Revival of Saipan’s garment industry hinges on military market

Neo Fashion Inc., a defunct garment factory in San Antonio, has started working to get the military into ordering specialty garments manufactured on Saipan, a move which, if successful, can revive the once billion-dollar garment industry but on a smaller scale.

“It’s not going to be as big as before but it will make specialty items. …There’s no reason we can’t make specialty items [for the military],” Neo Fashion consultant Paul Zak told Saipan Tribune.

Zak, however, said it’s not easy to convince the U.S. military to look at Saipan’s garment capabilities.

“I’ve been doing this for two years. Now we’ve got the samples in, now they’re testing it…We’re geared up…Once you get the order, everything else is easy,” he said.

Saipan’s garment industry peaked at over $1 billion in annual sales from 1998 to 2000. The government’s annual user fee collection from garments also peaked at close to $40 million during those years.

But since March, the government has not collected a single penny from the garment industry, which produced clothing for global brands such as Tommy Hilfiger, Calvin Klein, Gap, Levi’s, Abercrombie and Fitch, Polo Ralph Lauren, Ann Taylor, and Liz Claiborne.

Monthly user fee collection from the garment industry reached over $3 million during its peak years. The last time the government collected user fee was in February with only $746.13.

Prior to that, the government collected $115,796.11 in January; $97,899.22 in December; $164,419.07 in November; and $97,932.80 in October, government data obtained by Saipan Tribune shows.

In March, there was zero collection as the last of the factories ceased operations a month earlier.

Neo Fashion Inc. ceased garment manufacturing in January 2008, but the entity still exists as a corporation, said Zak.

He said Neo Fashion still has the equipment to help revive its operations, as well as former garment workers who are on island.

“They can come in and these people are IRs. There are people who are working on other jobs right now but would come back [if called upon] because they’re sewers; they have the experience…the initial [operation] will never be as big as it was but it may be a factory of 100 people,” Zak added.

He said there’s “absolutely” a chance for Saipan’s garment industry to be revived once it’s able to tap the military market. Puerto Rico, for example, exports almost $200 million in military garments to the United States.

“We export zero. Something’s wrong with that. We made garment for 25 years here. It’s not being able to make it but they don’t even know we exist,” he said.

Even without the military buildup on Guam as a result of the relocation of the Marines from Okinawa, Zak said Saipan can market itself as a supplier of quality garment products to the military just like it did for major U.S. retailers for years. Guam is less than an hour away from Saipan by commercial plane.

“Once you get a military contract, it ships from anywhere…whether it’s T-shirts or underwear, or backpacks, we should be going after that but what I found out is that it’s not that easy,” he said.

The consultant said he had gone to meetings where he was told Saipan is not qualified to become a supplier of garments to the U.S. military, and he had to show them regulations and PowerPoint presentations to tell them about the island’s once mighty garment industry.

Saipan garment factories started closing one after the other in January 2005 when the General Agreement on Tariffs and Trade expired, eliminating quotas on textile exports to the United States. The GATT had regulated all global trade in textiles and apparel since 1974.

From having 34 garment factories producing “Made in the USA” clothing, Saipan now only has dilapidated buildings that once housed garment factories from San Antonio to San Vicente, Lower Base and Tanapag.

Richard Pierce, the governor’s special assistant for trade relations and economic affairs, said 10 years ago, the CNMI collected nearly $40 million in annual user’s fee, and another $40 million in related economic contributions, which are now just part of CNMI history.

“Like presidential candidate Ross Perot’s colorful phrase referring to the loss of jobs and revenue to Mexico due to the proliferation of NAFTA in 1992, the ‘giant sucking sound’ we’ve heard for four year now in the CNMI are the jobs and money exiting to China, India and Malaysia due to WTO, and other economic factors,” Pierce told Saipan Tribune.

“And, since 1995, we knew WTO would be our version of NAFTA with CNMI jobs and our economy unless we did something. We tried,” he added.

There were some 25,000 jobs in the CNMI working on factories, service companies, and government as a result of the garment industry. Most garment workers employed by the industry were from China, the Philippines and Thailand, and most of them have already gone back home.