The pilot manufacturing factory for SweatX, the noble anti-sweatshop brand that aspired to prove that fully unionized and even worker-owned garment factories can thrive in a sea of sweatshops, quietly closed its doors in May. The small Los Angeles plant, launched by the Hot Fudge venture capital fund run by Ben Cohen (co-founder of Ben & Jerry’s), had struggled during its two years of operation.
“The reason why the thing failed,” explains Cohen, “was some pretty serious mismanagement.” Still, Cohen remains enthusiastic. “We discovered that it certainly is possible to cut and sew clothing in this country, pay workers a livable wage and decent benefits under good working conditions and still put out a product that is competitively priced.”
The basic concept was simple: Hire experienced, motivated garment workers (hardly a problem in Los Angeles, where 120,000 workers toil in thousands of tiny factories that routinely violate federal minimum-wage, health and safety laws), install them in a new plant, pay them a living wage with full health benefits, sign them up with UNITE (the garment workers’ union) and educate them in the virtues of cooperative ownership. Once the plant was up and running, the operation would be sold to its workers and managers, who would run it together. And once it had reached its initial market of socially aware consumers, liberal churches, unions, environmental and other social justice groups who would buy large wholesale orders for their organizations, it would branch out into mainstream department stores and retail outlets. The SweatX label would eventually become the socially conscious counterpart to Nike’s swoosh.
SweatX’s proponents believed it would provide a model that would give anti-sweatshop activists evidence to push major labels like Gap and Nike–whose products are made primarily in Asian and Latin American sweatshops–to raise their workplace standards. As Los Angeles mayor James Hahn said at the factory’s well-publicized opening in April 2002, “Your decision to locate the factory [in LA] is going to change the world.”
At the time, that claim did not seem far-fetched. Labor costs are only 6 percent of the retail price of garments made in the United States–60 cents for a $10 T-shirt. The increased cost required to compensate workers decently would hardly matter when consumers realized that they had an alternative to buying clothing made in sweatshops.
Unfortunately, SweatX suffered the same fate as many start-up apparel companies. Its problems included uneven quality, insufficient capacity and missed delivery deadlines. Cohen and his advisers installed an initial management team that lacked experience in the highly competitive garment industry. They leased an expensive building and purchased too much equipment. Too many managers added to costs, despite a “solidarity ratio” that limited them to earning no more than eight times what a worker earned.
In its two years of operation, the major customers for SweatX’s T-shirts and polo shirts were unions, a few colleges that, under pressure from student activists, created “sweat-free zones” in campus bookstores and rock bands like the Grammy-winning Foo Fighters, who sold SweatX shirts at their concerts. But SweatX never penetrated the largest universities, social justice groups or religious organizations. The SweatX management team learned too late that it could not profitably sell its products directly from the factory to individual customers or even large nonprofit organizations. The clothing market is dominated by a layer of large intermediary supply houses from whose catalogues nonprofit organizations, silk-screeners and many chain stores purchase their inventory. SweatX was negotiating with one such supplier when it ran out of cash. “They were learning on the job,” says Cristina Vázquez, UNITE’s western regional director.