Down for the count?

Gone are the glory days of the local garment industry. From dwindling orders to one manaufacturer having to reduce its work week, it’s been tough going.

Once the darling of the local manufacturing sector, this industry is on its knees. Anthony Rahael, managing director, Regency Manufacturers Limited, says local garment manufacturers need to re-invent themselves and find niche markets both inside and outside TT, if they want to survive. He also believes that the local garment industry is close to extinction, noting that trade liberalisation and the $8 minimum wage may be its death knell. To keep afloat, Rahael now contracts garment manufacturers to produce clothing for his firm. “Eventually when I could not handle the situation and realised that I was not getting enough returns I actually gave the machinery and equipment, some of which I had purchased, to my general manager and said: ‘You produce for me and I will pay you a contract price to manufacture garments for me.”

Regency is the largest manufacturer of casual shirts and school uniform shirts in the country. The company contracts at least three other manufacturers to produce garments. It also exports to other Caricom countries. Rahael recalls that when he first started in 1990 things were running smoothly — until the market was liberalised in 1993 resulting in a never ending stream of cheap clothes, especially from the Far East.   “When imported garments started to flood the country we started to get into some difficulty,” he says. He claims that these imported garments did not meet the required compulsory labelling standards that local manufacturers had to meet. “We are required to produce garments that are properlyb labelled. Sometimes we have to buy and print labels which sell at a minimum of 3,000, when we are only producing 1,000 pieces.” Having to print different labels for different types of materials leads to wastage, he says. He charged that while local manufacturers had to spend money to label their products properly, imported garments were coming into the country improperly labelled, some with no label at all. The compulsory labelling standards set by the Trinidad and Tobago Bureau of Standards (TTBS) state that all garments must have labels which include country of origin, composition of fabric, size, country in which it is made and washing instructions, whether written or in symbols. Rahael admits that the TTBS did try to clamp down on the number of improperly labelled imports, but this he said requires some “real political will” for the TTBS to address the problem.. “What they can do is prevent the goods from entering the country or seize and remove them from shelves, he says, acknowledging that such drastic measures are not going to go down well.

He said the influx of imported garments has continued and the local manufacturers have had to compete with garments that were produced at very low costs in countries like China. Matthew Gonzalves, owner and founder of Elite shirts, says the local garment industry is in big trouble. He said for the last 18 months the industry has been facing tough times especially with the number of imported garments available on the market. “The industry will not survive unless the Government does something to regulate the number of imported garments in the industry,” he warned. The Elite company, which has been manufacturing men’s and boys’ shirts for the past 61 years, has been hit hard. Gonzalves said in addition to sending employees home, he has to reduce the work week. The company once employed 100 people, it now has 75 workers. “The Elite company was definitely affected more than other firms in the industry.” He said while Elite’s export sales to the United States (US) and other Caricom countries have remained steady for the last 18 months, local sales have slumped to 20 percent because of the number of cheap imports that have flooded the market.

He said in addition to having to pay an increased minimum wage, the company is also unionised and he has to pay employees fringe benefits.  “Those garments are coming from countries like China and India which have very low production costs, which makes it impossible for local manufacturers like Elite to compete.”  He added that it is a well known fact that in China the cost of producing garments is quite low and their wages are less than half of what people are paid in TT. “Workers in China and India do not have fringe benefits like maternity leave or holidays and their governments subsidise their exports in order to earn foreign exchange. Obviously a local manufacturer cannot compete with that.”  The introduction of low fares and regular flights to Curacao, which has a free zone, has worsened the situation, Rahael says.  Many people seized this opportunity and went there on a regular basis, purchased their garments at low prices and returned to TT. This put further strain on the manufacturers, he says, noting that the airfare for Curacao is subsidised by that government and its businessmen to encourage more business in that country. “So it is ridiculously easy for someone to go there and shop and come back and compete with local manufacturers.

“While all this is legal and above board, local manufacturers are being hit hard.” When Regency first started business, the company produced a wide range of garments, but since they started contracting manufacturers they have narrowed their range to casual shirts and school uniforms. Everything else is imported. “We have gone from being a major manufacturer to a major importer,” Rahael says, stressing he has not been able to compete with the imported garments. The hike in the minimum wage from $7 to $8 also has brought with it an array of problems. Before the minimum wage, Regency offered employee ‘piece rates’ : employees were paid according to the number of pieces they produced. This, he said, made workers more efficient and productive. “But with the minimum wage, if a worker produced 50 of five pieces they were still going to be paid $7 and that somewhat crippled the industry. Piece rates were more effective because it encouraged employees to work harder.”

He described the implementation of an $8 per hour minimum wage as the “nail in the coffin” for the industry. Many workers had to be sent home when the last minimum wage was implemented and the same is going to happen again, he said.. Even so, Rahael believes that Regency has found its niche market in the manufacturing of school uniforms and casual shirts. “This is our niche market. It is a lot of work but we do it well.” Regency sells its school uniforms through Queensway stores.  So what can be done to revive the industry? Rahael said unfortunately, the government has realised that there are certain industries in TT that are not viable, he says, noting that garment manufacturing is one of them. Government can save this industry only if it reverses the trade liberalisation process, he thinks. But this might not be such a good thing for consumers since the price of garments may go up if this happens.

Gonzalves said while the minimum wage has been a deterrent in the industry, the cheap imports are forcing them out of business. “In my opinion workers deserve a decent salary and I have no objection to that. When workers make decent salaries their buying power is much better.” Like Rahael, Gonsalves also complained about the lack of labels on these imported garments. He explained that while he spends thousands of dollars on a yearly basis to adhere to the requirements of the TTBS to label his garments, garments are entering the country without any labels.  “The TTBS has the responsibility to ensure that all these imported are properly labelled with the required information before they reach stores.” He said he has lodged numerous complaints on this matter at the TTBS. Gonzalves noted that all developed countries around the world require that imports and exports be properly labeled. “Consumers are being robbed and cheated of their money with these imports, because they are not getting quality for their money and the TTBS has to do something about it.”  He said the Government has to take a decision to save the garment industry. “It is the Government’s obligation to the people to ensure that they have jobs. The garment industry in particular is very labour intensive and it has the possibility of employing 20,000 people if it gets the necessary assistance.” He suggested that Government increase tariffs and duties on all products that impact their industries, like the Barbados Government did sometime ago. The Barbados Government increased the duties on imported garments by 60 percent.
“The Government should do something similar here in TT. I am suggesting that there be a flow price (minimum price) of about US $5 on all imported garments and that Customs be given the power to confiscate any goods that arrive in TT under that value.” The Trinidad and Tobago Bureau of Standards (TTBS) believes that it has been successful in preventing non-conforming goods, including garments, from entering the country. The TTBS examines goods at the port of entry and at importers’ premises to prevent goods that do not meet the requirements set in the standards from being put for sale.

However, according to Kenrick Romain, marketing manager, TTBS, because the organisation is no longer in the baggage room of Piarco, small traders who use the port do not have their goods examined. TTBS wants to resume that examination at Piarco. Anthony Hosang, first vice-president, Trinidad and Tobago Manufacturers Association (TTMA), said the local manufacturing sector needs to seek out more niche markets and add more value to their products rather than compete with bulk or large manufacturers in the Far East. He said this may require re-tooling and some research and development into new markets as well as market sectors. Still, the garment sector, he says, may never again employ 16,000 persons as it did in the past.