U.S. Apparel Manufacturer Working to Create Change

NO SWEAT!

04/19/2003

How One L.A. Business Is Out to Change the Lives of Garment Workers Everywhere story by christine triano | Whole Life Times The next time you get dressed, take a moment to look at the label inside your shirt. It may say Made in China, or Made in the Philippines, or maybe Made in Mexico. If you happen to find Made in the U.S.A., you may, like many shoppers, breathe a small sigh of relief.

After all, that means you're supporting U.S. workers, and if a job is done in the U.S., you can rest assured that it was performed under safe conditions, and for a decent wage. Unfortunately, that's not the case. Made in the U.S.A. does mean the garment you are wearing was in fact sewn together by a worker in the U.S. But as for the latter points, there are no guarantees in today's competitive garment industry-even when the garment is manufactured within American borders.

Nearly seven years have past since Kathy Lee Gifford wept on national TV over revelations that her Wal-Mart clothing line was made by children laboring in Central American sweatshops. That scandal helped raise awareness of the burgeoning anti-sweatshop movement. It was also one of many instructive examples of the relationship between global free trade and how the goods we use and wear are made. What it didn't do was offer consumers a sound alternative to buying sweatshop-made goods. In terms of curbing sweatshop abuses, there have been scattered efforts at fostering greater corporate accountability.

The Clinton administration in 1997 launched the Apparel Industry Partnership, a voluntary venture aimed at bringing about a shift toward higher standards for garment manufacturing. Kathy Lee initiated inspections at the plants making her clothing line. There have also been a number of high-profile consumer boycotts, including the anti-Nike campaign spearheaded by the nonprofit human rights group Global Exchange.

But at the consumer level, the sweatshop problem is still largely perceived as being a problem based offshore. Most of us have heard U.S.-based horror stories, such as the sweatshop discovered in 1995 in the L.A. suburb of El Monte, where Thai workers were essentially enslaved in a small garment factory. Still, to most consumers, buying U.S.-made apparel is the best of all possible options.

That option could be much better, argues Cristina Vazquez, regional manager of UNITE!, the union representing garment workers. Explains Vazquez, as retailers push for lower and lower prices "it's basically a race to the bottom" when it comes to setting workers' wages. Of special interest to Southern California residents is the fact that today, a Made in the U.S.A. label likely means made in Los Angeles. It also means that the clothes you are about to put on your back were probably made in a sweatshop within driving distance of your home. The X Difference Enter sweatX, a line of colorful, casual sportswear with a potent anti-sweatshop message. Manufactured inside a freshly painted beige and white building in the downtown garment district, sweatX is more than a line of clothing.

It's the proudly showcased product of teamX, a garment manufacturer launched last year with start-up funding from the Hot Fudge Social Venture Fund, a venture capital firm created by Ben Cohen and a number of other socially-conscious entrepreneurs from Ben & Jerry's Ice Cream. When the people behind Hot Fudge were looking around a couple of years ago for new ways to fulfill the fund's mission to create sustainable, progressive businesses, it turned toward the sweatshop problem.

Looking at L.A., they noted the dismal statistics: Of the approximately 5,000 apparel contractors in L.A., three out of five were found by the U.S. Department of Labor to have wage and hour law violations, and over half had serious health and safety violations. According to Kimi Lee, director of the Garment Worker Center, an education and advocacy group, the apparel industry is second only to agriculture in California, with $30 billion in annual revenue.

With the industry concentrated in and around L.A., that means there are an estimated 120,000 workers employed by the region's 5,000 garment factories. Of that number, maybe six are unionized according to UNITE! Overall, Cohen and company at the Hot Fudge Fund were struck by how just pennies out of every dollar spent by the average apparel consumer actually make it into the pockets of the workers who make the clothes. Of the price of an average garment, about 50% goes to the retailer that makes it (the name on the label), while the remaining 50% is divided up between the manufacturer (the company hired to get the apparel made) and the sewing contractor (where the garment is actually sewn together).

When the revenue is finally shared, the worker who made the garment usually ends up with less than one percent of its actual retail price. Most garment workers labor long hours for minimum wage or less, almost never receive paid holidays, sick days, vacation or benefits of any kind, and are often denied overtime pay. In 1998, the Department of Labor estimated that in a typical 90-day period, the average apparel contracting shop accumulates $3,631 in unpaid back wages. As a result, Lee's group spends much of its time helping garment workers file wage claims against past employers. "The manufacturers who make things overseas have a tendency to want to see the same prices here.

That creates an impossibility," says Joe Rodriguez, executive director of the Garment Contractors Association of Southern California, a trade group representing about 200 of the better-run garment factories in the area. "By driving prices down to the lowest level, it squeezes out any possibility of higher wages for workers." Adds Lee, "If you think about the competition, that means 5,000 contractors competing for jobs from 200 manufacturers and retailers.

All of them are paying rent, overhead, the same costs of doing business. But the one thing they can vary is how much they pay workers." It was a direct response to this business climate that led the Hot Fudge Fund to hatch a radical plan: to launch a unionized, worker-owned apparel manufacturing business in L.A.-and to turn a profit in the process. One Year Later There was a big party to celebrate the opening of teamX last April. Michelle Shocked performed, everybody got free t-shirts, and hopes were high. Asked if there are plans for a party to mark the company's one-year anniversary, teamX sales director Larry Ameen shakes his head and laughs. It seems the company is too busy to stop and plan a party right now.

The factory floor at teamX is indeed humming. It is a brightly lit space, with clean, white walls containing a cacophony of sewing machines and Latin music playing on the radio. Workers labor on Gerber cutters and Juki sewing machines, top of the line equipment that helps keep the air clean so employees don't have to wear face masks. Colorful piles of sweatshirts, t-shirts, athletic shorts, fleece pullovers, and canvas bags punctuate the workspace. At 3:30 p.m. a bell rings, signaling the end of a workday that begins at 7 a.m.

There is no mad rush for the exit. Most employees take their time, finishing what they're working on, gathering their belongings, chatting with co-workers as they head out the door. Two men remain cutting fabric, working overtime on a big order shipping out to Ben & Jerry's the next day. According to teamX CEO Pierre Ferrari, it's too early for the company to show a profit, but they are approaching the break-even mark, with about $1 million in sales during the first year in operation and projections of at least $3 million in their second year.

Originally staffed by 20 garment workers, that number has reached 57 and is expected to keep climbing. "At this stage it's both exciting and nerve-wracking," says Ferrari. The company has grown by building a customer base comprised in large part by unions happy to buy sportswear and blankets bearing their logos from a union shop. The remainder of teamX's customers includes faith-based organizations, universities and colleges, socially responsible businesses, including Patagonia and Ben & Jerry's, and nonprofit groups, such as Global Exchange. "It's great to have a product to put our message on and that we can also support," says Tex Dworkin, marketing and product development manager for Global Exchange, which sells sweatX apparel in its two fair trade retail stores, as well as through its Web site.

A former buyer for Whole Foods, Dworkin notes that there are surprisingly few sweat-free companies to choose from when it comes to buying t-shirts and other promotional items. She adds, "With sweatX, we feel like we're working together toward a sweatshop-free future." "What they have done is a small first step, but it really does set a new standard," says Richard Appelbaum, professor of sociology at UC Santa Barbara and co-author of Behind the Label: Inequality in the Los Angeles Apparel Industry. "You can't depend on the patronage of the factory owner, or on the consumer to buy sweat-free. TeamX really focuses on worker empowerment." With an average wage of $10.78 an hour, plus full benefits, including health insurance and paid vacation, teamX far exceeds the industry standard.

Mara Rodriguez, 32, a sweatX cover stitcher who has been with the company since its launch, describes it as a "very different" place to work. In previous jobs, she often worked 16-hour days, six days a week for minimum wage. Breaks were infrequent and there was no overtime pay or paid holidays or sick leave. Candelario Salazar, 39, has been in the garment industry for 11 years, most recently running his own garment shop. As he speaks, his shyly smiling daughter Carmen, who comes to pick up her Dad after work every day, stands beside him.

When his business failed after a client defaulted on payment for a large order, he came to teamX willing to take any job. He started out sewing and today is floor manager. "This is the best company I've worked for, by far. They respect the employees. There's a good salary, benefits, paid holidays. In this industry, that's hard to find." It's not just the garment workers who feel lucky to have found teamX. Sales director Ameen initially turned down the opportunity to join the start-up company-not just once, but twice.

With over 20 years experience in the industry, Ameen was used to working for companies with fat advertising budgets and plenty of operating capital, including Jordache and Pepe jeans. It wasn't until he saw how the company would work explained to potential garment workers that he was finally sold. Ameen, who previously had no experience with social justice issues, today admits, "Honestly, I'm embarrassed about my lack of social consciousness before coming to teamX.

In the U.S., we don't look behind the label." Beyond the Usual Suspects To date, the teamX story reads like a corporate fairytale, with the company playing the role of valiant knight saving a handful of lucky workers from the rampant abuses of the garment industry. But fairytales have resonance because they are passed on from storyteller to child, and in the process teach us all a common lesson. So how will the teamX tale unfold? Parenting books talk about "modeling" good behavior as a way to teach children by way of example.

By continuing to share its story, teamX is hoping to do something similar. "Our story sells the company," offers teamX president Chris Mackin, a consultant and expert on employee-ownership who recently joined the company. "We're hoping to make the most of goodwill from the entertainers, big schools, unions and others that support us." Jackson Browne recently ordered sweatX t-shirts for his next tour-the kind of gesture that the company is counting on to help bring its brand, and its anti-sweatshop message, to new audiences of consumers.

Adds Mackin, "Our story is getting around. In a way, PR is our marketing." There are core issues still to be worked out. While the company is structured as a cooperative, worker ownership has yet to be implemented. Right now, the board of directors is reviewing the amount that will be required for workers to buy into the co-op, which will likely end up being somewhere between one and two month's wages for factory workers. Management will buy in with six or seven month's compensation.

As with many co-ops, teamX has and eight-to-one ratio cap on entry-level to executive pay. Then there is the issue of how teamX plans to expand its customer base beyond the converted. Unions, universities, faith-based groups, and other champions of teamX all share at a minimum a set of core values that make them amenable to the company's message. The question remains, can sweatX be a player in a world where a basic white t-shirt made in China can be bought for a dollar wholesale?

While the company produces a higher quality T-shirt than many imports, at nearly $5 wholesale, there is no getting around the fact that supporting teamX's mission affects the bottom line. As CEO Ferrari notes, "In the end, the retailers are really the problem. It's about the lowest possible cost and that's how they buy. They don't think the social justice issues are relevant. To make a change in the garment business we first have to build a reliable, stable customer base. But very quickly after that we have to get to people [retailers] not thinking about this stuff." To do that, teamX is counting on its model of conscious corporate behavior.

Ultimately, they hope to expand not just in the U.S., but to take the teamX model abroad to Central America or East Asia, where aggressive exploitation of garment workers typically goes unchecked. "I look at us as a small but powerful magnet that will hopefully act to raise the standards in the industry," says Mackin. "Our ambition is to operate eventually several facilities, but we also hope that our example will mean other companies will follow suit. While there might even be other union producers, there is no other company that has combined union with an anti-sweatshop message." Like in a fairytale, teamX does seem to be beating the odds.

Rather than being dismissed by the garment industry for their idealism, the company is building a solid reputation. Last December, teamX was one of 10 garment manufacturers recognized as being among "the best in the business" by Bobbin magazine, the industry's leading trade journal. "Anytime a company comes to L.A. determined to pay a living wage, it sets an important example that no one needs to be left behind," notes Danny Feingold of the Los Angeles Alliance for a New Economy, a group leading the area's living wage movement. It's an example that's hard to ignore.

The company's supporters hope the buzz is just the beginning. Says UNITE!'s Vazquez, "Everybody's talking about teamX. It's a big challenge that they have, but I think they will make it." -Christine Triano is a writer living in Los Angeles.