Garment Jobs Fall in Tougher Environment
Marking the end of several years of robust growth, employment in Southern California’s garment industry has fallen sharply this year amid a flight of sewing work to Mexico and cheaper competition from Asian imports.
New payroll data from employers indicate that the state’s previous monthly job tallies overestimated apparel manufacturing employment by about 13,100 jobs. What that means is that the state, and specifically the Southland, because most apparel work is done here, has not been seeing 4% to 5% growth for much of this year as had previously been estimated. Instead, there has been a decline of more than 3% over last year.
“We’ve always been somewhat mystified by the [employment] numbers that keep going up and up,” said Lonnie Kane, president of Karen Kane Inc., a $70-million manufacturer of women’s sportswear based in Vernon. Given all the pressures, he said, the new figures make a lot more sense.
On the positive side, the new payroll data, to be used in the state’s annual revision of all nonfarm jobs early next year, found that there are many more workers in the higher-paying film and technology manufacturing sectors this year than previously indicated. But by far the biggest change was in apparel.
Southern California’s garment industry still employs more than 150,000 workers, and it has held up well compared with the industry’s fortunes in the rest of the nation. It remains the center of fashionable, fast-turnaround women’s wear. But the new figures confirmed what many had feared and may presage further employment declines within the next year.
Most of the job losses are believed to have occurred at smaller businesses and sewing shops rather than design firms. The new payroll data did not show a corresponding decline in textile and other support industries, but they too are feeling the heat.
“There was a pretty dramatic decrease in July and August,” said Bill Tenenblatt, president of Antex Knitting Mills in Los Angeles and head of the local textile trade association. He said business has rebounded slightly in the last two months. He attributed part of the decline to “very, very cheap imports from Asia” that are starting to hurt the region’s apparel makers. Although he has not laid off workers, Tenenblatt has cut back his employees’ overtime.
Bruce Berton, a garment consultant at Stonefield Josephson in Santa Monica, says apparel companies have accelerated their production shift to Latin America this year--in many cases because they have little choice.
When Tommy Hilfiger or Calvin Klein tells its suppliers in Southern California to lower their prices, Berton said, contractors have no place to look but labor. The gap is huge: In the Southland, an experienced sewer costs about $7.25 an hour, including taxes. In Mexico, he said, it’s $1.10.
“The little guy doesn’t have a chance going forward because they don’t have the reach to be cost competitive,” said William Mow, chairman of Bugle Boy Industries in Simi Valley. Mow said that since May 1997, he has cut back about 200 workers in Bugle Boy’s distribution facility in Simi Valley, shifting the work to Atlanta--not for cost but to be closer to his customer base.
Mow says import pressures are coming mainly from the Philippines and Taiwan--not China, where costs have risen. “Canada is getting very competitive in certain categories, denim jeans and woven shirts,” he added. But more than anywhere, he said, “Mexico single-handedly has caused the decrease in employment in Southern California because of the North American Free Trade Agreement. Today they are very, very competitive.”
The revised garment sector job figures came as little surprise to the industry and reflected flaws in the monthly estimate process and the difficulties of tracking a volatile and dynamic industry, where new companies enter and exit the business at a dizzying pace. The monthly payroll estimates are based on a sample of employers, generally larger ones and those in business for at least two years.
Jose Millan, the state’s labor commissioner, said he has seen continued growth in applications for new garment businesses. But he said he suspects that many more firms are going out of business because they can’t compete--and the layoffs involved aren’t being tallied on a monthly basis.
The new payroll data, although still preliminary, include all firms, small and big, that paid taxes in the first quarter of this year. Therefore, it is a far more reliable source. Overall, the payroll data show 10,800 more nonfarm workers in the state than previously reported, a relatively small change given the state’s overall payroll employment of nearly 13.7 million.
Ted Gibson, chief economist with the state Department of Finance, said the payroll data show motion-picture employment was about 8,700 higher than previously stated. Based on that, the percentage change in employment in that industry--concentrated in Los Angeles County--would show an increase rather than a slight decline.
There were smaller increases in electronic components manufacturing, a positive sign for the San Jose area, which has begun to see a decrease in factory employment in the monthly reports. On the other hand, he said, statewide figures for the retail and services sectors are lower than previous estimates.
