GARAPAN Saipan —Hopes for a positive result of the visit by CNMI officials to Washington D.C. were a much-needed shot in the arm for the Saipan Garment Manufacturers Association.
With membership down to 10 factories SGMA has been keeping its fingers crossed that lobby efforts bear positive results.
“I have been pushing for it for a long time. Unfortunately it had been delayed until this year when our government officials saw that we are facing severe problems and the possibility of losing the garment industry ” James Lin president of United International Corp. and president of SGMA told the Journal. “I believe government officials now realize that this is something we have to do right away. We are running out of time. We are losing the competition because our cost of manufacturing is too high ” he said
The government sought recent services of the lobbying firm Sandler Travis & Rosenberg which is being paid $15 000 a month for this undertaking culminating in July meetings with federal officials and Lt. Governor Diego Benavente Resident Representative Pete A. Tenorio and Alex A. Sablan marketing manager of Saipan Shipping Co. and president of the Saipan chamber.
Lin said SGMA did not contribute funds to help the government pay the lobby group.
“We did not have any contracts signed. We’re not in a good financial situation to spend for the lobby effort ” he said. Lin said SGMA has been “having a lot of discussions and meetings with Benavente. We give the hope and trust on him. Hopefully he can get this amendment approved as soon as possible ” he said.
In 2000 SGMA had 34 members. This went down to 22 in February and down to 10 after 12 Korean garment factories with a total workforce of 4 500 pulled out in March. Lin said the Korean factories pulled out as a group citing financial problems. One such factory is the Sako Corp. which shut down operations early this year.
So far four factories including Sako have closed.
SGMA’s funding is mostly composed of regular dues from members paying $1for each garment worker employed. In May SGMA closed its rented offices in Gualo Rai along Middle Road and terminated employment of staff handling administrative work.
At present SGMA holds regular meetings at Lin’s office in his factory United International Corp. Administrative work is being done by the SGMA board of directors.
Lin said work hours at factories have decreased from an average of 60 in 2004 to 40 in the past few months. Industry-wide the workforce has also been reduced by 35% he said. UIC has reduced its workforce by half.
Lin said SGMA buyers used to place orders four to five months ahead of time.
“Now we wouldn’t know until about two to three months. It’s very difficult. We try to work quarterly. We have to look into the market demand to see whether our price can still be competitive. Every three months we try to see whether our buyers are still willing to book orders ” Lin said. “We hope we can stay on and stabilize the current situation. But there’s no guarantee. Everything is tied up now with the administration.”
He said an amendment to the Tariff Code “would give us more assurance to buyers for them to continue placing orders.” The CNMI government has high hopes that Congress would move to amend headnote 3(a) of the U.S. Harmonized Tariff Code by the end of 2005 to help ensure the survival of the garment industry in the CNMI.
Benavente said the 17 members of Congress and their staffers the group met with were “very very supportive” of the CNMI’s proposal to amend Headnote 3(a) of the Tariff Code.
The amendment would allow manufacturers here to reduce local value added requirement on garment products from 50% to 30%.
“They are looking at sponsoring or co-sponsoring legislation by the end of the year ” Benavente told the Journal. He said changes in international trading brought about by the lifting of worldwide import quota restrictions drove the CNMI’s point across during the delegation’s visit to D.C. “They were supportive of the proposal with the information that they have. The changes in world trade justify our proposal ” Benavente said. Other countries already enjoy what the CNMI is asking for he said.
“We are part of the U.S. yet we still have the 50% local value-added requirement ” he said. MBJ