ECONOMY: Levi Strauss Shelves More Costly N. American Workers

By IPS Correspondents Reprint | | Print |

Emily Hager

NEW YORK, Oct 29 2003 (IPS) - Graciela Hilario, 53, knows that her 20 years of sewing experience are powerless against economic globalisation.

Speaking in Spanish from a telephone at the Levi Strauss sewing plant in San Antonio in the state of Texas she says, “es muy lamentable”, or, ”it is so sad”. Hilario says she likes her working conditions and her benefits, including three weeks of vacation and health care.

But soon her job will be gone, as negotiators from Levi and the Union of Needletrades, Industrial and Textile Employees (UNITE) begin to hammer out severance packages for workers in San Antonio.

The consequences of free trade hit the American apparel industry hard last month when Levi announced it plans to close its remaining North American facilities, laying off 800 employees in San Antonio and 1,180 in Canada.

The company is moving its operations to free trade zones in Haiti, among other places.

One of the major contrasts between this migration of apparel manufacturing to foreign countries and the shift that occurred within the United States from the north to the south around 1950 is that companies can no longer invest in capital and technological improvements to compete with markets where wages are lower.

The plant closing comes 130 years after a man named Levi Strauss and his business partner, Jacob Davis, received a patent for a tiny metal grommet that secured the future of America’s quintessential jean company.

Katie Otto, a Levi representative, said shuttering the company’s remaining North American manufacturing facilities was “critical to the company’s long-term competitiveness,” and said there was no “apple-to-apple comparison” between savings in production costs in the United States and abroad.

Jean Hervey, the regional director for UNITE in San Antonio, said details about the severance plan would be determined at meetings expected to end in early November.

Hervey said the union was seeking one to three weeks of severance pay for every year of employment, at least six months of paid medical benefits and additional funds for new job training and education.

Levi has said it will contribute 700,000 U.S. dollars to help workers prepare for new jobs or start businesses of their own. The company has also contracted a firm to provide English classes and a variety of 12- to 18-month job-training courses.

Despite these potential benefits, many Levi sewers, whose average age is 45 and who have worked for the company for over 10 years, worry they will not qualify for new jobs in the car and aerospace industries that are replacing San Antonio’s apparel industry.

Vulema Duran, a member of UNITE and a 15-year veteran at Levi, said she appreciated the anticipated severance package but that it is incomplete and she would rather just keep her job.

Speaking in Spanish, Duran told IPS she hopes part of the severance package will guarantee jobs for Levi workers at a new Toyota plant in San Antonio. Toyota broke ground for the facility Oct. 17.

The plant will add more than 2,000 jobs in San Antonio, said Ramiro Cavazos of San Antonio’s Economic Development Department, adding it was “a given” that aerospace and automotive industry jobs would pay wages comparative to those at Levi.

The average wage at the jeans-maker is 14 dollars an hour, while starting wages at Toyota are 16 dollars.

But in an interview, Cavazos added that 25 percent of new Toyota employees have college degrees. “It’s going to take a lot of effort and desire on (the Levi workers’) part,” he said, to qualify for the positions.

Duran, who as a girl assembled car radios in Mexico before immigrating to the United States, said she hopes to find work on Toyota’s assembly lines. Yet she is still “enojada” – angry.

She said that when Levi representatives announced the plants’ closing in September, workers were told they would not receive their share of annual profits, which traditionally have come in the form of December bonuses.

Duran stressed that Levi’s CEO Phil Marineau’s 2002 compensation includes 22.5 million dollars in incentive pay and a 1.3-million-dollar bonus, in addition to his 1.2-million-dollar salary. On the other hand, workers who have literally been sewing the company together all year, will receive pink slips for Christmas.

David Ranney, associate fellow at the Institute for Policy Studies in Washington, D.C., says Levi could not compete with such rivals as the Gap and Tommy Hillfiger if it continued manufacturing in the United States because cheaper foreign labour has lowered its competitors’ production costs.

“Workers in apparel have been badly served by NAFTA’s undermining regulation and failure to include adequate labour and human rights standards,” Ranney said, referring to the North American Free Trade Agreement between the United States, Mexico and Canada..

Levi’s move to Haiti comes at a time when worker’s rights violations in third-world manufacturing facilities are being reported.

A Haitian advocacy group, Groupe d’Appui aux Rapatries et Refugies, reported earlier this year that 300 workers have been prevented from unionising in the country by Grupo M, a Dominican apparel company that hired them to assemble Levi products in a new Haitian free-trade zone near Maribahoux, Ouanaminthe.

On Oct. 9 the World Bank approved a 20-million-dollar loan to Grupo M to continue building manufacturing facilities in the Ouanamithe zone contingent on a finding that the allegations are proven to be unfounded.

The loss of manufacturing jobs in the United States and allegations of unfair labour practices occur against the backdrop of the final phase of negotiations for the Free Trade Agreement of the Americas (FTAA), set for November in Miami.

The FTAA would expand NAFTA to every country in Central America, South America and the Caribbean, except Cuba. Negotiations began when NAFTA was launched in 1994 and are expected to be completed in 2005.

The FTAA has come under strong fire from a cross-section of America. In September, a caravan called the “March to Miami” departed from Seattle for the Florida state city. Aboard were clergy, farmers, workers, environmentalists, union leaders and human rights activists. The march had a single message: “Stop the FTAA”.

John Campbell, an executive board member of United Steel Workers of America, Local 310, has worked 15 years at the Firestone plant in Des Moines. “The spirit of democracy is alive and well,” he says, “and that spirit is not consistent with these trade agreements.”

On the other hand, Jorge Pinto of Pace University’s Lubin School of Business, said in an interview, “Free trade has enormous consequences, but it is the best option for the United States and Latin America to compete with economies in Asia and Europe.”

Until the debate or agreement is settled, Graciela Hilario, the experienced and talented Levi seamstress in San Antonio, says she will focus on her work and try to pretend that nothing has happened. But deep down she knows that America’s apparel industry is nearly extinct.