Clothing Firm Adopts Non-Sweatshop Concept It hopes to stay competitive and turn a profit.

By NANCY CLEELAND

TIMES STAFF WRITER

LA TIMES, April 9 2002

Ice cream mogul turned social activist Ben Cohen is out to prove it's possible to make clothes with a conscience in Los Angeles, a city maligned by some as the nation's sweatshop capital.

His hopes are taking form in a bland warehouse set on an aging industrial strip just south of the city center. There a few dozen true believers bustle about with samples of SweatX, the brand of casual clothing they hope to market to college bookstores and high-end sports shops.

The enterprise is run by a former banker who took a 50% pay cut and is staffed by veteran garment workers who can hardly believe their luck at landing an $8.50-an-hour job, with benefits, a pension and profit-sharing. Backed with $1.5 million from Cohen's Hot Fudge Social Venture Fund, the business--which officially opens today--is aiming to show a profit within a year. More significantly, SweatX plans to raise consumer awareness of working conditions in garment shops while proving to other manufacturers that it's possible to pay a "living" wage and still earn a profit, say those involved in the start-up.

"We aim to put the lie to the myth that it's impossible to produce clothing at a competitive price and have a good quality of work life," said Cohen, co-founder of Ben & Jerry's Homemade Inc., by telephone from his home base in Vermont. "Will we succeed? All I can say is, we'll see."

Although most clothing makers insist that they treat workers well, few have marketed themselves that way.

And the evidence is against them in Los Angeles, where state and federal inspectors frequently find violations of wage, hour and safety laws at work sites.

An estimated 140,000 production workers are employed in the Los Angeles garment business, most at small contract shops that churn out orders for manufacturers and retailers at slim profit margins.

"The whole industry is based on the fact that workers are not paid properly," says Kimi Lee, director of the nonprofit Garment Workers Center in downtown Los Angeles. "Hopefully, SweatX will be a successful business and a good example, but they'll be competing against every factory that's not doing things the right way."

Many in the industry are watching skeptically, including Ilse Metchek, director of the California Fashion Assn. "I welcome them to the community. I think what they're trying is wonderful. But it's not proven yet," Metchek said.

She noted that the production of basic apparel--including sweatshirts, jeans and undergarments--generally has moved to Mexico, China and other countries where labor is cheaper, leaving Los Angeles with trendy fashion wear that requires a quick turnaround.

She questioned whether shoppers will be willing to pay a premium for a T-shirt just because the worker who made it was paid and treated well.

"Students protest. They yell and scream. But when push comes to shove, they go to Wal-Mart and buy clothing made in Saipan," Metchek said.

TeamX, the managers and unionized factory workers behind the new label, are betting otherwise.

They say that growing anti-sweatshop activism on campuses across the country proves there's a willing market and profess amazement that no one has tried to fill it.

"There are people out there who believe in the message," said Doug Waterman, a commercial banker for 32 years and now SweatX's president and chief financial officer. "Are there enough to make this a successful business venture? That's the big gamble."

Waterman said SweatX will produce clothing at the high end of the casual market, using fabrics such as hemp blends and organic cottons and designs that incorporate hip slogans with a social bent. And because production workers are organized under UNITE, the garment union, the brand hopes to be a major supplier for labor unions and governments.

The company hopes to keep the labor premium under $1 per garment by boosting production and shaving costs.

For instance, the company said it has eliminated middlemen such as labor contractors by directly employing those involved in production, from designers to packagers.

The Hot Fudge investment will enable the company to buy state-of-the-art equipment, including air-driven sewing machines and a completely automated $200,000 computerized cutting machine. SweatX intends to repay that investment interest, Waterman said.

Perhaps most important, he said, the company will benefit from high productivity because all workers, from sewing machine operators to sales staff, will be part-owners of the business.

Parity is built into the labor-management compact: No manager can earn more than eight times the pay of the lowest-paid production worker, Waterman said.

Only 20 production workers are now employed, but Waterman said he hopes that figure will be up to 80 within a year.

Eventually, he said, the company may expand vertically, to include embroidery on one end and fabric making on the other.

With only a few weeks on the job producing samples, several sewing machine operators said the job seemed too good to be true.

"I've been working in clothing for 20 years, and I never had a paid holiday before this," said Ana Acevedo, a Salvadoran immigrant whose highest-paying job before this was $7.25 per hour. "My last job paid cash. Sometimes less than the minimum."

Several other employees ran their own subcontracting businesses, squeezing by each month with the threat of bankruptcy hanging over their heads.

Leo Contreras, who worked as a contractor for 10 years, suffered a series of setbacks, including nonpayment from several contractors, before finally going broke last year. He recalled instances of paying his employees with sewing machines.