MIKE JAMES: Reporter: Seattle-based outfitter, Recreation Equipment Inc. An icon of the northwest lifestyle is shutting down its last clothing plant in the United States and moving the work to Mexico. The decision puts 125 employees out of work. REI Is the nation's largest consumer cooperative. Customers buy memberships, vote for a board of directors and collect dividends at the end of the year. One of the founders is Jim Whitaker, the first American to climb Mount Everest. While Seattle is hardly synonymous with the American apparel industry, the city did maintain a strong niche in the sportswear market for more than half a century with outfitters like REI, Eddie Bauer, and several ski-clothing companies. REI's flagship store and its headquarters is still here, but as the labels inside show, most manufacturing is overseas now -- drawn there by cheap labor. The ERI decision to close this fleece garment plant south of the city upset some customers and left others simply resigned.
JULIE BITTNER, REI Customer: I'm all for free trade and but I hate to see jobs go somewhere else. Cheap labor. I don't know what Mexican labor laws are like.
MARCIA TERRY, REI Customer: It's sad that they're taking business away from Americans. But we're international... It's an international company. We're an international marketplace so I can see both sides of it.
MIKE JAMES: REI executives refused comment for this story and would not allow cameras inside the store or at this clothing plant. In a brief statement the company blames the closure on global competition, saying in effect it is no longer cost effective to produce clothing in the United States. A glance at a global production map quickly shows what's happened to the world garment industry over the last two decades. Apparel production in Malaysia is up 597%, in Bangladesh 416%, Sri Lanka 385%. Indonesia 334%. International trade consultant Deborah Glassman believes the REI decision reflects this globalization of the clothing industry.
DEBRA GLASSMAN, Trade Consultant: What REI has done is just one more step in a really long process that has been taking place over a couple of decades and will continue as that process involves the industry that we call textiles and apparel basically leaving this country -- hundreds of thousands of jobs in that industry have left. I mean this is an industry that the United States no longer has a comparative advantage in because it's very labor intensive.
MIKE JAMES: Comparative advantage is all about labor cost, and in the apparel business, the United States is no longer competitive. The average hourly labor cost for clothing and foot wear workers in the United States is $10; in China, $4.20, in Mexico, $1.70. By the year 2005 international trade agreements administered by the World Trade Organization will eliminate textile quota systems that still protect manufacturers in the United States.
DEBRA GLASSMAN: Over the next five years, the protection, the remaining protection will be progressively dismantled and you're going to see a lot more factories shutting in that particular industry.
RICK WILSON: You go to these closings and people have worked there 30, 35 years.
MIKE JAMES: Union executive Rick Wilson knows all about clothing plants shutting down. He's district manager for UNITE, a union of needle, trades, industrial, and textile employees. Wilson says trade agreements like NAFTA, the North American Free Trade Agreement, are killing the industry in the Northwest.
RICK WILSON: 27 %of the apparel and textile jobs have left Oregon. We've seen 15,000 jobs leave the Pacific Northwest since NAFTA's been passed. We've seen 100,000 jobs leave the country nationwide, so where does it stop? Does it start with these entry- level jobs into America's society like the clothing and textile workers-- is that the only industry we're going to dispose of or is it going to start climbing into the others?
MIKE JAMES: Those are questions heard in Seattle last year during the disruptions at the World Trade Organization meeting.
PROTESTERS: Hell, no.
MIKE JAMES: Labor unions marched at that meeting demanding protection of worker rights abroad, the right to organize and to negotiate better working conditions. Labor expert, Margaret Levy, a researcher at the University of Washington Center for Labor Studies, argues that those demands are important now for all American workers.
MARGARET LEVY, University of Washington: Without some kind of governmental regulation and some kind of rules in place that regulate the international system, that the whole movement of jobs will be to push down the pay, push down the conditions, and that will then have an effect of doing that here as well. So that working families here who are already under pressure will feel more pressure. They'll be told if they don't tow the line, if they don't accept these conditions, that their jobs will move. It becomes a threat.
MAN: And this is our most popular wool jacket. We've been making this since the turn of the century but it's all 100% virgin wool.
MIKE JAMES: If clothing manufacturing does survive in the United States Stan Coles will either have it only in specialized markets. He's CEO of C.C. Filson a Seattle-based outfitter of durable and expensive working clothes. The Filson shop is full of special oils, soaps, and water-resistant pants, rugged leather jackets that last decades -- the kind of clothing that's more like equipment, where price is not the issue. Filson is also the last clothing shop in the city, the union clothing shop.
STAN KOHLS, CEO, C.C. Filson: Because we have a specific niche in the market our prices are not a factor because we don't have a tremendous amount of competition in the small niche we have. So we're not as concerned about what the finished garment prices out at.
MIKE JAMES: Kohls says places like REI and Eddie Bauer are in a very different market where price is everything, where consumers compare, so they must manufacture at a price that keeps their products competitive.
STAN KOHLS: The marketplace dictates that. I mean they're in a marketplace where the consumer knows what a comparable garment would cost because they sell a lot of high-tech items that are also available by lots of other manufacturers that have wonderful brand name and wonderful loyalty but still there are... there are limits to what somebody will pay for those goods because they know that garment should retail for x amount of dollars.
MIKE JAMES: Stan Kohls sees no end to the flow of clothing jobs overseas and he is blunt about the work that will remain even in specialized markets like his own. It pays at best $11-$12 an hour. The work is hard, and it is performed almost exclusively by recent immigrants. The vanishing jobs are not lucrative or high profile but economists believe the whole debate about the migration of clothing work overseas leaves many Americans uneasy about the benefits of open trade.
DEBRA GLASSMAN: People are starting to say maybe we should be concerned about these things or, gee, I haven't thought about them so much but, yeah, now I wonder about environmental management practices in Mexico or in other countries. I wonder about labor standards in factories making athletic foot wear. I wonder about the quality of products that are coming in from overseas. I wonder about health issues. I mean, you can go right down the list, things which people worry about can be linked to global trends and again trade is the channel.
MIKE JAMES: For economists like Deborah Glassman there's unease about trade is a part of globalization but so she argues is job growth.
DEBRA GLASSMAN: As jobs leave because of the changing international trade rules or changing international trade climate, there are also jobs being gained. The studies that have come out looking at job losses and job gains have shown that the job gains roughly-- in terms of numbers-- counterbalance the job losses. These are different people and different kinds of jobs, but there may even be net gains in terms of jobs.
MIKE JAMES: The REI Closure will take away 125 jobs but the state estimates the booming local economy will generate 30,000 new jobs in Seattle by the end of this year.