NEW YORK — As apparel factory owners worldwide consider whether the end of quotas means they will need to move their operations, the shareholders of a knit tops plant outside Managua, Nicaragua, are making no such calculations.
The Cooperativa Maquiladora Mujeres, or Women’s Manufacturing Cooperative, is owned by its 47 employees, who handle everything from sewing garments to administration. They even built the 7,750-square-foot factory themselves.
It’s an unusual model in the apparel industry, where manufacturing plants in the developing world are typically owned by wealthy, often foreign, investors and staffed by locals who earn subsistence wages. That framework, and the culture clashes that have emerged, has contributed to the industry’s sweatshop stigma.
At the co-op, however, workers are paid salaries averaging $1,200 a year, triple the average for factory work in Nicaragua. That is in addition to their share of the profits, which can more than double their pay.
The four-year-old cooperative expects to gain full free-trade zone status this month from the Nicaraguan government, a step that will significantly cut its tax and duty burdens. The factory’s worker-owners believe that status, as well as a planned yarn-spinning plant, will help drive revenues to $1.2 million from about $350,000 last year and allow the workforce to triple.
The volume represents a fraction of Nicaragua’s apparel industry. The nation’s apparel factories — primarily owned by Taiwanese, U.S. and South Korean investors — employ about 45,000 workers and shipped $587.3 million worth of goods to the U.S. for the year ended in November.
Yadira Vallejos, a founding member of the co-op who serves as its president, said the factory environment is unlike any of her other jobs.
“We don’t work under pressure and the communication that we have ourselves as co-workers is very good,” she said through an interpreter during a phone interview. “It’s a very new experience.”
The co-op, which specializes in tops made of organic cotton, got its start through the unlikely pairing of a woman who was selling organic tortilla chips and a transplanted North Carolina social worker.
In 1995, Bená Burda was running Bearitos tortilla chips when one of the organic farmers who supplied her company with blue corn told her he had decided to plant some cotton in addition to his other crops. She was obligated to buy it because of the terms of her distribution contract.
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“We bought all of his fiber out of the ground, not having a clue what we were going to make out of it or even how to make anything out of it,” Burda said in a phone interview from her office in Ypsilanti, Mich. She is president of Maggie’s Organics, a clothing brand that specializes in organically grown cotton that is the co-op’s largest customer.
Burda’s company began making organic cotton clothes through U.S. contractors, but after having several suppliers go out of business, she decided she needed to find a more stable factory. At an organic-goods conference in 1999, she met social worker Mike Woodard of the Jubilee House Community, a nongovernmental organization that was in Nicaragua to help people who had been displaced by Hurricane Mitch.
Their conversation lead to the idea of building an apparel factory in Nueva Vida — a town seven miles outside Managua — to employ some of the storm victims. Burda said she told Woodard that she would give such a venture all of her sewing contracts “if we could find a way to make the women vested in the success of the factory.”
Working with Vallejos and some other local women, Woodard helped to develop the cooperative structure and arrange a $100,000 loan to pay for construction materials and training.
The co-op’s original 14 members each committed to contribute 640 hours of unpaid work to setting up the co-op — labor that included building the factory itself. After that year and a half of work, each member became entitled to a share of its profits.
By 2001, they finished the factory and began running a five-day-a-week schedule.
Last year, the co-op received orders for $1.2 million worth of organic-fiber tops, but only was able to meet about a third of them because it was unable to find sufficient supplies of organic-cotton cloth, Woodard said.
The co-op has applied to the InterAmerican Development Bank, an organization of 46 member states including the U.S., for a $1.5 million loan to help build a yarn-spinning plant next to its apparel factory to process organic cotton. Woodard said a local mill has agreed to knit fabric to meet its needs.
In October, the Nicaraguan Free Trade Zone Commission approved the co-op’s bid for free-trade zone status, which will provide tax breaks and allow the co-op to import raw materials duty free for its export orders. Woodard said the co-op is awaiting final approval from Nicaraguan customs authorities for the benefits to take effect.
In addition to the $1,200 annual salary, the workers receive an annual share of the profits, which last year came to an average of $2,000 per employee, bringing their income to well above the average for factory workers, which is close to $385 a year, according to Woodard.
The co-op structure means that new employees have three months to prove their value as members. Those who pass muster with their colleagues pay $350 to buy into the co-op.
Vallejos, 28, said the job has allowed her to pay for Saturday university courses in business administration and to support her three-year-old son. She said her colleagues also were able to provide better food and clothing for their children.
“It’s very pleasing to me because I not only am able to provide for myself, but I’m helping to create employment for other people and to bring other people into this environment,” she said through Woodard, who translated.
Woodard acknowledged that the co-op’s niche of organic clothing, which tends to appeal to shoppers with strong opinions about the environment and social justice issues, has made it easier for the factory to stay competitive. Prices start at about $2.10 for customers who buy by 20-foot container loads.
“We can’t make a 95 cent T-shirt, which China can, but our T-shirt is of higher quality and is organic,” said Woodard.
“People do have the added good feeling of knowing the people who made their shirts work in a good environment,’’ he said. “When their children get sick, they are able to see a doctor and buy medicine, they eat three meals a day, they have enough disposable income that they are able to do things like sometimes get their hair done or take the kids out for some kind of entertainment.”
Country Focus:
NICARAGUA
GDP: $11.6 billion/$2,300 per capita (2004)
GDP Change: Change: +2.3 percent
Population: 5.4 million
Unemployment: 22 percent
Textile & Apparel Exports to U.S.: $587.3 million, +23.31 percent
Key products: Cotton pants, cotton blouses, cotton knit shirts
Currency: $1 U.S. = 16.25 cordoba oro
Major Companies: Knitwear S.A., Shinsung Tongsang, Wonchang Moolan Co., Yoo Yang International Co.
One of the poorest countries in Latin America, Nicaragua has benefited from close trade ties to the U.S. that resulted from a series of trade-promotion agreements over the past decade that provided duty-free and quota-free access for most of its apparel. While all 148 nations of the World Trade Organization have dropped their quotas, the duty-free status afforded by the Caribbean Basin Trade Partnership Agreement still provides a competitive advantage. Its proximity to U.S. markets and its Pacific and Atlantic Ocean seaports allow for quick shipments to the U.S. Still, Nicaragua’s apparel and textile industry is relatively small, employing fewer than 50,000 workers. It is currently ranked the U.S.’s 29th largest supplier of textiles and apparel.
NOTE: IMPORT DATA IS FOR THE YEAR ENDED NOV. 30, COMPARED WITH THE PRIOR-YEAR PERIOD. SOURCES: CIA WORLD FACTBOOK, U.S. COMMERCE DEPARTMENT, OANDA.COM