Is Having a Garment Industry Worth All the Trouble?

Guess’ decision last week to shift 1,000 apparel jobs to Mexico underscores a growing dilemma facing the Southern California economy: As the region’s economy seeks to develop its high-end industries in entertainment, trade, communications and aerospace, should it even try to retain generally low-wage industries such as garments?

On its surface, the question of whether to nourish an industry employing about 120,000 people, more than 70% of them Latino and mostly immigrant, would seem to be a no-brainer. But many in Southern California’s academic institutions, political leadership and media think otherwise, dismissing the garment industry as little more than a collection of sweatshops best located elsewhere. For example, judging by their relative silence in the face of Guess’ decision, City Council members Mike Hernandez and Rita Walters, who represent tens of thousands of garment workers, seem indifferent to the potentially devastating layoffs that would follow a wholesale exodus of clothing manufacturers.

Joel Kotkin is the John M. Olin Fellow at the Pepperdine Institute for Public Policy and a senior fellow at the Pacific Research Institute.

Still, there’s only so much that political leadership can do in a situation like Guess’. The seemingly endless search for lower-cost labor has led many garment makers, including some in such traditionally low-wage havens as El Paso, to move their production to Mexico and South America. Similar pressures could soon force other Southern California industries, like parts of food processing and housewares, to relocate.

Yet, many in Los Angeles’ garment industry would like to stay, especially if they receive some respect. The industry’s legitimate manufacturers are particularly distressed by constant references to them, in the media and among politicians, as exploitative Dickensian Scrooges. “We all get lumped together,” complains Ron Perilman, president of City Girl, a garment manufacturer in Vernon. “I go to a cocktail party and tell people I own a garment business and they all think I am running a sweatshop.”

In reality, the garment industry in Los Angeles, the nation’s largest, includes both relatively good employers and some of the worst. There are a plethora of quasi-illegal shops, estimated by the California Fashion Assn. to be 30% of the industry, that operate on a fly-by-night basis, selling directly through ethnic marketing channels or in the many cut-rate outlets in the city’s garment center.

These shops, via intermediaries, also frequently supply the cost-conscious lower end of the U.S. apparel market. Ironically, these “underground operations” are less likely to move south than larger companies like Guess, since they offer the low prices coveted by retailing giants and local outlets.

On the other hand, there are many companies like City Girl, which pay relatively good wages, offer health benefits and decent working conditions to their production workers, as well as to their designers, skilled craftspeople and sales personnel. These firms, largely concentrated in the “fashion” end of the business, want to stay here because of Los Angeles’ skilled labor base, textile suppliers, design community and roughly 5,000 contracting firms that enable quick turnarounds.

Indeed, the large-scale economics that drive larger producers of relatively standardized goods to Mexico often turn out to be unsuitable for smaller, specialized producers. As L.A. manufacturers learned in the 1970s and ‘80s with respect to production in Asia, the delays and lead times associated with outsourcing, not to mention quality control, often prevent firms from seizing the initiative on fast-changing fashions. A product sewn in Mexico, for example, can take up to six weeks to return to the states, compared with a turnaround as quick as two weeks in Los Angeles.

Unfortunately, such distinctions do not enjoy common currency. In part, this is because the industry is not unionized, despite two decades of organizing efforts. According to Kent Wong, an economist at UCLA, less than 2% of the city’s garment workers are represented by a union. One result is that labor-influenced politicians mindful of potential campaign contributions have little or no motivation to support the industry.

Still, it is unlikely that labor leaders will ever achieve their goal of unionizing the bulk of Los Angeles’ garment workers. Unlike other businesses, the U.S. apparel industry is proving itself virtually impervious to unionization, particularly as it becomes more and more dominated by smaller, niche-oriented firms. Even in New York, the birthplace of the garment workers’ unions, only about one-fourth of its garment workers are unionized.

For Los Angeles’ political and economic leadership, a wise response to challenges like that posed by Guess must be grounded in reality. That means recognizing that L.A.’s garment industry is not one vast “slave” shop like that discovered in El Monte last year. Nor is it a workers’ paradise. It is a little of both--and a whole lot more. Once that reality check is conducted, an appropriate policy can be formulated, one that rewards the industry’s legitimate, fashion-oriented companies and punishes its illegal operators. With the new welfare law soon to be in force, Southern California cannot afford to discard one of the few industries that offer a rung up on the economic ladder for many of the region’s less-skilled work force.*