Manufacturing
Saipan Works to Shed Sweatshop Image
With Tourism Sluggish, Garment Industry Underwrites Local Economy.
“What a difference a few years makes,” wrote U.S. Representative John T. Doolittle in March about Saipan’s garment industry. What in the mid-1980s — when the garment industry started — were hot, over-crowded and often unsafe work-places are now, in many cases, air-conditioned factories. Faced with sanctions and heavy fines for violations from the U.S. federal Occupational Safety and Health Administration (OSHA) garment factory owners have spent millions of dollars to upgrade the 33 Saipan plants that employ about 17,500, primarily Asian, workers.
They’ve constructed new dormitories, new kitchen areas for employees, and renovated existing factory facilities, said Richard Pierce, the executive director of the Saipan Garment Manufacturers Association (SGMA). OSHA gave them an incentive for the upgrade by repeatedly fining the companies. Tan Holdings, Saipan’s largest garment manufacturer with three factories, was fined about $12 million during the late 1990s.
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The industry has responded. Tan Holdings, for example, now has full time personnel insuring that its factories meet American federal health and safety regulations. It’s working, because one of the industry’s major critics is now singing their praises. In March, OSHA’s Region IX administration in San Francisco Frank Strasheim, said of Saipan’s garment industry, “they’re well on their way to becoming a model for the rest of the world. I’m impressed by the SGMA members’ commitment in placing the safety and health of their workers first.”
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Despite the difficulties that plagued Saipan’s garment industry in the 1990s, it emerged as a huge factor in the local economy, particularly after the dive of the visitor industry in the wake of the Asian financial crisis. When visitor arrivals dive-bombed after 1997, and tour operators were literally locking their doors, driving their cars to the airport and hopping on planes back to their Asian homes, the Commonwealth government’s budget was underwritten by the garment industry. In 1999, the industry reported that it paid a total of $72.8 million in taxes, utilities, immigration and port fees, and medical expenses. It’s also estimated that the industry injected another $62.4 million into the local economy during 1999 in a range of goods and services used.
Will this huge revenue base for the local government dry up when the World Trade Organization free trade provisions come into effect in 2005 — removing an important advantage that Saipan currently enjoys over other garment-exporting countries for access to the U.S. market? Governor Pedro Tenorio’s press officer Frank Rosario said that the federal government is concerned that when 2005 rolls around, some of the garment operators could just pick up and go, leaving workers stranded on Saipan — and the government to foot the bill on repatriation costs, as has happened in the past.
Pierce and local business man businessman David Sablan, president of Century Insurance, a Tan Holdings company, don’t think the industry will collapse with implementation of WTO agreements in 2005, though the tougher competition may mean a reduction in plants. “At least two thirds of the 33 plants will still be here in 2005,” Sablan said. Through automation of the factories, including computerization of designing and cutting operations, which has increased efficiency and reduced wastage of materials, Sablan believes that many of the Saipan plants will be able sell merchandise at a better price than their Asian competitors.
“There is no reason to believe that our factories could not still compete, regardless of quotas available to China, Malaysia or the other Asian places where our real competition is,” Pierce said. “The factories here that have made the largest investment will survive as long as there is a cost and quality factor that they can com- pete with.”
