Gov. Benigno Fitial, as the month historically has seen slight increases in garment exports.

User fee collections earned the Commonwealth more than $35 million in 2001 but collections have diminished at a more or less steady since then. The steepest collection drop occurred from 2005, when the tax collected brought more than $26 million to the Commonwealth, to 2007, when revenues totaled about $13 million.