JIM LEHRER: The story of a union's effort to organize an international maker of blue jeans. Jeffrey Kaye of KCET-Los Angeles reports.
JEFFREY KAYE: Los Angeles-based Guess, Incorporated enjoys a sexy global image. Famous for its stylish jeans and provocative advertisements, Guess earned $1/2 billion last year. But organized labor claims Guess profits are generated in sweatshops. The National Garment Workers Union has made Guess its No. 1 organizing target. The goals are labor's traditional ones--better wages, benefits, and working conditions--but part of the union's unorthodox strategy is an attempt to publicly shame and humiliate Guess.
CARLA NARANJO, UNITE: We have to send a strong message to Guess.
JEFFREY KAYE: Carla Naranjo is directing the campaign for the Union of Needle Trades, Industrial, and Textile Employees, commonly known as UNITE.
CARLA NARANJO: Guess clearly worries about its image, you know, I mean, you have Gap and everything; their image is very important because it's a very big part of the campaign. And so everybody knows what Guess is doing, and now they can't hide it any longer.
JEFFREY KAYE: In response to the union campaign Guess is waging a public relations attack on UNITE. It has given employees time off with pay to demonstrate against the union. Guess has run Spanish language newspaper ads accusing UNITE of lies, threats, and intimidation. Guess lawyer Daniel Petrocelli says the stakes in the union campaign are high, not just for Guess but for the garment industry as a whole.
DANIEL PETROCELLI, Lawyer: UNITE's theory is very simple. If you bring down the top dog, everyone else follows.
JEFFREY KAYE: The UNITE campaign against Guess is part of organized labor's new commitment to represent low-wage immigrant workers. The drive comes in the wake of stepped-up public attention to conditions in the garment industry. The use of underpaid workers in the U.S. and abroad led President Clinton to announce a crackdown on sweatshops.
PRESIDENT CLINTON: Some of the clothes and shoes we buy here in America our manufactured under working conditions which are deplorable and unacceptable.
JEFFREY KAYE: And in California, state and federal agencies have nearly doubled joint inspections of garment factories in the past five years. As the largest government manufacturer in Los Angeles, Guess has come into particular governmental scrutiny, not so much for its own factory, which employs 500 workers, but for conditions in the smaller, independent shops Guess uses to make its clothes. Guess has forty-five to fifty contractors, each employing 5200 workers, according to Guess official Irma Melwani.
IRMA MELWANI, Guess, Inc.: Altogether, you're talking about four thousand to five thousand employees in a whole--on a whole basis.
JEFFREY KAYE: Four to five thousand. So most of the workers who actually do the work for Guess would be at the contractor level?
IRMA MELWANI: That is correct.
JEFFREY KAYE: The fragmented structure of the garment industry makes it difficult for the government to place and for unions to organize. Complicating matters is the fact that some contractors hire workers such as Isabelle to sew at home. Isabelle earns less than the legal minimum wage. She gets paid by the piece.
ISABELLE, Garment Worker: (speaking through interpreter) I get about $4 an hour, very low wages, and it's hard to make more.
JEFFREY KAYE: Home work, as it is called, is illegal, because workers can be easily exploited, but the practice is widespread and by its nature difficult to detect. Five years ago U.S. Department of Labor Inspectors found Guess clothes were being made illegally by home workers employed by contractors. Officials determined the contractors had also violated minimum wage and child labor laws. Guess paid more than $1/2 million in back wages, and, faced with government legal threats, agreed to oversee its contractors.
IRMA MELWANI: We took on the responsibility of monitoring our contractors, which we were the pioneers, and our actual monitoring program has been used as the model not just for the other manufacturers here in Southern California but also for the Department of Labor.
JEFFREY KAYE: Guess's pledge earned it inclusion on the U.S. Department of Labor's trendsetter list of garment firms with effective monitoring policies. But last year, the Labor Department moved Guess to probationary status on the list after government inspectors again discovered labor law violations at several Guess contractors. In August, with the backing of the unions, workers employed by Guess contractors, filed a class action lawsuit against Guess and 15 of its contractors.
ENRIQUETTA SOTO: (speaking through interpreter) The conditions in the selling shops are very humiliating. Managers pressure us a lot. They say if we don't do our work, they're going to get somebody else. When we go and ask for minimum wage, they say they're 10 more people who can do the job.
JEFFREY KAYE: The workers claim that Guess knew its contractors broke the law. Guess denies the charges, but lawyer Petrocelli acknowledges the Guess monitoring program can't be perfect.
DANIEL PETROCELLI: It is impossible. You cannot know what people are doing 24 hours a day in their own factories. You don't--we don't work in the factories. They're independent factories. We can only know so much.
JEFFREY KAYE: The workers in LA's garment industry are mostly immigrant and non-union. Out of 160,000 garment workers, UNITE has fewer than 3,000 members according to union official Cristina Vazquez.
CRISTINIA VAZQUEZ, UNITE: The industry has too many little shops, too many contractors. You're talking about 160,000 garment workers, but they are divided in little, tiny shops, sometimes, you know, twenty, forty. And those are not, you know the shops that control the manufacturing.
JEFFREY KAYE: The high number of contractors compete to drive down costs according to Raul Hinojosa-Ojeda, a UCLA professor who has studied the garment industry.
RAUL HINOJOSA-OJEDA, UCLA Professor: That's an advantage for the manufacturer. The manufacturer can then play off a variety of different contractors that are literally right next to one another. JEFFREY KAYE: Play off in terms of--
RAUL HINOJOSA-OJEDA: Play off in terms of who can give you the lowest price per unit and, therefore, squeeze your workers.
JEFFREY KAYE: And that's what's going on?
RAUL HINOJOSA-OJEDA: And that's what's going on right now.
JEFFREY KAYE: Irma Melwani proudly showed us a Guess contractor. She said conditions for its 200 some workers comply with minimum standards.
IRMA MELWANI: For the most part they make minimum wage, and they work--now that minimum wage is $5--they're at least guaranteed minimum wage.
JEFFREY KAYE: Do they get any benefits?
IRMA MELWANI: No, they don't get any benefits. Our contractors get the same. Employees of contractors get the same benefits that are in the garment industry, which at this point are none.
JEFFREY KAYE: By contrast, at the few shops represented by UNITE, workers get sick days and paid vacations and are guaranteed higher than minimum wage, all of which drives up the costs for contractors. So in order to keep the industry non-union, manufacturers refuse to work with union shops, according to contractor Simeon Prophet. Prophet says he has been essentially boycotted by manufacturers because of his seven-year association with the union.
SIMEON PROPHET, Garment Contractor: It's like I have a plague. I mean, if I called up--I called up one company, they says, are you with the union, sorry, we can't talk to you. I can't get work being associated with UNITE.
JEFFREY KAYE: Who won't give you the work?
SIMEON PROPHET: Other manufacturers.
JEFFREY KAYE: The union's short-range goal is to sign a bargaining agreement on behalf of the 500 workers employed directly by Guess. UNITE officials say they are also organizing among the thousands of workers at Guess contractors. The organized campaign comes amid rising global competition and pressure to ratchet down wages.
Increasingly, Guess has been shifting its contracting to low-wage factories in Central Mexico. Guess provided tape of five factories in the state of Pueblo that make Guess clothes. According to Guess, the plants employ a total of five hundred to seven hundred workers, who earn an average of $40 a week.
RAUL HINOJOSA-OJEDA: This was a three-year-long study that we did on the impact of NAFTA.
JEFFREY KAYE: According to Professor Hinojosa, the North American Free Trade Agreement, NAFTA, has provided an incentive for U.S. companies to send more production to Mexico. NAFTA eliminated tariffs on a number of garments exported to the United States from Mexico.
RAUL HINOJOSA-OJEDA: The producers in Mexico are now becoming much more adept and much--and the quality is becoming much more world class, and that this is going to allow them to not only penetrate the U.S. market and to make alliances with American manufacturers much easier than they have before. Now, this began to happen even before NAFTA, but NAFTA has accelerated the process.
JEFFREY KAYE: A price war in designer jeans also accelerated the move to Mexico. Last year when Guess jeans retailed at an average price of $58, competitors started asking $45. Paul Marciano is president of Guess.
PAUL MARCIANO, President, Guess, Inc.: You have to lower your cost. To lower your cost and compete is to go where they manufacture. The factory where we manufacture in big part in Mexico is where Tommy Hilfiger manufactures, the Gap manufactures, Calvin Klein manufactures, and Sun Apparel, which is Polo jeans, is licensee of Polo--, manufacture, so we had exactly the same cost price.
At that point we can't compete because we had the same level of price manufacturing cost. If the price is lower in Chile, we would move to Chile. I mean, we have to deal with the global market. We are not in an American market.
JEFFREY KAYE: The global market has even longtime union shops questioning the future of their relationship with organized labor. Deanna Dee, Incorporated makes luxury cashmere coats. Its employees have been covered by union contracts for over 50 years, but co-owners Mary and Daniel Schwarz agree they might have to consider moving production abroad.
DANIEL SCHWARZ, Coat Manufacturer: They only way to cut cost is to go overseas because labor laws are much less stringent overseas, so they can produce a product a lot cheaper.
JEFFREY KAYE: Is it hard for you to compete?
DANIEL SCHWARZ: It's getting more difficult. It's getting more difficult.
JEFFREY KAYE: Because of your union affiliation?
DANIEL SCHWARZ: Partly because of the union affiliation and partly because the world is becoming a global market more than a local market.
JEFFREY KAYE: Both UNITE and Guess say they'll step up their campaigns against each other. Guess is planning Spanish language TV commercials. The union wants the public to equate Guess with sweatshops but is stepping short of calling for a boycott.