Glimpses of the Anti-Sweatshop Movement

A Brief History of the US Apparel industry

To understand why the answer is no and why outsourcing is so prevalent, we need to understand the structure of the international apparel industry, which necessitates understanding some of its history. Early on in the development of the apparel industry -in the late nineteenth century--New York City became the fashion capital of the United States, with most apparel manufacturing concentrated there. Even at this early date, however, there was a ruthless search by garment manufacturers for ways to lower costs, driven by the competitive pressures of the market. There was also a need to keep

production flexible, that is to be able to switch what was being produced and the quantities in which it was produced very rapidly. This is an artifact of the changing trends in fashion, where manufacturers must constantly adapt, abandoning one line of goods for another as popular tastes change. These problems persist io the current day; indeed, if anything, the speed with which fashions change has only accelerated, creating ever greater pressures for flexibility. Then, as now, apparel manufacturers looked to the outsourcing of production as a solution to both cost reductions and flexibility (Green

1997).

When a firm outsources production, it hires another firm--the contractor or

supplier--io produce the goods for ii. Contractors may, in turn, hire subcontractors do some of the production they have been hired to do. In the eyes of the lead firms--that is, the companies who do the outsourcing--this system has two virtues. If a contractor’s production costs grow loo high, they may simply switch to a cheaper firm, without any financial loss resuming from giving up their own factories. And, as fashions change, they may switch suppliers, finding ones better suited to produce the new goods. Then, as now, this system fostered rampant labor abuses. The workforce consisted--once again, then as now--primarily of young, immigrant women. Perhaps the most well known symbol of these abuses is the March 25, 1911 Triangle Shirtwaist Company factory fire, where a dropped cigarette started a conflagration. The owners of the factory kept the doors locked, in violation of safety codes, trapping many of the workers inside, with no way to escape. Some leapt out of the building io escape the flames, only to plunge to their deaths

below. The fire department came, but their ladders could not reach the top floors. In all,

146 workers, mostly young women, died in the fire (Green 1997; Ross 2004).

Such pervasive abuses fostered a strong labor movement in the industry, spearheaded by the International Ladies Garment Workers Union (ILGWU). The unrest included two major strikes--the “Uprising of the Twenty Thousand” (composed mainly of women workers) in 1909 and the “Great Revolt” of sixty thousand, mainly male cloak-

makers in 1910. Indeed, the Triangle Shirtwaist factory was one of the targets of the Uprising of the Twenty Thousand, though it was defeated there by the owners’ union- busting tactics; the doors of the factory were locked on the day of the fire, in part, io keep
union organizers from entering the building to speak to workers. Continued labor

organizing, with the support of middle-class reformers from the Progressive movement, eventually lead to changes in public policy in New York State that better protected workers. These policies were rolled back during the highly conservative political atmosphere of the 1920s, following upon the Red Scare of 1919, which involved the mass deportation of immigrant labor leaders. With the rise of the New Deal in the 1930s, however, a system of reforms took hold again, this time at the federal level. Indeed, some of the key New Deal officials, such Labor Secretary Frances Perkins and President

Roosevelt himself, had been among those reformers who had helped put into place the New York State reforms decades earlier. The combination of New Deal labor legislation and the post-war period of prosperity strengthened labor’s hand greatly (Ross 2004).
Because of the peculiar nature of the garment industry, the ILGWU was able to successfully lobby for it to be exempt from the generally anti-labor 1947 Taft-Hartley


Act’s ban on secondary boycotts, that is boycotts that targeted companies not directly involved in a labor struggle in an attempt to place indirect pressure on the main target. The Garment Industry Proviso allowed the unions to treat the lead firm and its contractors as effectively one unit, allowing them to simultaneously tackle all of them. Using this proviso, the ILGWU was able to force the lead firms to agree to outsource only to suppliers that were unionized, thus guaranteeing that much of the garment industry was covered by collective bargaining agreements. Conditions were hardly idyllic though. The apparel industry was part of the lower tier of the economy, with low pay for its primarily female, African-American and Puerto Rican workforce. Some sweatshops remained, though far fewer then before. The operations of the union became increasingly top-down, with many members having little real connection to the union. Often ILGWU representatives worked more closely with the contractor than the actual workers. Still, overall, conditions for workers were much improved (Bonacich 2002; Ross 2004).
Given the long use of outsourcing in apparel, it is perhaps natural that the industry
was one of the pioneers in pursuing relocation to poorer regions with weaker labor laws as a way to avoid labor unions and cut costs. In many ways, the model for other companies was Nike, which has never manufactured anything itself, but got its start importing running shoes from Japan, and then came to give orders on the design of the shoes as its profits increased in the US (Korzeniewicz 1994). As early as the 1950s, however, well before the rise of Nike, many lead apparel companies were relocating production to the southern US states, where they could find a union-free—and therefore more easily exploited—workforce. Even as they relocated to the US south, some lead


firms began outsourcing production to companies in Japan, South Korea and Taiwan, where labor costs were considerably cheaper than the US. This was encouraged by the Truman and Eisenhower administrations, which wanted to foster the growth of the apparel industry among its allies in East Asia as a way of stimulating economic development and thus limiting the influence of Communist, mainland China. Such overseas outsourcing, however, was strongly opposed by the apparel industry’s traditional contractors in both New England and the South, who lobbied the government for protectionist legislation; in this, they had some success, as there was a strong protectionist bloc in Congress. The lead firms were also initially limited in how much they were willing to outsource overseas, due to the lower quality of Asian goods. By the 1960s, however, Asian contractors had significantly improved the quality of the goods they produced. Thus, in the 1970s, overseas outsourcing increased dramatically as a cost- cutting response to the economic downturn of that era (Bonacich et al. 1994; Rosen 2002)
The conflicts between those supporting overseas outsourcing-both the lead apparel firms and the executive branch--and those supporting protectionism--the contractors and their Congressional allies--produced a series of compromises. These consisted of a succession of multilateral agreements--the Short-Term Arrangement Regarding International Trade in Cotton Textiles (1961), the Long-Term Arrangement Regarding International Trade in Cotton Textiles (1962-1973), and the Multifber Arrangement (MFA) (1974-2004)--regulating overseas apparel outsourcing by setting quotas for different countries, which determined how much apparel they could export to

the US—and thus how much US firms could outsource to that country for production for the US market. These proved inadequate as protectionist instruments though and apparel imports in the US grew steadily. As Japan, South Korea and Taiwan began to meet their quota limits, firms began turning to other countries as well. It was not oniy US-based firms that did this; many of the Japanese, Korean and Taiwanese suppliers also began moving their production io other countries, seeking to escape the growing power of labor unions, which had successfully raised wages in Japan, South Korea and Taiwan. While the contractors might directly set up their own factories in these new countries, they often subcontracted out production to new, local manufacturers in turn (Bonacich et al. 1994; Rosen 2002).

One of the main driving forces behind such outsourcing and movement overseas was the class conflict between the companies’ owners and the unions representing (however problematically at times) apparel industry workers (Ross and Trachte 1990). The lead US apparel firms wish to escape the marginal improvements the ILGWU had won for garment workers—or more exactly, they wished to escape the extra costs such improvements entailed--and the easiest way to do this was io go to locales where the labor movement was weak and in no position to challenge apparel manufacturers. The southern states of the US, with their anti-union, ‘Tight-to-work" laws were only the lust step in this process. Third-world countries, particularly non-democratic ones where governments had no qualms about violently repressing the labor movement, were a natural next step. This trend continues today, with contractors increasingly setting up shop in China and Vietnam, two countries where independent labor unions are totally
illegal, with only those controlled by and serving the interests of the nominally

Communist governments allowed.

Beginning in the late 1970s and accelerating in the 1980s, a dramatic shift happened in the policies of the US and other first world countries that, among other things, facilitated the ability of US and European firms to follow this pattern of outsourcing anywhere in the world. This was the rise of neoliberalism, which, though marked by a rhetoric of “free trade" and deregulation, is characterized more by a reorientation of the economic regulatory system, both domestic and international, in ways that undermines what collective power labor and other vulnerable social groups had built up in favor of multinational corporations. Although, in the US, many of these changes were initiated by the Republican administrations of Ronald Reagan and the elder George Bush, they were continued and strengthened by the Democratic presidency of Bill Clinton. Exploring them in full is beyond the scope of this dissertation and I will only highlight those aspects most relevant for understanding the rise of outsourcing here. It is important to stress that the picture painted of neoliberalism by many writers, especially those sympathetic to it (i.e., Castells 2001; Friedman 2000)--that it is the natural result of the growth of global markets and advances in telecommunications technology, a rising tide governments cannot control or hope to turn back--is grossly misleading.
Neoliberalism, rather, is the result of policies deliberately pursued by corporations and

governments, particularly US corporations and the US government. Different countries

took different paths towards neoliberalism, some more ideological, some viewing it as a

matter of pragmatic adaptation io the global economy (Fourcade-Gourinchas and Babb 2002), but it involved deliberate policy decisions by elites across the globe.
One of the major events that allowed the US and Europe to successfully push nations in the third world to adopt outsourcing-friendly, neoliberal policies was the third- world debt crisis, in which developing countries found themselves increasingly unable to manage the loams they had taken out to promote development over the course of the 1960s and 70s. While countries were having trouble paying off their loans as early as 1979, the debt crisis officially broke in 1982 when Mexico publicly announced that it was in danger of defaulting on its debts. Many more countries soon followed suit. The US Treasury Department worked together with the major commercial banks and the International Monetary Fund (IMF) and World Bank—sister organizations, the two major multilateral organizations charged with ensuring the stability of the international
economy and promoting development respectively—to arrange a bail out of the debt stricken countries. Most of the debt ridden countries were ordered to rake out loans from the IMF; when they were unable to pay off these, they had to take out yet more loans; and the cycle continued on, as the supposed solution to the debt crisis drove them into ever deeper debt. In return for these loans, the IMF required that the recipient countries implement a set of economic reforms known as Structural Adjustment Programs (SAPs), which prescribed restructuring stare policies along neoliberal lines (Babb 2009; Weaver 2000; Wood 1986).
These neoliberal policies in particular emphasized making the countries more open to investment by lust-world corporations and in general re-orienting the economy

towards production for export. One major aspect of this was the rewriting of labor laws, to allow companies more “labor flexibility"--that is, an easier time firing workers, greater ability to hire contingent (part-time and temporary) workers, less need to recognize labor unions, more freedom in forcing workers to perform overtime, etc. Even where labor laws remain strong, governments often simply choose not to enforce them, in order not to alienate foreign investors (Moody 1997; Robinson 2003). The World Bank and US Agency for International Development (USAID) also promoted the creation of Export Processing Zones (EPZs), also known as “Free Trade” Zones. Within these zones, even such labor laws as remain on the books do not apply; and companies are exempted from all taxes for periods as long as ten years. The hope is that this will result in them putting down roots in the country, resulting in long-term economic growth. However, not only are abuses of labor rights rife, but companies frequently close down and then open up under a new name when their tax holiday comes to an end (Bonacich et al. 1994; Klein 1999; Robinson 2003).

These policies have strongly benefited core firms that use outsourcing as one of their main cost-reduction strategies--and also have contributed significantly to the problem of sweatshops. Contractors producing apparel for sale in the first-world fit right in with the emphasis on exports that underlies much neoliberal policy. The promotion of “labor flexibility” and EPZs create ideal conditions for contractors to keep down costs (by paying their workers as little as possible) and thus making themselves attractive to first-world companies--a dynamic we will look at more below. This method allows corporations or industries to play governments (not only national, but local as well) off


against each other, pressuring them to compete to create “business-friendly” climates that will attract investors (Ross and Trachte 1990; Silver 2003). This results in what is popularly known as a “race to the bottom,” where governments progressively lower their worker, consumer, and environmental protection standards, each government hoping that by having the lowest standards than the next they can attract investment (Brecher and Costello 1998).
Even as these events happened internationally, the rise of neoliberal ideology among conservatives in the US lead to the disintegration of the protectionist bloc in Congress during the 1980s; the promotion of neoliberalism (so-called “free trade”) became normative in the US government, among both Republicans and Democrats. Thus, Reagan was able to throw his full weight behind promoting the interests of the lead apparel firms in expanding the opportunities for overseas outsourcing. Reagan sought to promote such outsourcing not only in East Asia, but in Central America and the Caribbean as well. As with the US government’s promotion of outsourcing in East Asia in the 1950s, this was in pan motivated by anti-Communism; Reagan hoped outsourcing would foster economic development, which would defuse the leftist insurgencies in the region. Lead apparel firms were among the first to take advantage of such Reagan- initiated polices as the Export Processing Zones promoted by USAID and the World Bank; and the Overseas Private Investment Corporation, a US government agency which provided companies doing business overseas with various services such as insurance, loans, investment missions, and information, thus encouraging them to invest abroad.
Additionally, the Reagan, Bush and Clinton administrations signed various international
agreements, which encouraged US firms to outsource to different parts of Latin America-


-the Caribbean Basin Initiative II (CBI II) in 1986, the Enterprise for the Americas Initiative in 1990, and the North America Free Trade Agreement in 1994. These encouraged not only US firms to outsource to the Caribbean Basin, Central America and Mexico respectively, but the Asian firms io whom they outsourced to set up shop there as well. As a result, the networks making up the apparel industry span the entire Pacific Rim, plus the Caribbean. Finally, as part of the creation of the World Trade Organization in 1994 (a process fostered by the Clinton administration), ii was agreed that the quotas of the Multifiber Arrangement would be gradually phased out over ten years; thus in 2004, any country could export unlimited amounts of apparel to the US (Bonacich and Waller 1 PP4; Rosen 2002). This has lead to heightened competition among countries to attract apparel production, leading them to push down wages even more, in an effort to make themselves attractive to the lead firms (Clean Clothes Campaign 2008b).
Since the 1980s, the US apparel market has grown ever more stratified; US consumer markets have become increasingly fragmented so that different firms market to different populations, based on not only tastes but cost. Some firms such as Liz Claiborne focus exclusively on high fashion items, affordable only by the most affluent; others, like the Gap, marker popular brand names io a wider market; while yet others—Wal-Mart, for instance—focus on producing cheap, often generic clothes whose main virtue is their low cost. These different sectors in turn have different strategies for outsourcing production, contracting with hums in different sets of counties. Much production for high fashion items remains located in such first-world countries as the US, France, Italy and Japan, where they remain close to research centers, world-class input suppliers, and sophisticated consumer markets, all sources of their competitive edge. The production of lower quality goods for more popular brands or mass-merchandising firms is outsourced to what are generally increasingly low-income countries, ranging from the newly industrialized countries of East Asia through locations like China, Bangladesh and Central America, to the most marginal countries like Burma and Vietnam. Firms outsourcing to such countries seek to keep competitive through low production costs, in the form of both labor and materials (Appelbaum et al. 1994; Cheng and Gereffi 1994; Gereffli1994). lt should be noted that that production which remains in the US--primarily in the traditional centers of New York City and Los Angeles—is hardly free from exploitation. As in the early twentieth century, US apparel contractors tend to rely heavily on easily exploited immigrant labor and operate outside the law, resulting in highly exploitive conditions similar io production sites overseas, driven by the same need to keep down costs (Bonacich et al. 1994; Esbenshade 2004b; Ross 2004).
These developments are not solely confined to the US. The MFA covered nor only imports to the US, but Western Europe as well. European apparel firms have also made extensive use of outsourcing, relying on contractors in South and Southeast Asia, Central America, Africa and Eastern Europe. Many West European governments, such as that of Germany, have actively encouraged such outsourcing as far back as the 1970s.
While their geographic range may be somewhat different than (though overlapping with) US lead firms, their practices are largely identical. Thus, European firms and governments contribute equally to the sweatshop problem (Clean Clothes Campaign

2008a, 2008b; Fröbel et al. 1980).

Some of the competitive pressures to produce overseas can be seen in the experience of Levi Strauss. In 1990, the company--which was committed to keeping production in the US--dominated the jeans market, controlling a 48.2% share. As its competitors moved production abroad and were able to produce similar goods for less, Levi Strauss saw its market share shrink. Finally, in 1998, now with only 25% of the market, Levi Strauss felt compelled to move production to Mexico, resulting in mass lay- offs in the US (Rosen 2002). Thus, it would be difficult for any one company io buck the trend by trying to be socially responsible--they would simply nor be profitable enough. In other words, the problem is a structural one. It is, however, a structural one of the apparel companies’ own making--they pushed for the neoliberal policy reforms that facilitate outsourcing and have actively resisted any changes to these policies that would limit the potential for the abuse of labor rights. The apparel industry remains, therefore, collectively morally culpable for prevalence of sweatshops.

The Structure of the Apparel Industry

The apparel industry’s extensive use of outsourcing results in a very complex set of relationships and hierarchies between firms. As a way of helping us make sense of this complexity, I will use the concept of “commodity chains" (Appelbaum and Gereffi 1994; Gereffi 2001; Gereffi and Korzeniewicz 1994). This concept has its roots in world- system theory, an approach that focuses on the ways in which global inequalities in power between nations and regions have been both reproduced and transformed from the

initial era of European expansion and imperialism in the 1500s to the present. Most world-systems theorists have focused on the way some countries—what they refer to as the core or metropolitan countries—have exploited other countries--those on the periphery. Additionally, many world-systems theorists speak of semi-peripheral countries, which have an intermediate status, exploited by the core and exploiting the periphery in their turn. In today’s world, the core roughly corresponds to the nations of the first-world, the semi-periphery to those third-world nations such as Brazil or South Africa that are regional powers, and the periphery to the rest of the third world (Arrighi and Silver 1999; Chase-Dunn 1998; McMichael 2004; Robinson 2003; Ross and Trachte 1990; Silver 2003; Wallerstein 2000). The concept of commodity chains was developed by a group of world-system theorists who were discontented with that theory’s focus on the capacity of nation-states in definitions of the core-periphery hierarchy. Instead, they sought to develop an analytic tool that would let them focus on core-periphery relations within systems of production (Korzeniewicz and Martin 1994), an approach more consistent with world-systems theory’s Marxist provenance.
A commodity chain refers to the extended system involved in producing any commodity, running all the way back to the harvesting of raw materials, through the various stages of production, with various types of labor contributing at each step, to the marketing of the finished product. These individual steps in the process are referred to as a nodes (Appelbaum and Gereffi 1994; Hopkins et a1. 1994). In analyzing a commodity chain, one should look ai 1) their input-output structure, that is the various goods and services that go into producing a profitable product; 2) territoriality, that is the geographic
distribution of production networks; and 3) governance structures, that is the system of power and authority within the commodity chain (Gereffi 1994). In analyzing the power structure of any industry, it is important to look both at the organization of each particular node, particularly capital-labor relationships (Appelbaum and Gereffi 1994; Dolan 2004; Hopkins et al. 1994), and the relationship between nodes (Gereffi l994J. In the case of the apparel industry, the latter has a major effect on the former, resulting in sweatshops being pervasive in the production process. Because each node is a sire of capital-labor relations, it is also a decision-making arena in the political opportunity system--each node contains managers making decisions about what to produce and how io treat their workers. The relationship between the nodes tells how the different decision-making arenas are interlocked, particularly the hierarchy among them--which arenas are subordinate to others and which arenas can command decision-makers in the subordinate arenas.
Power in a commodity chain is determined by which nodes have the highest barriers to entry and are the most profitable (Gereffi 1994). Different nodes in the production process have different rates of profit--the most profitable ones are the core nodes, the least profitable the peripheral nodes, and those of intermediate profitability the semiperipheral (Appelbaum and Gereffi 1994; Hopkins et al. 1994}. The core nodes lend to have the greatest concentration of firms, i.e. a small number of companies dominate the market from that position (Gereffi 2001 ; Ross 2004). What part of the production process is most profitable varies from industry to industry.


The most familiar sort of commodity chain is what Gary Gereffi (1994, 2001) calls a producer-driven commodity chain, which are found in capital- and technology- intensive industries, such as automobile, computer and electronics production. In such industries, the actual production of goods--or least certain stages in that process--remains the most profitable part of the process. Such industries tend to be highly centralized, with vertically integrated firms remaining dominant, though they may subcontract out the less profitable steps in the production process, such as making component parts. The apparel industry is, however, what Gereffi (1994, 2001) calls a buyer-driven commodity chain— one in which the chain is dominated not by producers, but by retailers, marketers and merchandisers. This arrangement is typical of most labor-intensive, consumer-goods industries, such as apparel, footwear, and toys. The greatest profits are io be made nor in actually producing the goods, but in designing and marketing them. Thus, these firms maintain control of advertising and retail while farming out production. There are also driven to constantly innovate--producing new styles of clothing, for instance--because their products are so easily imitated by competitors (Korzeniewicz 1994; Rabach and Kim 1994). As a result of this, for many core firms in buyer-driven commodity chains,
their major asset is their brand image and identity, which is best understood as a non- material form of capital. Much of the brand-name firms’ work becomes not about managing labor, but managing consumers, shaping how they use products and attempting to colonize ever more spheres of social life in a quest to increase the value of their brands (Arvidsson 2006; Klein 1999). Additionally, while the retailers, marketers and merchandisers were once largely distinct entities, with rise of retailers’ own private labels
(store brands) on the one hand and brand-name chain stores such as Nike Town on the other, the boundaries between the two have become increasingly blurred (Armbruster- Sandoval 2005 J.