|Women Encounter Technology: Changing Patterns of Employment in the Third World (UNU, 1995, 356 pages)|
|7. Restructuring and retraining|
The manner in which firms are restructuring is extremely diverse and includes the radical transformation of long-standing enterprises as well as the rapid growth of new enterprises. The case studies presented below illustrate both the breadth of that process and the specific ways that companies have tried to improve their own market position relative to their competitors. Changes in managerial styles, from entrepreneurial to corporate, new ownership patterns, and the global context of garment manufacturing mark a dynamic transition. Multinational firms have grown, declined and revived alongside smaller family-owned businesses. Large clothing com- panies have acquired their own retail chains, bought out their competitors, integrated vertically or sought international fame through designer-driven franchise operations and product licensing. Large garment firms have expanded too quickly and tied their fortunes to an economy in decline: some manufacturers closed their retail outlets in Canada to offset losses in the United States. Others, like Mr. Jax, closed their manufacturing houses.
The threat of factory closure has spelled trouble for unions. Some firms have sought to undermine already established collective agreements through wage freezes or capital flight across provinces and to low wage economies in the United States, the Caribbean and the Far East; the extension of free trade to include Mexico creates another opening for capital mobility. Some firms have co-opted unions by using employee pension funds to finance rapid expansion schemes.
The rapid change and multiple threats have paralysed union organizations and hindered their recruitment of members, which has created fertile ground for the growth of non-union contract shops and subcontracting to industrial homeworkers (Cameron and Mak, 1991; Dagg and Fudge, 1992; Leach, 1993). An inquiry into the conditions of clothing workers revealed that visible minority workers in non-unionized contract shops were especially disadvantaged when their factories closed without notice, leaving them with no jobs and no severance pay (BASIC, n.d.).
At the bottom of this class structure are the growing proportion of women who take work into their home. The ILGWU interviewed thirty industrial homeworkers, who were primarily Chinese-speaking. Most of the homeworkers were paid less than the minimum wage. Half of them reported difficulty in getting paid for work completed. Many women were being helped at home by their children (Dagg and Fudge, 1992:p. 24). The ILGWU has reported a two-thirds loss in membership since 1986. The expansion of garment manufacture to new localities outside urban centres, and even outside the country, poses tough challenges in organizing the unorganized.
Dylex in Toronto
Dylex is a pioneer in multinational retailing. The company began by manufacturing sportswear, marketed through retail outlets it purchased in Canada and the United States. The company met with success until it ventured into the United States and bought some failing retail chains (Foxmoor, Brooks and T. Edwards) at a time when the economy was heading into a downturn. In 1985, Dylex had 2,700 retail stores in Canada and the United States. By 1991, the conglomerate was down to 1,500 stores. The company showed a heavy loss in its Canadian operations in 1986.5 By the first half of 1991, they recorded a loss of 37.6 million dollars and were closing their Town and Country women's retail chain in Canada and their Club International, recently acquired from Monaco Group, in the United States.6 In 1991, the company announced a twelve month wage freeze among its 20,000 full-and part-time employees.7 Despite these losses, Dylex is considered to be a major stakeholder in the Canadian retail market with a strong balance sheet in 1991, with 117 million dollars in cash at hand,8 and control of about 10 per cent of the Canadian apparel retail market.
Alfred Sung and the Monaco Group
While Dylex sought to acquire retail holdings, the emphasis of Alfred Sung and the Monaco Group was designer-driven. The Monaco Group based its strategy on the promotion of a single designer, Alfred Sung, who is known throughout Canada and internationally. His name was used in marketing and promotion not only in women's clothing, but also in a variety of products manufactured under license by other companies. Some 30 per cent of the Alfred Sung label was manufactured in-house, 50 per cent was manufactured by Canadian contractors and the rest was manufactured overseas, primarily in Hong Kong.9 When the Monaco Group posted a loss in 1991, Alfred Chan and brother Edward Tan, for Etac Sales Ltd. bought the rights to the Alfred Sung label to market Alfred Sung clothing world-wide for fifty years. Etac is able to improve profit margins by using Asian manufacturers and distribution networks in Shanghai, Hong Kong and Tianjin.10
Tan Jay: from Winnipeg to Toronto
Peter Nygard, owner of the Tan Jay line, has also captured international fashion headlines. Nygard is well known for his lavish Hollywood-style extravaganzas both in Canada and the United States. He is also famous for placing whole page advertisements in Winnipeg newspapers to present his case against union organizing drives.11 The Manitoba labour board has ruled that Tan Jay had committed unfair labour practices, including the refusal to deduct union dues, to allow the union access to the plant and to pay into the union's retirement and health and welfare funds. The labour board ruling followed a history of intimidatory practices used by the company against its immigrant workforce, many of them from the Philippines. The company was ordered to pay the union and illegally laid off employees $150,000 in monies owed and fines.12
Tan Jay employs fifteen hundred workers and has also opened factories in Montreal and Thunder Bay, with research and design facilities in New York and Los Angeles and extensive offshore operations throughout the Orient (Ghorayshi, 1990). Much of Nygard's success has been underwritten by his political acumen in lobbying for favourable terms from federal government assistance programmes to finance the restructuring of his four factories in Winnipeg. He has now moved his corporate headquarters to Toronto.
Mr. Jax Group of Vancouver
Another feature of the Canadian garment industry is the expansion of new fashion centres outside the traditional Montreal, Toronto and Winnipeg needle industry. Vancouver's Mr. Jax is an example of a fashion group that initially had trouble breaking into the eastern retail market. In 1986, Mr. lax listed on the Toronto Stock Exchange and purchased West Coast Woollen Mills in British Columbia. The mill made woollen worsteds and would become Mr. Jax's domestic fabric supplier.13 In 1987, the Mr. Jax Group acquired Surrey Classics.14 But by 1990, unable to sustain its expansion, Mr. Jax was in the red, looking to sell to a multinational company who could take advantage of the United States market.
Mr. Jax Group employed 1400 people across Canada, had six companies with retail outlets and real estate holdings plus a state-of-the-art factory housed in a recently purchased building on Vancouver's waterfront. In the year ending 30 November, 1990, it posted a loss of 5.9 million dollars. In January, 1991, it announced the closing of the Surrey Classics Division.15 One hundred and ninety workers were affected by the closure.16
The restructuring of Canadian garment capital has been supported by federal government policies designed to improve the competitiveness of Canada's manufacturing base. The previous regulation of imports as an industrial strategy did not work. Despite the government's 'protection' of the domestic clothing industry, the industry showed a decline in employment prior to the FTA, which could in part be attributed to rationalization and new technology. Following the introduction of the FTA, industrial homework increased. As mentioned, some small companies, unable to compete, have opened import houses or have become non-union shops in a subcontracting nexus.
The federal government helped manufacturers modernize their operations with grants through the now defunct Canadian Industrial Renewal Board. Non-Canadian multinational corporations have established branch plants in Canada under the auspices of the also defunct Foreign Investment Review Agency (Matron, 1984). Work sharing (with the help of unemployment insurance), subsidized training programmes and tax shelters were also provided through government assistance programmes (Ghorayshi, 1990).
The Free Trade Agreement
In 1988, the political and economic stage was set for the introduction of the FTA, which would have disastrous consequences for workers, unions and small businesses in the ladies' clothing industry. The FTA has helped to shift the Canadian clothing import structure from low cost countries to the United States. The agreement opened the Canadian market to manufacturers based in the United States while helping big clothing firms in Canada to move production south of the border; it also helped large clothing manufacturers-turned-retailers in Canada to ship their manufactured apparel goods duty free to their existing retail outlets in the United States. American exports of apparel to Canada (not including production contracted abroad by US firms) increased dramatically by 26 per cent in volume and 14 per cent in value in the first nine months of 1991, following the introduction of the FTA, although the total market for apparel was down considerably, with the total volume of imports from all sources declining by 7 per cent, and by 11 per cent in value terms (Beatty, 1992: p. 14).