A Pattern for Success : Garment Maker Finds Prosperity With Union Labor
Ronnie Shapiro runs his women’s coat and blazer company at what lots of people in his industry consider a huge disadvantage: His goods are produced in unionized U.S. plants--not in the low-wage Third World factories, domestic sweatshops or near-sweatshops used by many other garment manufacturers.
But even though Shapiro must pay higher labor costs by virtue of being one of the rare unionized apparel producers in Southern California, his 57-year-old family firm has prospered. Shapiro says the annual sales of his M. Shapiro Co., after climbing solidly in the last five years, have reached $15 million. Its garments are sold, usually carrying the Dumas label, in department stores around much of the country.
And that success, Shapiro and union officials say, suggests how medium-sized apparel manufacturers--not just industry giants--can survive without relying on dirt-cheap labor. “It can work,” said Steve Nutter, western regional director of the Union of Needletrades, Industrial and Textile Employees, or UNITE.
That wouldn’t be much of a revelation in most industries. But in the apparel business, some manufacturers and their sewing contractors have prospered from the labor of people stitching clothing for, in the worst cases, less than $1 an hour. They have found low-wage havens everywhere from Central America to the now-infamous compound in El Monte where 72 Thai nationals toiled in allegedly near-slavery conditions.
In fact, a random survey by state and federal inspectors last year of 69 garment manufacturers and contractors in California found that half were violating minimum-wage law and more than two-thirds were breaking overtime pay requirements.
Even at the less than 5% of Southern California apparel firms that are unionized, the pay is modest. For example, the four union contractors that handle the Shapiro firm’s sewing and assembly work employ 200 people who, compensated largely on a piece-rate basis, earn from $5 to $10 an hour.
The crew of about 10 union fabric cutters working at Shapiro’s 30,000-square-foot headquarters and warehouse in West Los Angeles make as much as $15 an hour, at least several dollars more than they would be likely to earn at a non-union firm.
What may be even more significant, however, is that all of the union employees at both Shapiro’s firm and his contractors’ shops receive paid vacations, sick days, overtime and health care insurance--benefits that are nearly unheard of in much of the industry.
“We’re doing OK,” said Humberto Badillo, 57, a union fabric cutter for nearly 13 years at M. Shapiro Co. “The conditions here are better than at other places.”
Shapiro, who describes himself as apolitical and expresses mixed feelings about unions, says his firm’s pay practices and work policies are guided more by his personal sense of fairness than by union contract obligations. He points out that the 40-employee firm, which he inherited upon his father’s death in 1990, has little turnover among its union, or non-union, workers.
“Even if we weren’t with the union, our people would be treated the best,” said Shapiro, a trimly built man who is youthful-looking at age 50.
“I take a lot of pride in the fact that I can go into the warehouse, look anyone in the eye and know they have no ax to grind,” he said. “That’s a total turn-on for me.”
To be sure, part of the reason that Shapiro can pay production workers comparatively good wages and benefits is that he is shielded from the most severe competitive pressures of the apparel business. The competition among manufacturers of coats and blazers arguably isn’t as brutal as it is among, say, T-shirt makers.
And Shapiro, who says he is financially independent because of his family inheritances and his past investments and earnings, has not shouldered the heavy debts that plague many other manufacturers.
Still, Shapiro also says he has used several strategies to hold his ground against competitors that pay lower wages. For starters, he holds down the costs he can control, such as advertising and executive salaries.
“You go to New York and you have firms where two or three guys are making $250,000, $300,000, $400,000 or more a year. We don’t have people like that,” said Shapiro, who lives in Beverly Hills and drives a 1991 Jeep Wagoneer. (He declined to disclose his salary or that of his 70-year-old uncle, Irving Shapiro, who as production chief is the company’s No. 2 manager.)
“This is a Southwest Airlines type of operation--no frills,” he said.
Likewise, Shapiro’s products are moderately priced. He says the firm sells its blazers for about $30 apiece to retailers that in turn sell them to consumers for $50 to $60.
The firm also stresses quality, Shapiro said. While the company originally made only women’s coats, most of its business now comes from blazers. The firm says the expertise it gained in making such relatively intricate garments as coats has enabled it to make better blazers than many of its competitors, who generally have come from the sportswear business.
Finally, Shapiro emphasizes that because his goods are made in the United States, he can respond swiftly to his customers’ needs. If a store needs a certain coat in a certain size, he says, he can ship it within 48 hours. “You don’t have to wait for a ship to come in,” Shapiro said.
Still, the company has had its share of problems. One financial blow was the 1991 bankruptcy filing by The Broadway, a key Shapiro customer. And parent Broadway Stores Inc.’s recent agreement to be acquired by Federated Department Stores Inc. raises questions about whether Shapiro will lose an important chunk of business.
Moreover, even though local UNITE officials today cite Shapiro as one of the fairest employers they deal with, they staged a punishing 49-day strike against his firm only months after he took over the business in 1990. The walkout, aimed at a pair of non-union Shapiro contractors rather than M. Shapiro Co. itself, succeeded in persuading the contractors to sign union agreements.
Neither Shapiro nor his contractors have suffered any strikes since and labor and management have learned to coexist peacefully.
“Every [unionized] company has problems with its union, and this company is no different. But we’re managing our problems OK,” said Badillo, the union cutter, echoing the general sentiments of both sides.
Moreover, Shapiro makes common cause with the union when it comes to the issue of low-paid overseas and domestic sweatshop labor.
He keeps a collection of his competitors’ blazers at his office and points to the labels showing where they were produced: Mexico, the Dominican Republic and India. He said he has avoided overseas contractors, largely to keep labor peace.
“We’re able to compete with offshore people, but it gets harder all the time,” Shapiro said.
Nutter, the union official, is sympathetic.
“They’re under enormous pressure,” he said, “because of the competition they receive from unfair competitors along with the pressure they get from retailers” seeking merchandise at low prices.
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Made in America
Garment Jobs Are on the Rise Locally ...
The number of workers in the apparel industry has dropped since 1988, but it has been on the upswing in Los Angeles County:
U.S. Jobs (in millions):
1994: 0.95
L.A. County Jobs (in thousands):
1995*: 99.2
* As of June
... as Wages Creep Up
Here are hourly wages paid to garment workers nationwide. The figures do reflect shops in the underground economy.
1988: $6.12
1989: $6.35
1990: $6.57
1991: $6.77
1992: $6.95
1993: $7.09
1994: $7.33
Sources: American Apparel Manufacturers Assn., Bureau of Labor Statistics, California Employment Development Dept. Researched by JENNIFER OLDHAM / Los Angeles Times
