Over the past decade, the garment industry in Saipan grew from 21 companies with $300 million dollars in sales in 1992, to its peak year where 34 companies had $1 billion in sales in 1999, to its current 26 companies and sales in 2003 of $796 million. The industry accounts for over 30% of local government revenue, and accounts for nearly 45% of all jobs in the Commonwealth of the Northern Marianas.
There are currently 24 of the 26 apparel manufacturing companies on the island of Saipan, in the Commonwealth of the Northern Mariana Islands, which are Members of the Saipan Garment Manufacturers Association (SGMA). SGMA was formed in 1993, after being re-named and re-organized from its original Garment Industry Association (GIA).
As the manufacturing industry grew in size and sales, and as a labor-intensive operation, so did grow problems associated with workplace safety, employer/employee relations and human rights issues where a large influx of temporary factory workers became a part of the American legal system through both federal and local enforcement offices, and their enforcement activity.
Nearly all improvements within the Saipan apparel industry have come as a result of the individual companies’ initiative, the manufacturers’ Association’s efforts, federal and local law enforcement activities, partnerships built between the factories and governmental authorities, and the apparel plants’ buyers’ and retailers’ demands and directives in America.
A whole new chapter is opening in the Saipan garment industry, and this Report will chronologically demonstrate how those improvements have been achieved, and what lies ahead for the vital revenue producing factories in the CNMI.
Apparel Industry Partnership
Although a set of industry-wide standards was first formulated and presented by SGMA’s executive director, in a 1994 meeting with the U.S. Department of Labor’s Washington D.C. Wage & Hour Compliance Administrator Dan Sweeney, it was not until a team of SGMA Members attended the Apparel Industry Partnership (AIP) Conference in New York, New York in 1997, that SGMA began preparations to build and install its own SGMA industry standards for all factories in Saipan.
Then President William Clinton created the Apparel Industry Partnership in a collaborative effort with most major American retailers to effectively guarantee minimum standards for offshore sourcing for apparel sold in America by most major retail brands.
A majority of the buyers and retailers in America had already installed their own codes of conduct at their overseas sourcing factories, and President Clinton attempted to merge those efforts and safeguard consumers in America, by making sure those offshore factories made their products in compliance with local laws, and paid living wages and protected the fundamental rights of their employees.
The SGMA Members that attended that Conference in 1997, took the AIP’s basic tenants and principles and began their work to create their own SGMA Code of Conduct, where the same buyers and retailers that became Members of the AIP, could be assured that sourcing in Saipan would meet the same minimum standards prescribed by the AIP.
The SGMA standards ended up exceeding most buyers’ and retailers codes of conduct provisions, where, for instance, no one employed in Saipan apparel operations can be under 18 years of age, while many buyers from America seek 16 years of age as an acceptable working age in their offshore sourcing factories.
SGMA Code of Conduct
The Saipan Garment Manufacturers Association (SGMA) retained a nationally recognized business and human rights organization, Business for Social Responsibility (BSR), to create and implement an industry-wide set of standards, the SGMA Code of Conduct.
A contract was signed (Appendix I) between SGMA and BSR to make recommendations for the Code of Conduct, consult on enforcement, provide training and technical assistance and help assist in the selection of independent external monitors (Appendix II). This contract was signed in October, 1998.
Many of the factories were already under their buyers’ compliance audits, and these were generally regarded as very creditable codes of conduct.
Perhaps the biggest factor in developing a consensus on the development of the standards was BSR’s work with buyers, retailers and federal Labor officials in San Francisco and Washington, D.C.
The Code of Conduct (Appendix III) was registered at the CNMI Attorney General’s Office in December 1998, and was adopted by the SGMA General Membership of 34 Members in November 1998.
Extensive and exhaustive training conferences and seminars for the SGMA Code of Conduct began in January of 1999, with mandatory attendance requirements for SGMA Members. Also attending these conferences have been local and federal enforcement and outreach officials, many company employees from other CNMI businesses, buyers’ representatives that were in Saipan on their inspection and auditing visits, local CNMI Government officials and various members of the media.
Training conferences have been held on:
January 11-15, 1999, at the Hyatt Regency Saipan
August 23-25, 1999, at the JoeTen Public Library
March 5-7, 2000, at the Hyatt Regency Saipan
May 2-5, 2000, at the Pacific Islands Club Hotel
July 2- August 14, 2001, at SGMA Office conference rooms
September 5-7, 2001, at the Joeten Public Library
March 4-6, 2002, at the Northern Marianas College
September 11-12, 2002, at the Pacific Islands Club Hotel
August 11-15, 2003, at the Saipan Dai Ichi Hotel
The SGMA Code of Conduct requires compliance on rights of employees, treatment of workers, working conditions and standards of living and standards for transshipment and manufacturing.
The Code contains its Commitment by all Members which outlines requirements for policies, objectives, rules, guidelines and procedures promulgated by the Association. Members signed the agreement in December of 1998.
Standards for the treatment of workers and working conditions, standards for living conditions, the fundamental rights of all employees, standards for transshipment and country of origin rules, compliance and enforcement principles and the monitoring outline are included in the Code of Conduct.
SGMA launched its worldwide website to highlight the SGMA Code of Conduct, its Membership listing, industry statistics and the latest news. The goal of the association increased to include more than just compliance and education. The industry now had to deal with a campaign that was aimed at destroying all efforts at being the best factories in the world.
SGMA Code of Conduct Monitoring
Perhaps the most important component of the Code of Conduct is the monitoring of the Code itself. Internal monitoring teams are required under the Code, and external independent inspection monitoring is required of all SGMA Members for compliance with the standards of the Code of Conduct.
SGMA publicly announced its Request for Proposals in mid-1999. Thirteen recognized firms submitted proposals, and the selection of SGMA’s independent monitoring firm was announced in October of 1999. Price Waterhouse Coopers was selected to inspect all SGMA Member companies in late 1999.
Factory monitoring reports were submitted to SGMA within 10 days of completion of the audit/inspections and remediation hearings began within 20 days of submission to SGMA.
Another round of monitoring, under the SGMA Code of Conduct, was conducted in June of 2002, by Global Social Compliance (GSC), an offshore operative for PWC.
These audit inspections consist of interviewing a minimum of 25 company employees per SGMA company, while inspecting for any instances of forced labor, child labor, harassment or abuse, nondiscrimination, health and safety, freedom of association and collective bargaining, wages and benefits, overtime and hours of work, workers dormitories and freedom of movement and compliance principles.
The SGMA Code of Conduct independent monitoring component has proven the most useful of tools in gauging the success of the minimum standard requirements for all SGMA Members.
Initial factory monitoring reports yielded good results. Six of the ten Code provisions were in total compliance in all factories. Some safety deficiencies were noted, overtime in excess of Code allowances was detected, not all internal monitoring was properly installed and some employees were still unaware of the Code itself. The work was in progress.
Although the purpose of the Code of Conduct and its monitoring component is to improve all conditions within the factories and for their employees, there have been both casualties and success stories. Since the adoption of the Code of Conduct in 1999, there have been 5 Member suspensions, and one reclaimed company which was re-instated.
The factories themselves are monitored almost constantly by internal and external monitoring under the SGMA Code of Conduct, frequent monitoring by the buyers and retailers of goods manufactured here in Saipan, enforcement officials from U.S. Labor Wage & Hour and OSHA, local CNMI Government authorities, and various accreditation firms for the factories themselves.
Evidence of inspections and changes were evident as early as 1998, when then recent OSHA statistics showed that CNMI apparel factories had a 70% better compliance rate than apparel factories elsewhere in the United States, despite the fact that they were among the most frequently inspected (OSHA Internet Site www.osha.gov/oshstats)
SGMA also helped to advance a number of local CNMI government efforts to improve immigration controls. We actively supported the alien worker amnesty legislation designed to register and account for foreign workers illegally staying in the CNMI.
SGMA continues to support an industry-wide legislative cap on the number of foreign workers in our industry.
The Association will meet with Governor’s Office officials on July 8, 2003 to discuss the re-institution of a worker pool to allow for easier flow from factory to factory of currently available workers on Saipan, thus lessening any dependency on bringing new workers to the Commonwealth. Also, SGMA will work with the Governor’s Office to re-introduce a modified Memorandum of Understanding between the CNMI and the Ministry of Foreign Trade and Economic Committee (MOFTEC), as approved by the U.S. State Department, to eliminate any remaining workers in the CNMI that came through any unlicensed recruitment firms in China. This would totally legitimize all workers here in Saipan, making sure that unscrupulous recruitment scams were never seen again.
Excellence 2000 Partnership
A partnership agreement between the Saipan Garment Manufacturers Association (SGMA) and the Occupational Safety and Health Administration (OSHA), the Excellence 2000 Partnership, was signed as a voluntary Member commitment between SGMA and OSHA in December 1999 (Appendices IV, V, VI).
There are now 20 of SGMA’s 24 Member companies participating in the Excellence 2000 Partnership.
Under the Partnership, criteria includes an executive commitment, a commitment to develop a formal safety and health program including employee involvement, periodic safety and health inspections/audits by OSHA, training and education, employment of a Safety and Health Professional within the Factory, recordkeeping/injury analysis, worker housing accommodation, sanitation, fire safety, safety and health program analysis and cooperation with OSHA.
The Partnership has been highly successful and increased safety and health awareness in all areas of manufacturing operations, and it is understood and accepted that one or two Saipan companies will soon apply for the prestigious VPP status with OSHA.
Northern Marianas Alliance for Safety and Health
SGMA became a Member of the Northern Marianas Alliance for Safety and Health (NMASH) in September 2002 (Appendix VII), after successfully hosting a health and safety conference in early September 2002.
SGMA invited the Hotel Association of the Northern Mariana Islands (HANMI) and the Saipan Chamber of Commerce to attend a conference that had already been planned with OSHA as a part of their commitment toward the Excellence 2000 Partnership.
OSHA then proposed an Alliance between local and federal public and private sectors to promote awareness and knowledge of safety and health through the joint efforts of participants with a primary emphasis on the delivery of health and safety training and education for the benefit of the community in the Northern Marianas.
Members of the NMASH include SGMA, the Hotel Association, the Saipan Chamber of Commerce, the Saipan Contractors Association, the Office of the CNMI Governor, Division of Environmental Quality, the CNMI Department of Labor and Immigration, the CNMI Department of Public Safety, the Northern Marianas College, Region IX OSHA and the OSHA Region IX Education Center, University of California in San Diego.
A NMASH 5-day Conference was completed from August 11-14, 2003 in Saipan, where CNMI Governor Juan N. Babauta declared August 10-16, 2003 as CNMI Health and Safety Week, and the OSHA Region IX Administrator presented a $200,000 grant award for small business consultation in the CNMI.
The NMASH organization is patterned after the successful Excellence 2000 Partnership.
CNMI Garment Industry Monitoring Program
A $19 million settlement reached in April, after a $ 1 billion class action lawsuit was filed in early 1999, between garment workers and U.S. apparel manufacturers and retailers over allegations of sweatshop conditions removed some uncertainty about actual conditions and essentially defined what can be expected in the future.
Under the settlement agreement, where Saipan factories and retailers and buyers admitted no wrongdoing, nearly 25% of the settlement amount is dedicated to set up and operate a Garment Monitoring Board. The Oversight Board is comprised of 3 judges, an administrator, executive director and independent monitors.
The Oversight Board will utilize the CNMI Garment Industry Monitoring Program (Appendix VIII), and as the releases attached (Appendices IX and X) state, this will surely end all speculation as to whether there are any remaining noncompliant factories in Saipan. They simply cannot exist under the approved U.S. District Court settlement agreement.
According to one California attorney representing the workers in the suit, “Not only does this fully protect fundamental human rights of the workers, but it does so in a commercially practical way that all segments of the industry can be proud of.”
The Oversight Board’s independent monitoring firms were selected and initial factory and subcontractor inspections were conducted by Global Social Compliance in late 2003. SGMA has cooperated and joined with the Oversight Board to assist in OB monitoring. Recently, the SGMA supplied listings of all subcontractors utilized by SGMA Member companies.
What Others Say About Us
2000 Bank of Hawaii Report: “The garment industry on Saipan should be credited with preventing an economic depression in the CNMI following the decline of its tourist industry during the Asian economic crisis.”
“Garment sales for the CNMI to the U.S. market now pays about one third of the CNMI’s taxes. If this source of funds diminished substantially or disappeared abruptly, it would have immediate and severe consequences.”
U.S. General Accounting Office (GAO) February 2000: “Data suggests that the garment industry in the CNMI pays a higher share of its gross receipts as taxes and fees than the garment industry in the United States.”
OSHA Region IX Administrator Frank Strasheim March 2001: “You are quickly becoming a model in safety for the rest of the world.”
PricewaterhouseCoopers: “The SGMA and its members have made significant effort, including training and education as well as monitoring to ensure conditions are improved to meet expectations.”
National Retail Federation: “The SGMA effort represents one industry-wide attempt by suppliers to work together to improve the treatment of workers.”