Thread: Defense-ive competition: It’s ‘brutal’ for U.S. textile cos.

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Defense-ive competition: It’s ‘brutal’ for U.S. textile cos.
Boston Herald General Economics Reporter
Sunday, March 18, 2007 - Updated: 10:50 AM EST

No one excuses what Michael Bianco Inc. is alleged to have done at its apparel facility in New Bedford - from reportedly hiring illegal aliens and underage girls to fining employees $20 for taking too long to go to the bathroom.

But industry experts say alleged sweatshop conditions at Bianco, which was raided by Homeland Security officials earlier this month, show how cutthroat the low-margin textile and apparel industries have become in an age of global labor competition - and how competitive business is among Department of Defense contractors in particular.

“The business is simply brutal,” said David Costello, a spokesman for Lawrence’s Polartec, until last week known as Malden Mills, the famous textiles company that does business with both private firms and the Pentagon.

One might think that Pentagon textile and apparel contractors would be less competitive, largely because of the protectionist World War II-era Berry Amendment. The act requires the military to buy only from U.S.-based textile firms, which make fabrics, and apparel companies, known as‘cut-and-sew” operations that actually stich together fabrics into uniforms and other end-product items.

But global competition, especially from firms based in low-wage countries in Latin America and Asia, is taking such a toll on U.S. companies that many domestic textile and apparel makers are simply abandoning private-sector business in favor of going after Pentagon contracts, experts say.

“The defense (contracting) competition is very intense,” said Steve Lamar, executive vice president of the American Apparel and Footwear Association. “As U.S. firms get hit by overseas competition, they head for what they think is safe harbor in defense contracts. There are a lot of firms going after this (government) business.”

That’s exactly what Michael Bianco, orginally founded in the mid-1980s as a leather-goods maker, said it was forced to do several years ago in order to survive.

“After losing a lot of business from U.S. brands of leather goods who took theirbusiness overseas, we began to compete for large government contracts,” saidMichael Bianco president Francesco Insolia, in a statement issued days after the feds raided his New Bedford operations, rounding up hundreds of illegal aliens working in what officials called “deplorable” conditions.

In his statement, Insolia, who is among those charged with conspiring to violate immigration and labor laws, added that the company looked at moving out of state before deciding to do business with the government via its New Bedford facility, where workers make backpacks and vests for the Pentagon.

A spokeswoman for Bianco, which has denied the allegations against it, declined to comment for this article, though the spokeswoman did confirm Bianco has examined possibly moving operations to Puerto Rico, the U.S. commonwealth island where there are no federal income taxes and yet is coveredby the Berry Amendment.

Defense-ive competition: It’s ‘brutal’ for U.S. textile cos.
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“For decades, you’ve seen what we call a race to the bottom” within the textile and apparel industries, said Stephen Wishart, a researcher at Unite HERE, a union that represents about 40,000 U.S. workers in the two related industries.

It’s gotten to the point where U.S. companies have concluded that if they can’t move to low-cost countries, they’ll simply import low-wage workers from low-cost countries in order to remain competitive, something Biaco is alleged to have done, said Wishart.

New England textile and apparel companies are at a distinct competitive disadvantage even against other U.S. firms doing business with either private companies or the Pentagon. New England’s workers are paid more and are often union members, while workers in the South are paid less and more often don’t belong to unions, Wishart said.

Andre Mayer, economic researcher at the Associated Industries of Massachusetts, said there are still some relatively solid textile and apparel companies in the state, such as Lawrence’s Polartec and New Bedford’s Joseph Abboud Manufacturing. But those companies usually specialize in specific fields or have very high-end customers who can pay for higher-priced items.

But other Massachusetts companies - whether they work for the government or not - aren’t faring as well.

Fall River’s Quaker Fabric Corp., an upholstery maker, recently reported massive losses last year. The culprit: overseas competition.

“The market for upholstery fabric in the United States is continuing to experience unprecedented changes, with imports, in a variety of forms, now representing a very large percentage of total consumption,” said Quaker chief executive Larry A. Liebenow in a statement last month. “For us, this meant a 29 percent drop in last year’s domestic fabric sales and an 18 percent drop in export fabric sales.”

Experts say they don’t see at what point the industry carnage will all stop.

The Berry Amendment is literally the“last bastion” for U.S.-based textile and apparel makers, as Wishart puts it.

And yet even that amendment doesn’t protect firms from hyper-competitive market forces.

“It’s that constant competition,” said the AAFA’s Lamar.“It’s always been a very competitive business.”

These conditions are what Americans worked in, in the early 1900's and in Great Brition. All of the protesting and fighting our Ancestors did to end this, here we are again.

All this cheap labor has brought us right back to slavery and sweat shops we must fight to end this, before it progesses any further.

It begins with sending illegals home, then these employers can pay Americans a decent wage or close their doors, I would say it is completely up to them, we really don't care because as it is those jobs are not benefiting Americans anyway at least at the present time.