News-Sentinel.com

Thursday, 03/18/1999

NAFTA

American clothing makers move to Mexico

By Erin Magruder and Erica House of Southwest Texas State University

WESLACO, Texas -- When Vicke Sifuentes Ortega was called into an office at the Haggar Clothing Co. plant here, all she could do was think about her friend Elvida.

Ortega, 35, had worked at the Haggar plant for 11 years. She knew her seniority would allow her the opportunity to keep her job at the plant, but she also knew her family could survive without it. Her husband had a good job.

Elvida, in her late 50s, had no one else to support her financially.

"I just looked at her that afternoon, knowing she was going to lose her job, and it was so sad," Ortega said. "She was old and did not speak English. I knew it would be very hard for her to find another job."

Ortega did what many others would not do. She gave her position at the company to her friend.

Ortega was just one of about 400 Haggar employees who lost their jobs when the plant shut down its sewing operations on May 1, 1997.

Haggar consolidated its factories in Weslaco and Brownsville, Texas, into one plant in nearby Edinburg. Then, in June 1998, Haggar laid off 350 workers in the consolidated Edinburg plant, cutting the work force to 800. By spring, Haggar will trim about 30 more of the 100 remaining jobs at the Weslaco plant.

Haggar, which now produces 85 percent of its clothing in other countries, is just one of many companies in the apparel industry that have sought cheaper labor to gain a competitive advantage.

"Made in Mexico" became even more appealing after the Jan. 1, 1994, enactment of the North American Free Trade Agreement, which dramatically reduces trade barriers between the United States and both Canada and Mexico.

Many textile companies were already doing business in Mexico years before NAFTA was passed.

Dallas-based Haggar, for example, has been in Mexico for more than a decade and was the first American apparel company to completely own a plant there.

NAFTA allows U.S. companies to export cut fabric to Mexico, where it is assembled by low-wage workers and shipped back to the states without incurring duties.

The appeal of Mexico became even greater after the peso devaluation four years ago that brought down the price of labor. The average Mexican worker is seldom paid more than $2 an hour, including wages and benefits.

While wages on the Texas side of the border are among the lowest in the country, those wages are still much higher than in Mexico.

"Pretty much all production in the apparel industry will move to Mexico in the future," Haggar facilities worker Donald Ramirez said. "That is the only way for a company like Haggar to compete in a global market."

But in Weslaco, with a population of 28,000 in the heart of Texas' Rio Grande Valley, competing in a global market cost the city one of its top five employers.

Although the unemployment rate for the state of Texas has decreased every year since NAFTA was signed, the Texas-Mexico border area continues to have the highest unemployment in the state and one of the highest in the nation.

The McAllen-Edinburg-Mission Metropolitan Statistical Area, which includes Weslaco, has a staggering unemployment rate of 18.2 percent.

In addition, 55 percent of adult residents over the age of 25 do not have a high school education or the equivalent, and many residents are functionally illiterate in both English and Spanish.

In preparation for the layoffs in Weslaco, Haggar sponsored both an educational fair to attract other regional employers looking for workers and a job fair to help workers with the transition.

"We're doing this so that we know, when we go to sleep at night, that we're doing everything we can to get these people jobs," Joe Haggar III, chairman and CEO, said.

At the same time, the NAFTA-TAA (Transitional Adjustment Assistance) program provided training, job search allowances, relocation allowances and income support for workers. The program provides federal money to states to be used for workers who lose jobs because production moves to Canada or Mexico.

Under NAFTA-TAA, laid-off Hagggar employees receive up to two years of approved retraining or academic training programs and the equivalent of unemployment insurance for 18 months, based on their salary at the plant.

In Weslaco, the Texas Workforce Commission in cooperation with the Job Training Partnership Act administers the NAFTA-TAA program.

"The average worker had been employed with Haggar for 13 years," said TWC's Alicia Torres. "Many of them did not have any other skills outside of the apparel industry."

Letty Flores, who has no high school education and speaks little English, worked for 14 years as a seamstress at the Haggar plant in Weslaco. When she was laid off, she and husband, Arnold Flores, wondered how they would pay their bills.

"My wife went back to school for about eight months after she lost her job," Arnold Flores said. "But she only received $3,000 from Haggar in severance pay and $118 per month in unemployment, and that is not enough for anybody to live on. It was a very bad time for our family."

But Adela Zuniga, who was laid off from Haggar in Weslaco after nine years of employment, said she sees an opportunity to make a positive change in her life.

Zuniga, 29, who speaks English and has been enrolled in training classes since September, expects to receive her GED by April.

"I went into my job spreading material at Haggar with no education," Zuniga said. "This was a chance for me to go to school and do something good for my future. I heard it only takes six weeks to become an airline stewardess, so I think I will do that next."

If that happens, Zuniga will be one of the luckier laid-off Haggar employees, all of whom saw their industry collapse.

"The apparel business as we know it is not going to be around much longer," Ramirez said.

For the Flores family, the dramatic change in Weslaco portends a better year in 1999.

"My wife got a new, better job somewhere else," Flores said. "And most importantly, she is no longer working in the apparel industry."