REMAINING MARIANAS GARMENT FACTORIES TO CLOSE

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By Haidee V. Eugenio

SAIPAN, CNMI (Marianas Variety, Dec. 14) – Garment sales reached only US$18 million in November, a 53 percent drop from US$38 million in the same month last year as Commonwealth of the Northern Mariana Islands factories continue to close one after the other due to stiff competition from other Asian countries now also exporting to the U.S.

Eight of the 15 remaining garment factories have announced closures between this month and February.

Once the second 50-cent minimum wage increase takes effect next summer, seven of the remaining garment factories which have not yet announced their closures will also cease operations, according to Richard A. Pierce, the governor’s special assistant for trade relations and economic affairs.

"This tragedy did not have to happen," Pierce told Variety, saying that the federal government "knowingly," "purposefully" and with intent closing the garment industry down.

Saipan had 34 garment factories in 2000 with sales peaking at over US$1 billion.

Garment sales reached only US$492.16 million in calendar year 2006.

Today, Pierce said, only 15 remain in operation and eight of them — Jin Apparel Inc., L&S Apparel Corp., Poong In Saipan Inc., Neo Fashions Inc., Sam Kwang Saipan Corp., Commonwealth Garment Manufacturers Inc., Mirage Saipan Co. Ltd., and Winners Corp. — have already announced a shutdown.

"The remaining seven factories will cease their operations with the second minimum wage increase if enacted," he said.

By that time, the Commonwealth of the Northern Mariana Islands’s minimum wage of US$3.55 an hour will be raised to US$4.05.

Pierce said the other factories in operation are United International Corp., Onwel Garment Manufacturers, Kyung Seung Saipan Inc., Marianas Garment Manufacturers, US Commonwealth of the Northern Mariana Islands Development Inc., Rifu Apparel Corp., and Uno Moda Corp.

"It was well within the federal government’s control to arrest this long announced downturn in the industry, and keep this industry alive until at least 2009 and possibly longer. I refuse to listen to anyone that says it was going to happen anyway. That may have been true in 2009 or 2010, but it did not have to happen now," Pierce said.

Pierce said the Commonwealth of the Northern Mariana Islands will lose approximately US$750,000 a month in direct revenue from the closure of eight factories, as well as millions in government fees to the Commonwealth Utilities Corp., the Commonwealth Health Center, the Commonwealth Ports Authority and the Department of Labor, among other agencies.

"This will be the immediate impact. We won’t know the effect upon the overall Commonwealth of the Northern Mariana Islands economy until a few months from now but, in my opinion, this is going to be the hardest hit this government has ever taken," said Pierce.

The latest government data shows garment sales reached only US$18 million in November compared to US$38 million last year during the same month.

From the US$18 million, the government collected US$665,559 in user’s fee.

"Apparel sales are plummeting, and badly needed Commonwealth of the Northern Mariana Islands revenue is absolutely going to fall off the map," Pierce added.

He said when the last of the factories close, the Commonwealth of the Northern Mariana Islands will see an overall net effect from today’s levels of about US$3 million in lost monthly revenue.

"This includes all revenue derived from the industry, direct and indirect. This represents 25 percent of current Commonwealth of the Northern Mariana Islands revenue," he said.

From 17,000 workers, Saipan’s garment industry now only has some 8,000 resident and nonresident workers mostly from China.

Since January 2005 when the World Trade Organization liberalized trade rules allowing Third World countries to export more of their cheaper garment products to the United States, factories on Saipan have been shutting down one after the other.

The garment business is one of the Commonwealth of the Northern Mariana Islands’s two major industries; the other one is tourism which also continues to post declining arrivals.

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