6 am, July 13, Las Mercedes Free Trade Zone, Managua, Nicaragua
A river of people, 19,000 workers, packed ten or twelve across, pours slowly through a bazaar of hawkers toward the gates of the Las Mercedes Free Trade Zone, about a mile from Managua's airport. Headed for twenty-three factories that open at 7 am, the people will work until at least 5:15 pm; many will be forced to work until 7, and others until 9, for firms that are free from most tariffs. The hawkers sell them fried bread, fruit, meat sandwiches, caffeine and vitamin-B pills. The workers suck neon-colored sweet drinks from sandwich bags as they flow through the gates.
We are at the Zona Franca at the request of the Managua union confederation (CST-JBE) to verify its charges of violations of internationally recognized labor rights and Nicaraguan labor law, especially at the Chentex factory, the last of two Las Mercedes factories with functioning unions. This year, Nien Hsing, the Taiwanese company that owns the Chentex plant, two others in the zone and three in Mexico, launched a brutal offensive to crush the union. The Chentex management has fired workers who are members of the union and even those seen as friendly to it, and it has charged union leaders with serious criminal offenses carrying potential seven-year sentences. In response, the union is reaching out to allies in North America, including the National Labor Committee, the AFL-CIO, the United Steelworkers, the apparel workers' union UNITE, Witness for Peace and the Campaign for Labor Rights.
On this morning, the workers give us evidence that los Chinos (the Chinese), as they refer to the management, act with lawless impunity. Amid the dust and rotten fruit of the bazaar's trash, a knot of activists passes out leaflets. People gather, drawn by their leaders and eddying around us. A slim young man reading from some notes on an envelope introduces a woman who has been hit by her supervisor at Chentex. She tells of complaining to the Ministry of Labor after she was verbally abused and then hit, and says that she was fired when she made the complaint. The young man, the financial secretary of the Chentex workers' union, introduces us to Jessica, a fired union activist who was hit by the same supervisor in 1997.
The workers are mostly young women, and single mothers are numerous, although an experienced observer notes that it seems as if the number of men has increased among the mass trudging toward the gates. Elsewhere--in the United States too, as Edna Bonacich and Richard Appelbaum report in their new book on the Los Angeles apparel industry, Behind the Label: Inequality in the Los Angeles Apparel Industry--the proportion of men in this basically female industry rises when work becomes more scarce.
Out of the crowd comes a young man, muscular in a red football jersey, his black hair shining in the morning sun. He is among the 300 fired at Chentex. One afternoon his supervisor handed him a photocopied note written by hand. There was a blank space for his name. Addressed to the director of human resources, the letter said he was writing to resign from the Chentex union, and asked the firm to stop deducting union dues. He refused to sign, as many others had. He was fired on the spot.
Nicaraguan labor law nominally protects this man, as well as the women who were hit. But in addition to being bureaucratically slow, the Ministry of Labor processes complaints as directed by the government of President Arnoldo Alemán, which openly sides with the employer. Time, in Managua as in New York, is the great ally of the employer in labor disputes. The Chentex and other Las Mercedes workers have no savings. So, fired unjustly, they have few resources that might support a patient wait for the not-so-just process of law. Within this desperate gap between resources and justice the employer sometimes offers a Faustian deal: We will release you and give you the legally entitled severance pay (accrued at one month per year of service) if you withdraw your complaint of unfair practices. Thus, impunity is purchased.
One of the activists brings to us another woman, who is pretty but sad-looking. "I lost my baby because los Chinos abused me," she says. She is finishing the night shift. These days they are working six days a week, 7 pm to 7 am, with a break at midnight. This woman was pregnant in the spring. Her supervisor yelled at her when she lagged, calling her names like "dog face" and saying she was as dumb as a horse. She says, "I lost my baby in May, because they harassed me so much."
Yet another woman comes forward. She works in the embroidery area. They have been on twelve-hour shifts for weeks, including many Sundays. She was told not to join the union or she would be fired. Now even more women come up. They are not on the night shift; they were sent back from the gate because they were late. We asked if they could get into trouble for talking to us. "Claro"--of course--they could be fired for talking to union people.
The Nicaraguan apparel industry has grown rapidly in just a few years, and the vast majority of its production is bound for US markets--$73 million in 1995, $232 million in 1998 and an estimated $314 million this year. The factories in Las Mercedes are contractors who work for known brands and retail stores.
Global contract-production is a cutthroat business. About 30 percent of the apparel sold in the big stores is store-brand merchandise in which the chain acts as the initiator of the production process--the "manufacturer." The actual production enterprises, like the Nien Hsing Textile Company--however tyrannical they are to their workers--dwell in the middle of a steep pyramid of power rising above them. At Chentex they make store-brand jeans for Kohl's retail stores (Sonoma), J.C. Penney (Arizona), Kmart (Route 66) and Wal-Mart (Faded Glory), as well as Gloria Vanderbilt, Bugle Boy and Cherokee jeans. The smallest of the four retail chains, Kohl's, has a revenue stream of $4.6 billion--more than double Nicaragua's GDP. Kohl's profits of $258 million are much greater than Nien Hsing's 1999 sales of $158 million. So here, as in the rest of the apparel business, the retailers are the 800-pound gorillas. The top eight retail chains controlled 62 percent of US clothing sales in 1996--and concentration has steadily increased since then.
Retailers, an executive told Bonacich and Appelbaum, "know how many minutes it takes to sew a particular garment and can calculate, on the basis of the minimum wage, how much they need to pay per garment in order to cover it. For large orders, however, retailers can simply cut back the price they are willing to pay, forcing the contractor to pay less than the legal minimum." Explains one former Nieman Marcus official: "The pressure goes right down the line. Pricing starts from the retailer and moves down. It doesn't start from the bottom, from the real costs of making the garment. The retailer can always go down the street and find someone who can make it for less."
Typically, labor costs are 10 percent of the retail price of clothing under standard conditions in the United States. Under the sweatshop conditions faced by more than half of US apparel workers, who earn less than the minimum wage and get no overtime pay--as many as 400,000 workers--earnings of the sewers are about 5 percent of the retail price of women's clothing. Chentex workers earn no more than 1 percent of the retail price of the jeans they stitch--between 30 and 40 cents an hour.
When we visit their homes we can see the result. Tipitapa is a sprawling town twenty minutes from the Free Trade Zone. There we meet a woman who was fired from Chentex--unjustly, she thinks--for low production. Her sister, who lives across town, was fired for being a union member. Cristina's home is a ten-square-foot wooden frame; two of the walls are hung with plastic sheeting, while the others are constructed from cardboard boxes that once held shirts shipped from the free zone in Panama. Her shack has a dirt floor and holds one large bed and two chairs for herself and her husband and baby. Her toilet is a hole in the ground surrounded by a shower curtain hung from a rack. We are shocked to learn that her husband works seven days a week at another of the free-zone plants, but even with his overtime they can afford only this bare shelter.
Important increases in workers' pay would have small impact on the final retail price. The Chentex workers earn but 20 cents for a pair of jeans selling for $21-$34. The Nien Hsing owners, whose profits increased 29 percent in 1999, must be held accountable for their actions. They can be pressured through their big customer, Kohl's, which needs to be informed that North American consumers care about the behavior of their contractors. In 1998-99 the Chentex union succeeded in obtaining legal status, and in negotiations won relief from forced overtime. They began wage discussions this year by proposing a base-pay increase of 40 percent, but management would not negotiate. The union called a one-hour stoppage to emphasize its seriousness. Then things got nasty, with criminal charges against union officers and the campaign to fire activists and intimidate union supporters.
As the workers reached out to their international allies, Nien Hsing unsheathed its longest sword. The company told the Nicaraguan government that if the Ministry of Labor forced it to drop the criminal charges against union leaders, Nien Hsing would drop its plans to build a new, $100 million Free Trade Zone industrial park in the city of León and would pull its three factories out of the country.
The charges have not been dropped, and the Nicaraguan government shows no willingness to support the union's demands that the right to join a union, ostensibly protected by local law and conventions of the International Labor Organization, be respected. The Vice Minister of Labor broke an appointment with our delegation, as did the US Embassy labor attaché. Had we met with the latter, we would have asked him to use the weight of the embassy's influence with the Vice Minister of Labor.
Representative Sherrod Brown of Ohio, a member of the delegation, was astounded that the embassy had broken its appointment with us and has circulated a letter signed by sixty-seven of his House colleagues, asking President Clinton to call for an investigation of labor-rights abuses, in order to determine various Central American countries' and firms' eligibility for the new benefits of Caribbean Basin "parity" (parity, that is, with NAFTA benefits). These are supposed to be conditional on acceptance of internationally recognized labor rights. There are other ways in which US policy can tell the Nicaraguans that we really do believe in labor rights as human rights; for example, the US Embassy could tell the Nicaraguan government that we consider criminalizing labor organizing to be a human rights issue.
The union is attempting to preserve its base of support among the workers still inside the plant by telling members to go ahead and sign the letters renouncing the union, but the firings continue. The enthusiastic spirit of the workers is large but not infinite. The union's legal status is in jeopardy because Nien Hsing uses the renunciations as evidence of the union's minority status, and the Ministry of Labor gives copies to the US Embassy to claim its innocence. At our wrap-up meeting late one night, we asked Manuel Ruiz of the CST-JBE how long the union could hold out. A short man with dark eyes and an easy smile, Ruiz delivers answers in concise lists. He glances at Luis Barbosa, the CST general secretary, who nods. "Eight weeks," says Ruiz. That was on July 15. The clock is ticking.
Readers are encouraged to urge their Congressional representatives to make labor rights a condition of US foreign and trade policy, and to write Kohl's about ending labor abuses at the Chentex factory: CEO R. Lawrence Montgomery, N. 56 W. 17000 Ridgewood Dr., Menomonee Falls, WI 53051; (262) 703-7000. For more information, contact the National Labor Committee, (212) 242-3002, or www.nlcnet.org .