Hyunjin Saipan to be next casualty?

Hyunjin Saipan, Inc. may soon add to the list of Saipan garment factories that have ceased operations since the lifting of quota restrictions on apparel took effect in January this year pursuant to a World Trade Organization accord.

There have been reports circulating around the island that Hyunjin will shut down its Saipan operations, following the disclosure of another garment firm, Express Manufacturing, Inc., that it will stop local operations beginning Dec. 17.

Hyunjin has made no official announcement yet regarding the reported closure, but sources at the company said talks about the possibility have been existent since early this year. Hyunjin’s management would reportedly convene today to discuss, among other things, its plans relating to its operations or its closure.

“The news have been out since early 2005,” said a Hyunjin employee. “There have been plans about closing the factory, but there’s no official word from the management.”

The Saipan Tribune contacted Hyunjin, but its general manager, Lee Jin Sik, was not available for interview.

This developed as Express Manufacturing confirmed the company’s closure effective Dec. 17. Express office manager Kim Sunmi said the company has about 100 employees.

Earlier this year, at least three garment factories shut down their operations, while others resorted to workforce reductions. The decision of La Mode, Inc., Sako Corp. and Mariana Fashions, Inc. to stop doing business displaced around a thousand workers.

It remained unclear at press time as to how many workers would be affected if Hyunjin ceases local operations. But the company has reportedly reduced its workforce of approximately 500 to half.

Saipan’s garment industry players have been reporting declining sales, following diminished competitiveness in the global market as a result of the WTO setup, as manufacturers from some countries such as China and Hong Kong incur lower production cost due to cheaper labor. In November alone, sales reportedly dropped by $23.6-percent to $52.37 million compared to November 2004’s sales.

The CNMI government and Saipan’s garment manufacturers have been lobbying the U.S. Congress to amend the federal tariff law by reducing value-added requirement on garment imports from 50 percent to 30 percent for local manufacturers to avail of duty-free treatment.

The U.S. Tariff Code requires that 50 percent of the value of the garment has to be added locally by transformation, in terms of additional labor, packaging or other overhead costs, so that garment products coming from U.S. exporters like the Commonwealth could enter the United States duty-free.