layoff's

["Ian Murray" <seamus2001@xxxxxxxxx>]

A Pakistani Setback
Drop in U.S. Imports Hurts Textile Industry

By Paul Blustein
Washington Post Staff Writer
Wednesday, December 26, 2001; Page A01


LAHORE, Pakistan -- Until the bombs started falling on Afghanistan,
globalization had worked pretty well for textile workers like Muhammad
Saeed.

For the past six years, Saeed stitched shirts and jeans at a factory
supplying U.S. companies including Gap, Levi Strauss and Eddie Bauer.
The job supported a lifestyle that, by American standards, could
barely be described as humble; six people sleep in one bed in Saeed's
one-room home, which is tucked amid a maze of alleys littered with
donkey droppings and sewage water flowing in the gutter. Still, the
pay of $88 a month was more than triple his salary from his previous
job, and he was able to earn substantially more by working overtime,
helping his family to rise well above the squalor and illiteracy in
which millions of Pakistanis are trapped.

But now Saeed has been laid off, along with thousands of other workers
in Pakistani textile plants, following a slew of order cancellations
by U.S. firms worried about their ability to obtain and sell garments
made in a Muslim country next to a war zone.

Perry Ellis, Tommy Hilfiger and American Eagle Outfitters were among
the labels that reduced or canceled orders over fears of instability
and disruptions in shipments after widely televised demonstrations by
militant Pakistanis protesting the U.S. airstrikes and Gen. Pervez
Musharraf's alliance with Washington.

Several Pakistani clothing makers report being told by U.S. buyers
that, even if supplies were not disrupted, the "Made in Pakistan"
label had become a liability in the U.S. market, which is the single
largest customer for Pakistani textiles, absorbing $1.9 billion of the
$5.8 billion that Pakistan exported last year.

The Pakistani government estimates that because of factors related to
Sept. 11, 68,500 workers have been laid off and 177 establishments
closed, 70 percent of them in textiles and textile-related businesses.

The result is an unhappy lesson about the vicissitudes of
globalization, in which modern corporations show little loyalty to any
particular country or workforce but adapt quickly as they seek the
most profitable and cost-effective locations from which to conduct
business. This case shows how such moves can have geopolitical
consequences: Even though no evidence suggests that U.S. companies
were driven by any animus toward Pakistan, their actions galled many
here because they came at a time when Islamabad has provided vital
backing to the U.S.-led coalition against terrorism.

"What kind of friendship is this?" demanded Saeed, a gentle-faced
40-year-old with seven children. "Despite a lot of opposition, our
government supported America, but America is switching orders [for
apparel] to other countries, and now we have no idea where our next
meal is coming from."

Saeed worries that his landlord may throw his family out of their home
in a couple of months for failure to pay rent, possibly prompting his
school-age children to drop out and find work. "And then," he
predicted sarcastically, "Americans will accuse Pakistan of having too
much child labor."

The specter of betrayal by America is hardly what the Bush
administration wants to see in a key allied country whose president,
Musharraf, is viewed as taking considerable risks in joining
Washington's cause. So administration officials are sympathetic to a
request from Islamabad for a suspension of U.S. duties on imported
Pakistani textile and apparel products, the idea being to provide
American importers with a financial incentive to keep doing business
here. The duties, which average about 17 percent, are paid by the
importers; Pakistan is seeking a three-year suspension.

The issue is pitting international political interests against
domestic ones. The U.S. textile industry strongly opposes suspending
duties on Pakistani goods, arguing that it would only speed the rate
of job loss in an industry that has shed more than 60,000 workers in
the past 12 months, mostly in the Carolinas and other southeastern
states. Congress has the final say, and the U.S. industry enjoys
substantial clout on Capitol Hill.

Textiles and apparel are almost invariably the first rung up the
ladder for a country developing an industrial base, and that is
particularly true in the case of Pakistan, a country of 140 million
people whose economy was almost completely agrarian when it became
independent, separating from India in 1947. The textile industry,
which took off in the 1980s, employs 3.5 million, about 60 percentof
the industrial workforce.

Those figures understate the sector's importance "because textiles
create linkages for income generation all through the economy," said
Ali Cheema, an expert on the industry who teaches at the Lahore
University of Management Sciences.

Much of the cotton used in making Pakistani garments is grown here,
and the country has a large spinning and weaving industry as well,
including the Faisalabad market, one of the largest yarn markets in
Asia.

"If there is a shortfall anywhere in the chain, it affects everyone's
income. There's a huge multiplier effect," Cheema said. "There's a
saying in Faisalabad that the price of poultry fluctuates with the
price of yarn" -- the reason being that people eat less chicken if
yarn is not selling well.

The dark side of the industry is visible in urban alleys where
elementary-school-age children sit hunched over sewing machines. But
those scenes contrast starkly with clean, modern facilities such as
Needlepoint Ltd., where a workforce consisting mainly of men in their
twenties and thirties makes knit tops, polo shirts and sweat shirts,
most with labels such as Calvin Klein and Ralph Lauren. Needlepoint
workers earn wages averaging $55 a month, with the most skilled
drawing $200 a month (compared with the roughly $35 to $40 a month
that, say, a household servant or manual laborer earns in Lahore).

Needlepoint has to keep on its toes, said Nasir Abbas Mirza, the
firm's chief executive, because brand-name firms, sensitive to
American consumers' concerns about unsafe working conditions and
exploitative practices, send monitors on surprise visits to make sure
their standards are being upheld.

"If we want to supply to brand labels in the United States, this is
the way we have to be these days," he said. "I'm not saying all
Pakistani factories are like this. There are sweatshops here, making
non-branded goods." But this brightening picture suddenly turned bleak
after Sept. 11. At Needlepoint, many of the sewing and cutting
machines now stand unmanned, and 150 workers -- a quarter of the
payroll -- have been laid off, with another 120 slated for layoffs in
January and February because of a 60 percent reduction in U.S. orders.

Although one Tennessee-based clothier continued doing business with
Needlepoint without disruption, other customers postponed orders for
at least one season, and one major customer, East Coast retailer
Aeropostale, "has packed up and said, 'No more business here,' " Mirza
said. (Asked for comment, a spokesman for Aeropostale said,
"Needlepoint has not been dropped from our vendor matrix, and they
will continue to be allowed to bid on future programs.")

Altogether, orders from U.S. buyers dropped 68 percent from
year-earlier levels for clothing that would be manufactured from
December through February 2002, according to a survey last month of 40
Pakistani textile makers that represent about two-fifths of the
country's export industry.

Those figures are dismissed by the American Textile Manufacturers
Institute. "Certain large importers and their representatives are
saying they're going to cut back on orders from Pakistan, but that is
a ploy, frankly, to get the U.S. government to make some sort of
concessions in the form of tariff elimination," said Charles Bremer,
director of international trade for the institute.

Pakistani textile manufacturers point to their idle machinery and
workers as evidence that their pain is real. Some U.S. customers who
were initially scared off in October and November have resumed
contacts now that anti-government demonstrations have died down;
however, "a lot of buyers are still waiting, because they feel that in
order to come to Pakistan they need some incentive," said Samina
Sultana, director of Cotton Connection, a firm that serves as an
intermediary between many U.S. customers and Pakistani manufacturers.

The big worry here is that the impasse in Washington will drag on for
weeks or months -- a real possibility, because the White House needs
the support of textile-state lawmakers to secure broader legislation
granting the president enhanced authority to negotiate new trade
deals. Such a trade bill passed the House by one vote earlier this
month, but the Senate has yet to act. Too long a delay in resolving
this issue could mean that another season's worth of orders is lost,
and buyers, once satisfied with suppliers in other countries such as
China and India, may never return.

That would be a nightmare for Muhammad Abbas, who was among 560
workers laid off at Lahore's Highnoon Textiles last month in a move
that the company blamed on skittishness among U.S. customers. "From
morning to evening, I try to find a job, but everywhere I go the
circumstances are the same," said Abbas, a father of four with a long
beard and white skullcap. His brother, the family's other means of
support, has also lost his job at a textile factory.

Abbas's two-room home sits off a muddy path trod by cattle and goats
and has a concrete floor. One wall is adorned only by a 1994 calendar
depicting the Grand Mosque of Mecca. "We are making ends meet by
selling our household items, like my bicycle and my wife's jewelry,"
he said, adding that he has stopped sending his 8- and 12-year-old
children to school because of his inability to pay fees, which average
a bit less than $7 a month.

Pakistani officials warn that such woes will only make the country a
more fertile breeding ground for Islamic fanaticism.

But in interviews, laid-off workers generally said they harbored no
antipathy toward the United States and weren't inclined to become
politically active. "How can I join a demonstration?" asked
30-year-old Ghulam Nabi, who, like Abbas, has been forced to sell
household belongings and pull his two children, ages 6 and 7, from
school. "I'm too involved in my own suffering."

Many asked why Pakistan was being shown such ingratitude for its
support, and they said they were not impressed with the billions of
dollars in grants, loans and debt forgiveness that Washington has
recently backed for Pakistan. "The common people of Pakistan get no
benefit from the aid America gives," one worker said, echoing a
sentiment that experts in the field said accurately reflects the poor
results of aid here. "It helps the government, but not us."

Abbas agreed. "Sending us orders would be much more helpful than aid,"
he said.

Rep. Jim DeMint (R-S.C.), a champion of the U.S. textile industry,
acknowledged that Pakistani factories need help getting orders but
said, "I think we need to be sensitive, too, to the job losses in our
country. There are thousands of textile workers here who are without
jobs, and they're displaced -- perhaps permanently -- because some of
them didn't graduate from high school."

DeMint said he is willing to accept favored treatment for some
Pakistani imports, including gloves and finished apparel, that don't
compete directly with many U.S. textile operations, provided other
imports that do threaten American jobs are excluded from the deal.

DeMint obtained a letter from Commerce Secretary Donald L. Evans
promising that in working out how duties might be lowered for
Pakistani imports, the administration would work with Congress to
"minimize the impact" on the U.S. textile and apparel industry.

"I'm confident we can do this in a way that's good for our country and
good for Pakistan," DeMint said.

If so, such a resolution can't come too soon for Pakistanis like
24-year-old Yousaf Butt, a Needlepoint employee who is worried about
losing his $130 monthly paycheck. "Why should we be mad at America?
America is doing the right thing," he said, adding: "The only thing I
care about is, I want to work."