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FRAYING AT THE EDGE ; S. FLORIDA FIRMS STRUGGLE WITH CHANGING LAWS.
South Florida Sun - Sentinel; Fort Lauderdale, Fla.; Nov 17, 2002; Doreen Hemlock Business Writer;

Abstract:
Photos/ Ginner Dixon (color) THE LOOK: Perry Ellis model Justin Macala, left, Marketing Director Colleen Adams and Marketing Coordinator Loren Krongold create the perfect look for photographer Steven Mueller at Perry Ellis in Miami. Jobs for designers, marketers and others who support the apparel industry remain in South Florida while factories have gone offshore. (color) STYLE: Cuba-born [George Feldenkreis], CEO of Perry Ellis, expects his staff to focus more on Asian production when the next change in U.S. trade laws occurs in 2005. Staff photo/ A. Enrique Valentin STITCHES IN TIME: Rows of workers sew clothes at the Interamerican factory in Santiago, Dominican Republic. The factory employs thousands of workers. Thanks to the apparel industry, the Dominican Republic now ranks s South Florida's No. 2 trade partner.

Full Text:
(Copyright 2002 by the Sun-Sentinel)

A third-generation apparel entrepreneur, Mano Howard used to employ 350 people at his South Florida factory cutting fabric to be sewn into pants in the lower-wage Dominican Republic and sold in U.S. stores.

Today, garment makers in the Dominican Republic cut cloth themselves, and Howard is looking to sell the last third of his Bend n' Stretch Inc. headquarters in the once bustling industrial area of Hialeah.

It's a painful dislocation in an industry going global, but just one piece of a complex story.

While South Florida has lost factory jobs, it has morphed into an apparel trade and services hub for the Americas, especially for clothes made in the nearby Caribbean and Central America. That's created new jobs at ports, trucking companies, customs offices and other businesses.

Thanks to apparel, the Dominican Republic now ranks as South Florida's No. 2 trade partner and Honduras as No. 3, with more than $4 billion in apparel-related trade with those two nations alone. Miami-Dade and Broward counties also have attracted new offices from companies overseeing their hefty production in the Americas: Gap Inc., Levi Strauss & Co. and Eddie Bauer among them.

Yet South Florida's new role as a trade and services hub now faces a threat of its own.

Come 2005, quotas on world apparel trade will be lifted, and analysts expect more production for the market to shift to now quota- choked Asia and China, where wages are even lower than in the Americas.

That means the gateway for U.S. clothing imports will move more toward California and the U.S. Pacific Coast and away from Florida, imperiling thousands of jobs in the Sunshine State and Latin America.

"We have to re-invent ourselves all over again," Bend n' Stretch President Howard said bitterly.

South Florida's changing role in the apparel industry from a sewing center in the 1960s to a fabric-cutting hub in the 1980s and now to a trade gateway is a story of how globalization works, its dislocations and its opportunities. It's a story of growing links between nations and ever-faster changes in markets, laws and technology that affects everything from where we work to literally the shirts on our backs.

Cuban arrivals

The South Florida saga began when a flood of Cuban immigrants fleeing a homeland turning communist built Miami in the 1960s into the third-largest garment production center, surpassed only by New York and Los Angeles.
Cubans developed factories mainly in the Hialeah area, and many of the women arrivals anxious for jobs began sewing -- even the mother of now Miami-Dade County Mayor Alex Penelas.

But by the 1970s, sewing operations were leaving the United States, propelled by rising U.S. wages, world trade accords that slashed import duties and a push by some department stores to cut costs by contracting private-label clothes directly from abroad. Much of the sewing went to lower-wage Asia.

By 1978, when Howard started Bend n' Stretch, he didn't even consider stitching in Florida. His firm opted to cut cloth in Hialeah for sewing overseas, mainly in the Caribbean region.

His business boomed, however, when the Reagan administration in the 1980s passed new laws to encourage production in America's back yard, instead of in Asia. Washington added quota incentives to an existing low-duty program for certain clothes made in the Caribbean and Central America -- with benefits generally limited to goods made from U.S. cloth cut in the United States.

The move aimed to help the Caribbean Basin stem poverty and socialism and also help U.S. fabric makers, who were facing tough competition from cheaper Asian-made cloth.

Even Asian producers from Korean and Taiwan flocked to the Caribbean region to set up garment factories and cash in on the generous plan.

Hialeah flourished, cutting U.S. fabric into parts, shipping the parts to the Caribbean Basin and then receiving finished garments for U.S. sale. Howard's work force peaked at 350 in the mid-1980s.

"The laws told us where to go, and we went," said Tom Travis, a trade lawyer who specialized in apparel at Miami-based Sandler, Travis & Rosenberg PA.

But the legislation changed again, with the start of free trade with Mexico in 1994.
Free trade meant more generous benefits for clothes made in Mexico than in the Caribbean Basin. Mexico quickly blossomed into the single largest apparel supplier to the United States.

But growth in South Florida's trade suffered, as clothes made in Mexico tended to be trucked through Texas and other states along the U.S.-Mexico border instead.

By 2000, Washington took action to restore some of the Caribbean Basin's luster. New laws expanded existing duty and quota incentives to include clothes not only made from U.S. fabric but also cut in Caribbean Basin nations. Cutting operations fled South Florida, just as sewing had.

Howard's staff in Hialeah shrank to 15 employees, leaving him resentful and angry with U.S. politicians, and unsure of his next move in the industry.

"To help the rest of the world, we've chased away manufacturing," said Howard, seeing no future for his children in a business where his Austrian grandfather pioneered one piece, snap-down-the-front pajamas for children. "We did it to ourselves. We're imbeciles."

Imports flourish

South Florida's evolution mirrors changes in the U.S. apparel industry as a whole.

Just as the apparel job tally in Miami-Dade and Broward counties fell by roughly half over the past decade to 7,900 in August, jobs in the U.S. industry have slipped by about half to 529,000 in May, according to government statistics and apparel journal Bobbin of Columbia, S.C.

Today, imports account for more than two-thirds of clothes sold in the United States.

Companies now can e-mail designs and orders worldwide, making it easier and faster to migrate abroad.

"There's no longer any question of whether production is going to go offshore. It's a matter of where is it going to go," said Kathleen Desmarteau, Bobbin's editor-in-chief.

What's driving the evolution, experts say, is simply price.

While labor advocates often bemoan the loss of U.S. jobs, big discount retailers such as Wal-Mart Corp. and Target Corp. cater to growing U.S. consumer demand for apparel at rock-bottom rates.

"It's a penny business today," lamented Jack Alberquerque, an industry veteran now semi-retired in Greenacres near West Palm Beach. "Everyone is looking for prices, prices, prices."

The chains can offer clothes especially cheap, because too many factories worldwide are chasing too few orders, said consultant Robin Lewis, former executive editor of Fairchild Communications Inc. newspapers, including Women's Wear Daily.

"In the land of excess, the consumer is king," Lewis told a recent apparel conference in Miami Beach.
Miami-based apparel maker Perry Ellis International, probably the best known and most successful apparel company in South Florida, feels the price pressure daily.

To compete, the apparel giant that started 35 years ago as an importer of four-pocket guayabera shirts now makes virtually all its garments overseas. None of its varied brands, from Munsingwear to John Henry and Speedo, are made in South Florida, Cuba-born CEO George Feldenkreis said.

Perry Ellis employs about 400 people in Miami: clothing designers, logistics planners, quality control inspectors, finance specialists and others. They manage a global empire with sales topping $280 million a year and production split roughly 70 percent in Asia and 30 percent in the Americas.

Costs the key

Yet come 2005, Feldenkreis expects his staff will focus even more on the Pacific Rim.

With quotas lifted, few in the Americas can compete with Asia's wage rates. Factories pay about 50 cents an hour for sewing machine operators in China, including fringe benefits -- less than one- third the rate in Mexico, Dominican Republic or Honduras.

"What's coming is a tsunami from China that's going to make us all run," warned Henry Fransen Jr., executive director of the Honduran Apparel Manufacturers Association. His group represents companies employing roughly 100,000 people -- more than any other industry in Honduras.

To compete, Caribbean Basin producers are touting their relative advantage for U.S. buyers: proximity.
U.S. neighbors emphasize they can deliver clothes in days, compared to the weeks it takes to ship from China. That means less cash tied up in inventories and faster response to fashion trends.

Analysts say South Florida can help Latin partners too by speeding apparel handling.

Some suggest the Port of Miami, the main gateway for apparel imports, operate round-the-clock, seven days a week with Customs staff, so goods can be whisked through faster for distribution nationwide.

Feldenkreis of Perry Ellis also would like to see South Florida universities train more apparel designers, marketers and other top executives to bolster the area's competitiveness as an apparel service center.

Without quick and coordinated action, executives say much of the Caribbean Basin's production could ultimately wither like South Florida's sewing and fabric-cutting operations already have.

"South Florida will remain a central hub for everything made in this hemisphere," Feldenkreis said. "The question is: How much will stay?"

Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305- 810-5009.

Changes in the apparel industry are rocking the Americas. Today, the South Florida Sun-Sentinel looks at how the industry in South Florida has been transformed. Next Sunday, we highlight the challenges facing the Dominican Republic and the Caribbean Basin.

[Illustration]
PHOTOS 3; Caption: Photos/ Ginner Dixon (color) THE LOOK: Perry Ellis model Justin Macala, left, Marketing Director Colleen Adams and Marketing Coordinator Loren Krongold create the perfect look for photographer Steven Mueller at Perry Ellis in Miami. Jobs for designers, marketers and others who support the apparel industry remain in South Florida while factories have gone offshore. (color) STYLE: Cuba-born George Feldenkreis, CEO of Perry Ellis, expects his staff to focus more on Asian production when the next change in U.S. trade laws occurs in 2005. Staff photo/ A. Enrique Valentin STITCHES IN TIME: Rows of workers sew clothes at teh Interamerican factory in Santiago, Dominican Republic. The factory employs thousands of workers. Thanks to the apparel industry, the Domincan Republic now ranks s South Florida's No. 2 trade partner.

Sub Title: [Broward Metro Edition]
Start Page: 1H
Companies: Perry Ellis InternationalSic:448190Sic:448190

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