New Approaches to Sweatshop Problem Urged

Overwhelmed by a proliferation of sweatshops in Southern California’s fast-growing garment industry, California and U.S. officials declared Tuesday that new approaches are needed to combat a problem that has thwarted traditional law enforcement.

Only about 45 state and federal inspectors monitor the about 4,000 Los Angeles-area sewing shops, or contractors, that employ about 100,000 people, said California Labor Commissioner Victoria Bradshaw.

And while a multi-agency task force uncovered the alleged slave-like conditions at a clandestine El Monte apparel manufacturer, Bradshaw said more inspectors are only a stopgap solution--and one unlikely to be implemented broadly in an era of shrinking government.

“There’s not going to be enough resources for enforcement to solve the problem,” said Bradshaw, who called for industry self-policing, stiffer fines for repeat offenders and other steps to improve matters.

Likewise, U.S. Department of Labor officials maintained that self-monitoring by the industry is the most practical way to oversee the high-pressure, often cutthroat field, which is characterized by thin profit margins and quick turnaround on orders.

“We’ll never have enough resources to do one-on-one inspections” at all of Southern California’s sewing shops, said Assistant U.S. Labor Secretary Bernard E. Anderson, who addressed reporters in Downtown Los Angeles along with Bradshaw.

In the aftermath of the El Monte raid, federal officials plan to use the internationally publicized incident as a wedge to persuade more manufacturers to sign agreements pledging to monitor compliance at sewing shops that manufacturers do business with. Under such accords, launched in June, manufacturers assume responsibility for paying back wages and civil penalties if their contractors are found to be in violation of labor laws.

“This type of enforcement works,” said U.S. Labor Secretary Robert B. Reich, who noted that almost half of all Los Angeles-area garment workers are now employed in contract shops monitored by manufacturers for labor law compliance.

While the Third World-like conditions exposed at the El Monte site raided this month were unusually severe, authorities say many other Los Angeles sewing contractors are unlicensed and exploit sub-minimum wage labor, typically performed by immigrant women, many of them undocumented. Low labor costs underpin the entire regional garment industry, the nation’s fastest growing, having surpassed New York as the center of garment production.

The public acknowledgments Tuesday of shortcomings in the current regulatory scheme came as authorities publicly identified more than 40 firms--including major retailers such as Macy’s, Sears and Neiman Marcus--that may have received goods from the El Monte factory and associated businesses. Other retailers named include the Broadway, Robinsons-May, Montgomery Ward and Mervyn’s.

“It is clear from our investigation that this merchandise found its way to the racks and shelves of some of this nation’s most prominent retailers,” Labor Secretary Reich declared. “The evidence certainly shatters any perception that this operation produced merchandise only for back alley operations.”

Major retailers, Reich said, have agreed to join a summit meeting next month in Washington designed to identify ways “to protect the industry, workers and consumers from abusive contractors.”

At the joint federal-state news conference in Los Angeles, Bradshaw acknowledged that a suspected Los Angeles front operation for the alleged slave shop was state-licensed for two years--but was never inspected. Moreover, Bradshaw said, 13 of the 16 Los Angeles-area manufacturers that are believed to have served as the main conduits for the El Monte goods are themselves unlicensed garment manufacturers, though some have been in business for years.

State authorities seeking to trace the destination of garments produced at the El Monte site have issued subpoenas seeking information from all 16 firms, Bradshaw said.

Invoices and other documents found at the El Monte site pointed investigators toward the retailers and manufacturers. The names of additional firms are likely to surface as authorities decipher the large volume of records written in Thai, officials said.

The broad scope of the El Monte operation, authorities said, dramatizes the glaring need for improved monitoring of the area’s bustling garment industry.

Authorities raided the converted apartment complex Aug. 2, revealing the alleged near-enslavement of 72 Thai workers who toiled up to 22 hours a day, seven days a week, for an average of 69 cents an hour, officials say. Eight alleged overseers are being held on federal charges of harboring or transporting illegal immigrants. Law enforcement authorities are seeking two other suspects.

Investigators believe that the workers are owed more than $5 million in back wages, funds that authorities have vowed to recoup. But new questions arose Tuesday about just how difficult it may be to collect that sum.

In most cases, officials concede, the web of front operations, manufacturers and contractors has successfully shielded the big-name and deep-pocket retailers identified Tuesday from any liability. While some manufacturers--the firms that sell the subcontracted, sweatshop-produced goods to retailers--may be legally required to pay some of the back wages, that amount seems unlikely to approach $5 million.

In fact, William C. Buhl, regional administrator of the U.S. Department of Labor, conceded that one motivation of naming the retailers publicly was the hope that many would “pony up” funds for a back-pay pool for the workers. Such an action, officials suggest, may help counter the stigma and negative publicity associated with selling garments from an alleged slave operation.

Workers’ representatives say they plan to file civil suits seeking damages from the retailers and other firms that profited from the alleged slave operation.

California authorities have already won a court order freezing about $1 million in seized assets linked to the alleged sweatshop operators, including $850,000 in cash found at the El Monte site. However, attorneys say such funds may also be sought for the legal defense of the eight alleged sweatshop operators.

The 72 workers--all suspected illegal immigrants--were freed from custody of immigration officials last week and many are now looking for jobs in the above-ground garment industry. Most are expected to be sent back to Thailand after acting as witnesses in the criminal case.

Underlining the paucity of regulation in Los Angeles’ no-holds-barred garment industry, officials Tuesday unveiled a grid of both licensed and unlicensed firms that apparently helped market the sweatshop-produced clothing nationwide.

Several of the unlicensed manufacturers that probably purchased sweatshop-made goods are well-established. One manufacturer--Tomato Inc. of Los Angeles--did more than $3.3 million in business in 1993-94 with the Los Angeles sewing shop that is suspected of serving as a front for the El Monte operation, according to federal documents obtained by The Times. That purported front, D&R; Fashion, was itself state-licensed for two years, until its registration expired in March.

Even licensed manufacturers and some of the nation’s most prestigious retailers may have traded extensively in the sweatshop-produced goods. The loophole-ridden tableau, critics say, demonstrates the abysmal failure of the state licensing procedure and the federal enforcement of minimum wage and overtime laws.

“A license is just a piece of paper; it provides no protection for the workers,” said Steve Nutter, regional director of the Union of Needle Trades, Industrial and Textile Employees.

Legitimate garment industry firms, which complain that the heavily publicized case is marring their image, Tuesday denounced what they termed wildly deficient oversight.

“Existing regulations are fine,” said Robert Walter, president of the local Garment Contractors Assn., who spoke at a garment district news conference called by an alliance of manufacturers. “But the amount of police out there to enforce those regulations is terribly inadequate.”

But U.S. and state officials, convinced that more inspectors will never do the job alone, are emphasizing alternative strategies, such as industry self-policing. California authorities targeting sweatshops are also looking toward greater use of technology and more cooperative arrangements with other law enforcement agencies, including local agencies and federal tax and immigration officials, Bradshaw said.

Organized labor, immigrant activists and others are skeptical of industry self-policing, which they view as a case of the fox guarding the henhouse. Instead, such groups back a bill pending before the state Legislature that would hold garment manufacturers “jointly liable” for wage and other violations committed at the sewing shops hired by the manufacturer.

The bill--similar to proposals vetoed by Gov. Pete Wilson in 1992 and 1994--is opposed by the California Department of Industrial Relations, Bradshaw’s employer. The proposal, Bradshaw and other opponents argue, may drive garment manufacturers further into the underground economy and could even force the industry to flee California.

All retailers and manufacturers contacted have described their firms as unwitting victims of the sweatshop operators.

Jan Drummond, a Sears spokeswoman, said the giant Illinois-based retailer is not yet aware what contractor or garment manufacturer may have served as a conduit for the El Monte operation.

Mervyn’s, the only retailer named by authorities as under investigation for possibly making direct purchases from the sweatshop operation may actually have bought its wares through a manufacturer, said Sandra Salyer, a Mervyn’s spokeswoman.

Erwin Gilbert, president of B.U.M. Equipment, said his leisure-wear firm purchased an order of women’s shorts from Tomato Inc., which may have been made at the El Monte factory.

Neiman Marcus, the Dallas-based upscale retailer, said it is “exploring” the matter with its vendors.

State and federal officials say they found Neiman Marcus labels at an unlicensed Panorama City garment factory that was one of three locations raided by a multi-agency task force Aug. 2.

One potential reverberation of the negative publicity is the possibility that manufacturers and retailers would become more cautious about buying inexpensive garments made in the United States.

On one hand, domestically made merchandise can be delivered on shorter notice with better quality control. On the other hand, the likelihood of retailers suffering a black eye for selling goods that may have been sewn by workers toiling in substandard conditions is more remote overseas.

“This is a situation that happened in America, and it’s an unfortunate thing,” said Gilbert, president of B.U.M. “Does it put a doubt in our mind? It really does.”

Times staff writer Karl Schoenberger contributed to this report.