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CorpWatch Interviews Lora Jo Foo

September 22nd, 1997

Lora Jo Foo is President of Sweatshop Watch, a coalition comprised of 20 U.S. member organizations dedicated to eliminating sweatshop conditions in the garment industry. Ms. Foo is also Managing Attorney at the Asian Law Caucus, where she represents workers in low wage industries.

CW: Could you give us an overview of the history of the garment industry and how it became both a global industry and a "Third World" industry within the U.S.?

Foo: The garment industry started in the industrial Northeast primarily in the state of New York, around the turn of the century. Basically you had your early immigrants, your Jewish, Italian, Polish, Southern and Eastern Europe and they formed the bulk of the industry. They were mostly young women. Over time, union organizing began among these workers and there were mass rallies of twenty to thirty thousand workers calling for a shorter work week and improved working conditions. Out of that, the International Ladies Garment Workers Union was formed. They won an 8 hour day with decent wages under union contract.

In the 1950's, because manufacturers decided that wages were too high in the industrial Northeast because of unionization, the industry started moving down to the South to states where unionization was just not a tradition. They employed a work force of mainly young white and African-American women who had never worked in an industry and this was basically new for them. They were your exploitable and more vulnerable workforce. And so the first running away of garment manufacturers was from the industrial Northeast down to the American South.

By the 1960's even wages in the American South were considered too high for the manufacturers and so they started moving overseas. The first countries they moved to were the developing countries of Japan, Singapore, Hong Kong, and Korea; basically what are today the developed countries of Asia. In those four countries, the wages were far cheaper and that was the reason for the manufacturers running away to Asia. Based on garment, these countries accumulated enough capital so they moved on to more heavy industries like automobile and refrigerator which today competes with the rest of the world.

As the living conditions and wages started going up in those four countries, the so-called "Newly Industrialized Countries (NICs)" of Asia, American manufacturers then started looking elsewhere. Where they looked was to SouthEast Asia and other underdeveloped and developing countries of Asia. Production moved from Hong Kong, Japan, Korea and Singapore to places like Malaysia, Indonesia and Vietnam where wages were even lower--the lowest you could get. And that caused a great dislocation of garment workers and very high unemployment of garment workers who were left behind in Hong Kong and Korea. Because Japan continued to develop economically, it managed to absorb its workforce. In Hong Kong, it was a different story. A lot of the Hong Kong garment workers who were now in their 30's and 40's ended up unemployed and unemployable. They had no skills to work in other industries, so it was one of these very sad situations where American capital just moves and leaves a workforce behind with no skills other than the ones that they had for 20 years in an industry that is no longer there.

CW: What about the U.S. garment industry today?

Foo: Garment production came back to the U.S. when immigration law changed. There was a period up until 1965 when immigration from Asian countries was severely limited with very racist policy on the part of the US government that limited Chinese immigration to 105 people per year other than those who were immigrating with US citizen relatives over here. And for each of the Asian countries, there were similar policies. When they changed the immigration law in 1965 so that it was an equal playing field--every country had a cap of 20 thousand--the racist aspects of the laws changed. Then you had a large influx of immigrants coming from Hong Kong and China which created, in the major fashion centers of New York, LA and San Francisco, a pool of exploitable immigrant women labor. There was an internal colony in the US, basically a Third World in the US within the fashion centers. Although it is not as competitive as Asia, there has to be some local production, domestic production.

There were also more and more Mexican and Central American workers crossing the border, particularly with the right wing regime of Central America. What happened in El Salvador and Guatemala [in the 1980s] is there were a lot of refugees crossing the border into Texas and Los Angeles which contributed to the large pool of young women and undocumented workers. So about the 70s and 80s, work did start coming back to the US.

CW: Isn't there also a thriving garment industry in Latin America itself?

Foo: There's also the phenomena of a lot of work being done in Central America under a type of tariff. All of these treaties and tariffs are going to expire in less than 10 years when GATT gets rid of quotas altogether for garments. But, for now what we have in Central America is an arrangement called the "807 Tariff" where you can produce in Central America and the Caribbean and the tax on the import is on the value added. The value added is basically just labor. This is US made cloth and textiles that have been made and cut in the US and shipped across the border to be assembled. So, the value added is just the labor. So when it comes back across the US border, the tariff on it is very low. So it is very cost effective to get things produced across the border and it is just as competitive as sending it overseas. So, a good percentage of garments are produced that way in Central America and the Caribbean.

A lot of the factories in Central America are run by Taiwanese and Korean managers. They set up shop and their customers are brand name US manufacturers who would rather use the Taiwan and Korean managers because they have accumulated all of this experience through all these years of garment production. And so The Gap for instance, has a factory in El Salvador called the Mandarin and that is a factory run by Taiwan managers. The abuses in those factories are outrageous.

With NAFTA and no tariffs at all between US and Mexico, you now have the situation of maquiladoras opening up on the border. So the Texas garment industry is being devastated because so many of the factories are moving across the border. The impact is felt in San Francisco because a lot of the large Chinese-owned contractors that employ many immigrant women workers have also opened maquiladoras in Mexico. They will have large factories in San Francisco and will have a factory of 300 workers across the border in Tijuana; this creates a situation where wages really get depressed and workers are afraid to speak up because they know that the contractor can close shop very easily and move the entire operation to Mexico.

CW:Why do we even have a local industry when production is as cheap as it is in Southeast Asia and Latin America?

Foo: A lot of it has to do with the fact that not every manufacturer can move across the border; some of them are too small to take advantage of that. You have to do work in very large volume to send the work to places like Asia. So the very large companies like Liz Claiborne, the Gap, Levi Strauss and the Gitano group can do work overseas and the lag time between when you send the styles over and when the whole thing is finished is ten to twelve weeks. So large companies can go overseas when smaller manufacturers can't, so there is local production.

Even for the large companies like Liz Claiborne and the Gap, because of the way production no longer has very large inventory, the stores buy only so much of a certain, style, color, size and then monitor it very closely to see what is selling, to see what is a hot item and what isn't. Hot items need re-orders and re-orders have to be done locally with a one or two week turn around, so there is not time to send it to Indonesia. That is why a lot of the factories here are doing the re-order work. So basically that is why we have a local production.

CW: Will the current dynamics of economic globalization change this situation?

Foo: With the passage of NAFTA, even our advantage of local production or quick turn-around time is undermined. As Mexico's industry becomes more sophisticated and as their infrastructure develops the shipping and trucking and all of that becomes much more efficient, the prediction is that our garment industry in the US will fall to half. So when GATT gets rid off all quotas is when the devastating effect will be had in the U.S. garment industry.

For instance, Liz Claiborne works in 40 countries around the world, no one producer makes more than 4% of her production, so they can very easily move from one country to another when there is labor unrest. And one of the reasons they are in 40 countries around the world rather than concentrated in one country is because of quotas. Each country has a certain number of quotas, how much they can import into the US, so when they use up one country's quota, they move on to the next, but when GATT gets rid of quotas, they will probably just concentrate on the cheapest country. Eastern Europe has become an undeveloped country, the new Third World for garment manufacturing when you're at Macy's or other shops, you notice a lot of the wool blazers, women's wool blazers are made in Bulgaria or Hungary. And prices are competitive with Central America and Mexico.

CW: As an outside advocate to the Presidential task force since the negotiations began about a year ago, what is your perception of the main topics of debate among the people on the committee?

Foo: Actually, the people on the committee compromised, they are not in any heated debate over anything in particular, although there are some human rights groups pushing for the adoption of a living wage rather than a minimum wage. So really it is all the other labor and human rights groups at this point pushing the taskforce to set up independent monitoring that actually has teeth and works and to adopt their standards of a living wage.

If it is just the minimum wage, then what you are enforcing is a nation of sweatshops. The minimum wage in a lot of these countries is set so low that it is way below the poverty level, even the subsistence level. And it set low to attract American manufacturers and when you use that as the standard it is making sure that workers continue to earn starvation wages and so the push now is to rally the human rights groups on the taskforce to agree to something like that or they are really doing an injustice to workers around the world.

CW: Can you explain the concept of a living wage and how it might be determined?

Foo: A living wage is not too different than say when the State of California determines what is the minimum wage necessary for subsistence and you take into account the cost of rent, the cost of food, the cost of clothing, the cost of medical care and something left over for discretionary money so that people can enjoy life rather than just subsist. So, California does have a formula that they use to determine whether the minimum wage is accurate.

Throughout the country there have been living wage campaigns where people are getting cities to agree that contractors to the city must pay a living wage. There are formulas which have been created to determine the living wage over and above the minimum wage because the minimum wage really just brings people up to poverty level. A minimum wage is not a living wage, it is not a decent wage.

CW: What do you think is the greatest obstacle in getting corporations to pay a minimum wage?

Foo: The greatest obstacle is their greed. Their bottom line will refuse to do it. When you look at the overall cost of a garment, the labor cost is down there at the bottom 10%. We buy something for $60 at Macy's, $30 of that goes to the retailer, $25 to the manufacturer, and $5 goes to the laborer. The process all comes through everybody in the hierarchy, in the pyramid above the garment worker. So, that pricing structure has to change for garment workers to be able to earn a living wage. This means that instead of Macy's making $30 per garment, they'll make 29. The profit margins have to change for manufacturers and retailers.

CW: If, through this partnership agreement, a living wage is included, what role do you see for consumers in influencing more companies to join this partnership?

Foo: I think that we need to send the message that if you don't sign this partnership, then you don't support a living wage and we just won't purchase your products. That is the message we need to send. If there is a living wage built into the taskforce agreement and there is a monitoring system that actually works, then I have no objection publicizing those companies that are part of the taskforce and that are paying a living wage as an incentive for people to buy their clothes.

There has been talk of a "No Sweat" label that would be given to manufacturers that are part of the taskforce, but as long as they don't agree to a living wage and there is no monitoring system that works, then we would be giving them a label when in fact we don't know whether or not the laws are being complied with and whether or not people are being paid a living wage. I've opposed the idea of a "No Sweat" label and will continue to oppose it. Sweatshop Watch opposes it until there really is an agreement with a living wage in it and a monitoring system that works. We've played a role in coming up with ideas for them and how independent monitoring actually can work, but none of that is going to make any sense unless you have a living wage.