Profits Clothed in Sadness

Euna DuBose works in a factory sewing camouflage trousers for the Marines. As the grandmother of three soldiers, this gives her some uneasy moments.

An extra-small pair of pants will make her think: This fellow’s just a baby. She’ll wonder: Will he get home safe? And what about her son’s sons -- one in Afghanistan, one awaiting orders in Mississippi, one just home from Mosul but perhaps destined to return to Iraq?

DuBose never had thoughts like this with her last job, when she made Levi’s.

“I’d rather be doing jeans,” the 70-year-old said. “No emotions were involved.”

She doesn’t have much of a choice. The last jeans factory here failed two years ago. But the Marine uniform plant is thriving.

The war in Iraq is boosting Opp and many other communities. Over the last two years, military spending has become a pillar of the economy for the first time since President Reagan ordered the Cold War buildup of the mid-1980s.

Defense spending accounted for 11% of the third quarter’s economic growth, double the rate of two years ago, according to government data released this month.

That figure does not fully depict the effect of the war, analysts say, because it doesn’t account for the way military contractors are upping orders of equipment and raw material from their own suppliers, creating a wide ripple.

Companies in Evansville, Ind.; Union City, Calif.; Mullins, S.C., and McAllen, Texas, have just been awarded contracts totaling $91 million to make soldiers’ ready-to-eat meals. Companies in Mount Gilead and Waynesville, N.C.; Belleville, Ill., and Atlanta won contracts worth a combined $70 million to quickly make black and desert tan hot-weather boots. In San Ramon, Calif., ChevronTexaco Corp. received a $108-million contract for jet fuel.

All of these contracts were awarded by the Defense Logistics Agency, an arm of the Department of Defense that buys apparel, fuel, medicine, construction material and repair parts. In the fiscal year that ended Sept. 30, the agency bought $28 billion in materiel and services, up 12% from the previous year.

No one is tracking what this spending is doing to employment, but it might be considerable. Sopakco Inc., the South Carolina company making ready-to-eat meals, publicized a $35-million contract extension two years ago as creating 250 jobs.

Opp needs any stimulus it can get. Its heyday was 20 years ago, when this region near the Florida border was thick with apparel plants producing dresses for Ralph Lauren, shorts for Arrow, children’s wear for J.C. Penney Co. and lots of jeans for Levi Strauss & Co. and Lee Co.

The quest for cheaper labor drove all those factories to Mexico, the Caribbean and Central America. That caused a downturn that has left Opp’s downtown with 14 empty stores along its two-block width. Even the McDonald’s recently closed.

Yet if the war is providing Opp with a rare jolt of economic adrenalin, the cruel reason for the work prompts ambivalence.

“If it weren’t for the war, we wouldn’t have a job. But that doesn’t mean it’s good that there’s a war,” said Patricia Walker, who outlines the flies on 600 trousers a day. “It makes my head spin.” Walker’s daughter, Salena, is stationed with the National Guard in Italy.

Economists have long known that war can stimulate jobs and growth. World War II is widely credited with pulling the U.S. out of the Great Depression. In 1939, the increase in military spending amounted to 2% of the growth in the economy. By 1942, it was 100%.

War has been a stimulus in other eras, too. In 1967, at the peak of the Vietnam War buildup, increases in military spending equaled half the rise in gross domestic product. In 1985, at the crest of the Cold War, it was about 15% of that year’s growth.

During the 1990s, however, inflation-adjusted military spending declined. It’s not a coincidence, economists say, that the decade was one long boom.

“Government spending and the taxes that finance it drain resources from the private sector, where the money would have been used to create more jobs and more wealth,” said Daniel Mitchell of the Heritage Foundation, a Washington think tank with conservative views.

The supplemental appropriation for combat operations in 2004 was $65 billion. Every dollar of that is a dollar the government doesn’t have available to spend on other things. Economists call this the opportunity cost.

“We’re cutting or under-funding all kinds of useful stuff, from worker training to child healthcare,” said Jared Bernstein of the Economic Policy Institute, a Washington think tank that is critical of the Bush administration. “So I’d argue that the opportunity cost is high.”

Here in Opp, the workers at the American Apparel Inc. plant see opportunity in a more personal light.

Rita Mitchell, for instance, used to make $5.50 an hour at a local dry cleaner. She had no insurance coverage or other benefits and had to put up with the public, which she didn’t particularly like. She came to the factory only six months ago, but she’s already fast enough to earn more than $9 an hour. She also has health insurance.

“There are a lot of single parents here,” said the 38-year-old Mitchell. “They can make enough to live on.”

Whether single or married, a lot of these workers have personal connections to the war. A survey of American Apparel employees during the Gulf War in 1991 found more than half had a loved one involved in the fighting, and management speculates the figure might get that high this time too.

Mitchell has a photograph of her nephew, Jason, tucked away on her sewing table. “He drives a fuel truck somewhere near Fallouja. Not the safest thing, I know,” she said. “I cry myself to sleep every night.”

Founded in 1987 and based in Selma, Ala., privately held American Apparel has doubled in size in the last five years to 1,700 employees. (The company is unrelated to the identically named Los Angeles-based maker of casual wear.)

Part of the reason for the growth is an aggressive expansion, but an equal amount is because of increased demand for its products. Uniforms used in battle wear out much more quickly than dress uniforms worn on parade.

“I’m glad we do what we do because I think we do it well. I just wish we weren’t doing as much as we are for the reason we are,” said American Apparel President Rick Cippele.

The company has six factories making 17 items of clothing, all for the military. All the plants are in Alabama, which has a multitude of empty factories and women trained to work in them.

What keeps American Apparel from going the way of so many of its commercial colleagues is a federal law requiring the military to buy from U.S. companies whenever possible.

Kevin Burke, president of the American Apparel & Footwear Assn., credits military contracting with keeping most of the organization’s 100 domestic apparel members alive.

The Defense Supply Center, an arm of the Defense Logistics Agency, spent $2.6 billion on clothing and textiles during the 2004 fiscal year. That was a jump of 28% over fiscal 2003.

“This is what happens in any wartime situation, whether it’s 2004 or 1942 or 1953 or 1968,” said Burke. “But even when the hostilities are over, there will still be a need to make apparel for the armed services.”

Not, of course, that the hostilities appear anywhere near over.

“In terms of business, that’s good news,” Burke said. “The plants will be running at full capacity.”

Despite this, some of the clothing contractors are trying to diversify their portfolios. Although American Apparel has no intention of getting into commercial work -- “We dipped our toes in several times, and got bitten off at the kneecap,” said Cippele, the firm’s president -- other companies see benefits.

Capps Shoe Co. in Lynchburg, Va., won a $35-million, five-year contract last month for women’s dress Oxfords for the Army and Air Force. It’s waiting to hear about a $25-million contract for men’s shoes.

“It will put you in an early grave trying to get these contracts finalized,” said Chief Executive Tom Capps. “If I did only military I’d have had to lay off just about everyone.”

And if he did only commercial?

“A lot of the people in our factory wouldn’t be working today,” Capps said.

Between the two sides of his business, he hopes to expand his workforce by a third, to 200 people.

While American Apparel began as a military contractor and Capps has put increasing emphasis on government work, other firms are getting into defense work that never imagined it.

Randy Gardiner, president of Red Dot Corp., a manufacturer of heating and air-conditioning systems in Seattle, said its first government contract came “right out of the blue” last spring.

The military brass realized that armoring Humvees to make them less vulnerable to Iraqi mines was making them the equivalent of quick-bake ovens. Approached by the military with an emergency request for help, Red Dot promptly hired 100 people and prepared 10,000 specially engineered air-conditioning kits in less than five months.

Although Gardiner wouldn’t comment on what this did to the employee-owned firm’s bottom line, he said 2004 revenue would be up about 20%.

The venture was successful enough for him to seek out other military work. Red Dot is now supplying cooling systems to a Houston manufacturer of armored trucks for the military. Defense subcontracting work like Red Dot’s isn’t tracked by government statisticians but it’s an integral element of the war economy all the same.

“I don’t think there’s any downside to this,” Gardiner said. “Every night I ponder the television programs that show wrecked and burned vehicles in Iraq and say, ‘They’re going to need to replace them.’ ”

Although that’s also true for the uniforms being made in Opp, the town’s new mayor realized the 180-employee plant can’t do all the work of revitalization. H.D. Edgar was scarcely sworn in when he flew to Korea in October.

He wouldn’t say what he was after, but local speculation centered on a plant that would supply the massive Hyundai Motor Co. auto factory that will open in the state capital of Montgomery next year. On his return, Edgar also said it looked “real good” that a company from “up north” would be announcing an Opp plant in a week or two.

Weeks have stretched into months. Meanwhile, a few miles away in Dozier, one of the area’s last remaining commercial apparel plants just closed.

In a statement to the local media, Dozier Manufacturing Inc. Vice President Nathaniel Wright said, “We just ran out of options, unfortunately.” The plant made uniforms for Disney World employees.

Laid-off Dozier workers are joining the stream of those applying to American Apparel. The plant will be hiring 25 or 30 more workers in the next few weeks. And if American Apparel wins the two big contracts it’s vying for, it will probably grow even more.

Maybe it’s the nature of the work, maybe it’s because everyone’s relatively new, maybe it’s just because this is the South, but there’s an easy camaraderie on the plant floor. Many of the women have worked for the manager, Peggy Henderson, at one of those failed plants. Many say they just love sewing.

And they all are proud to be participating in the war effort.

Carol Wyatt was hired in July, a month before her oldest son, Morgan, was sent to Iraq. She’s waiting for him to call so she can ask whether his uniform was made by American Apparel.

“I’m so glad we can make the soldiers what they need, that we have this opportunity in Opp,” said Wyatt, 44.

She and her co-workers don’t really discuss the reasons for the war, although there seems to be general agreement it was necessary, if unfortunate.

Said Wyatt: “We went because of the terrorist stuff. But I’d rather my son was back home. Any mother would.”