Union rep holds out small hope for Hartz & Co.
Aug. 18, 2006
By JOSEPH M. DELEON News-Post Staff
jdeleon @ fredericknewspost . com
FREDERICK — Hartz & Co. may not be finished yet, according to Harold Bock, international vice president and regional director of UNITEHERE, a union representing Hartz workers.
On Aug. 8, the Frederickbased apparel manufacturer filed a federal Worker Adjustment and Retraining Notification, required when a closure or layoff will affect more than 100 employees. The company planned to lay off about 230 workers by Oct. 13.
Mr. Bock said negotiations to buy Hartz are now underway with a company that Hartz has done business with for more than 40 years. He will know if the company, which he declined to name, will purchase Hartz by this time next week.
Mr. Bock said he spoke with several companies about a deal, but one in particular showed promise.
“If we had a new buyer to keep this place operating, the outcome would be great,” he said. “The alternative is that the plant will close.”
Earlier this week, the U.S. Department of Labor began investigating whether foreign trade contributed to Hartz's problems. The investigation typically takes 45 days.
An ongoing problem
Globalization, consolidation and computerization have contributed to the decline of the apparel industry in the United States since 1994, according to a Bureau of Labor Statistics report.
In 1994, the North American Free Trade Agreement (NAFTA) was passed. NAFTA gradually stopped most barriers to investment and trade between Mexico, Canada and the United States.
Mexico has since become the leading exporter of apparel to the U.S., increasing its apparel exports from $1.8 billion in 1994 to $7.7 billion in 2002, according to the report.
Trade agreements with other countries have also damaged the U.S. apparel market.
The Bureau of Labor Statistics projects a 16.3 percent decline in U.S. apparel and other textile product industries from 2000 to 2010. That decrease will lead to the loss of more than 100,000 jobs over that decade.
Mike Todaro, managing director of American Apparel Producers' Network, said when he hears another U.S. apparel company shuts down, he assumes it's related to foreign trade.
“After NAFTA passed, we lost 200 of our 350 members, virtually all ‘Made in the U.S.A.' apparel manufacturers,” he said. “The alternative for displaced apparel workers is some sort of service sector job, generally a restaurant or hotel.”
Lisa Coblentz, a spokeswoman for the staffing agency Manpower in Frederick, said transitioning into a new career will be hard for Hartz workers.
“Some of them have worked there for 20 years and that's all they know,” she said. “They expected to retire from that company.”
The refined dexterity skills workers have used over the years may be transferable to biotech and electronic manufacturing industries, she said.
Spanish-speaking workers, who make up between one-third and one-half of Hartz's employees, are more likely to transition into heavy manufacturing, Ms. Coblentz said. Many of those companies have made accommoda tions for a large Spanish-speaking workforce.
From bad to worse
The greatest cost in apparel manufacturing is the fabric, Mr. Todaro said.
“Since there are so few companies that make fabric, they don't bargain,” he said. “The only way to save money is in laborers who cut and sew.”
One result of a noncompetitive market is that U.S. companies often provide a foreign business with the blueprints for a garment, then leave it to that company to purchase the raw materials to make it.
Another way U.S. companies deal with foreign competition is to eliminate longtime employees, who generally make greater salaries, Mr. Todaro said.
“This has allowed retailers and brands to fire everybody who has gray hair, everyone who is a veteran and replace them with a recent college grad,” he said. “It doesn't take that much skill to make phone calls to an offshore apparel manufacturer.”
Developing economies, such as those in some South American countries, rely on low-skill industries, such as apparel manufacture, Mr. Todaro said.
“Nicaragua is going gangbusters in apparel,” he said. “Any peasant can slap together a Tshirt.”
He said Costa Rica is no longer in the apparel manufacturing industry because the literacy rate has climbed so much, he said. Industry there is moving toward high-technology manufacturing, such as the assembly of television sets.
“People follow the cheapest needle,” he said. “And that lowcost needle is not in the U.S.”
As more U.S. companies go out of business, existing companies get bigger, which means fewer companies outsourcing bigger contracts, he said.
“Technology allows you to be in touch with someone in Asia as if they were in the other room,” he said. “These things have combined to kill industry in the U.S.A. Cost is king.”
Mr. Todaro remembers a meeting 10 years ago with a representative of Wal-Mart.
“They told me to give them a call if I could deliver a dozen golf shirts made in the U.S. for the price they can be made in Cambodia,” he said. “It's the death of the phrase ‘Made in the U.S.A.' because people aren't paid enough to care where it's made.”
He said women's apparel and designer jeans are the only garments that will continue to be manufactured in the U.S. because that segment of the fashion industry is concentrated in New York City.
Fighting the trend
Cesar Aguilar, spokesman for Owings Mills-based Lion Brothers said the U.S. apparel industry faces stiff competition from countries in Asia, but could see a rebound within the next decade.
Lion Brothers manufactures embroidered patches, appliqués and clothing labels for businesses such as Nike, Puma and the National Football League. The company employs more than 300 people worldwide, 100 in Owings Mills.
U.S. retail businesses could improve because the structure of the industry in Asia is in danger of being overburdened, Mr. Aguilar said.
Over the years, work sent to Asian factories has taken longer to process because of the large volume of orders, he said. Wage increases in Asia, customs delays and a shortage of shipping containers make things worse.
“China is not the panacea everyone thought it would be,” Mr. Aguilar said. “Continued offshoring will cause more frustrations when the ports clog, especially when a big guy like Wal-Mart takes up all those resources.”
When that happens, the U.S. will have a chance to recover some of its lost business.
“Something miraculous will happen when all that work being sent offshore gets backed up,” he said.
That miracle will be more garment manufacturing in the United States, Mr. Aguilar said.
Mr. Aguilar said Lion Brothers has remained competitive by using technology. Advances in technology not only allow workers at Lion Brothers to work faster, but help reduce waste and decrease downtime. That translates into efficient work habits that increase production.
“If we take a more difficult path to add value to the product and give it a better look either aesthetically or technically, our customers can charge a little more for their product.”