Immigration act cripples apparel industry.

Immigration act cripples apparel industry The new federal immigration act is wreaking havoc in Los Angeles' $6 billion apparel manufacturing industry, depriving garment makers of seamstresses just as import restrictions and the sagging dollar create record demand for the "Made in L.A." label.

The lack of sewing machine operators is so accute that last week a group of sewing contractors met with the Philippine consulate here to try to arrange to bring 3,000 skilled seamstresses here from the Philippines. In the meantime, manufacturers say orders and profits are getting savaged.

"This will cost me $10 million in sales this year," grouses Roland Kosser, president-owner of ID#, a popular sportshirt and sweatshirt maker downtown.

"I had been expecting $50 milion to $60 million in sales this year, but no more. Usually, we have 50,000 to 80,000 pieces a week made for us, but we're down to 40,000 a week, 37,000 a week."

Line after line of empty sewing machines - left idle by the disappearance of undocumented workers - is causing the bedlam.

"My sewing contractors are telling me they don't have the workers," Kosser says. "They've got people working overtime on weekends, but it's not enough. But my buyers don"t care about my problems, they just want the goods on time for the shelves."

Manufacturers usually handle in-house the design, advertising, financing and wholesaling functions of the business. But they must rely on teams of sewing contractors for cutting and sewing, the irregular and labor-intensive aspects of the business.

In turn, the sewing contractors for decades have relied upon armies of illegal immigrant women - a labor supply that has dried up thanks to uncertainties surrounding the federal Immigration Reform and Control Act of 1986 (see related story on page 26).

"It's driving me crazy. I could double my output if only I had the workers," declares Ricardo Arciniega, owner of Terry/Anne Inc., a women's slacks and skirt sewing contractor in South Gate.

"A lot of manufacturers are coming back from offshore because of the dollar and quotas, and I can't fill their demand. It's disheartening. Everyone else is in the same boat."

Today only 120 seamstresses run Arciniega's fleet of sewing machines, far from the 250 he would like. At 25,000 to 30,000 pieces a week, his production is half of what he says it could be. "I have customers at my door needing large amounts of production... I've had to turn them away," he says.

For the city, the threat is of more than passing interest. Backed by savvy financiers and endowed with red-hot designers, Los Angeles-based apparel manufacturers are producing garments at an annual rate of $6 billion, up a thumping 50 percent from 1980. Factory line employment in the garment district has surged to nearly 100,000, up roughly a fifth from 1982, according to official state statistics.

That makes apparel the city's biggest manufacturing industry, and third-largest in the county. The rag makers also generate thousands of additional business services jobs. Economists generally estimate that each new manufacturing job in Los Angeles generates two to three related new jobs in the region.

"Apparel manufacturing is a basic industry that draws money into our economy from the rest of the U.S. and even the world," says Jack Kyser, economist for the Los Angeles Area Chamber of Commerce. "There are additional thousands who make their living in accounting, advertising, trucking and banking from the garment workers - people don't realize how big this all is."

The strength of the industry is seen in the proliferating number of banks in the garment district; Hanmi Bank opened a branch there a year ago, and Capital Bank of California opened up a branch with factoring services last month in the California Mart at Ninth and Spring streets downtown. Those banks join others, such as Mitsui Manufacturers, Union Bank and the Bank of America Textile Branch, all of which now have offices in or near Cal Mart.

Brazenly optimistic, local apparel manufacturers talk of Los Angeles eclipsing New York as the garment-making hub of America and establishing itself as a world-class design center. "It's an evolution, but especially in the last three years there has been a much greater response to Los Angeles designers; the buyers are coming here from stores in New York. We are taking a global fashion leadership role," proclaims David Morse, general partner at the 2,000-showroom California Mart downtown, where manufacturers exhibit their goods to buyers.

Los Angeles designers -- such as Leon Max, Rafael Montealegre and Roberto Bassi -- have fashioned international reputations for themselves as popular-clothes trendsetters.

But with the immigration act limiting the employment of new seamstresses, sewing contractors say they aren't able to keep pace with Los Angeles' global profile - and they make no bones about their interest in Philippine labor.

"We've tried everything else, and that's what they did in Canada recently, so we're working on it. They say they have experienced machine operators," says Garth Ward, president of the Garment Contractors Association of Southern California and owner of Fashion Sportswear Inc. in South El Monte. "We've had advertisements in La Opinion, the San Gabriel Valley Tribune, the Herald Examiner and many local advertisers, the give-away weeklies. In fact, we hit every address within five miles of here. From that we hired three workers. I wanted to add a second shift to the 150 operators I employ now, but I can't."

The Philippine consulate seemed interested in a plan to send 3,000 workers here on two-year permits, and the group has discussed the plan with the Labor Department, says Ward.

Sewing contractors like Ward and Arciniega are the real-life production managers of the apparel industry. There are about 4,000 registered sewing contractors in Los Angeles, and perhaps another 500 unregistered sewing outfits, says Victor Jurado, senior deputy for the Division of Labor Standards Enforcement in Industrial Relations. Most shops have 50 seamstresses or fewer.

Additionally, there are many thousands of workers -- perhaps another 50,000 -- who work in informal, off-the-books shops or in "homework" operations, says Roger Miller, regional manager for the Bureau of Field Enforcement.

For those in the garment district, the new immigration law seems like lunacy. "This is a stupid law, they are destroying the whole industry and sending the manufacturing overseas. They are putting everyone on unemployment, including me!" exclaims Ho Seto, owner of Ho Fat, a jeans-making contractor employing 90 in the garment district. "Tell Reagan and the INS to change the law. I need more workers."

But the INS claims the problem is with the garment industry, not with the law. "It may be that the law does hurt, if it has been their practice to hire illegal aliens -- that was the purpose of the law," says George Rayner, acting deputy district director in the Los Angeles office. "Obviously, if they were paying a good wage there would be people willing to do the work . . . or maybe the problem is working conditions."

Contractor Arciniega says he pays $4.50 an hour base starting pay, but higher wages will make his product uncompetitive with imports. "The pressure is constant, and they are paying far less in the Far East," he comments.

Fellow contractor Ward is equally concerned by competition from unregistered contractors. "The underground is growing, the illegal operators who will hire undocumented workers, pay cash, don't pay minimum wage, or hire refugees on welfare," says Ward. ."You bet the manufacturers are getting the clothes they need from illegal operations."

At the International Ladies' Garment Workers' Union here, officials say the immigration law is temporarily working to their advantage, but they expect illegal contractors to proliferate and limit the new edge. "We are having a strike now against Ideal Textile (a downtown textiler that used to employ 200), and they haven't been able to replace the workers.

"Employment now is in a holding period," says David Young, an ILGWU representative. `But we don't expect it to last. All you need is a good-looking green card counterfeiter, and there's plenty of contractors who will hire illegals."

Apparently, even without union help some sewing machine operators are making gains: "My contractors tell me that when they can get workers to come in, they want $5 an hour, up from $4," says Kosser of ID#.

With federal inspections looming for legitimate contractors, the growth of an off-the-books cadre of unregistered sewing contractors is to be expected, comments Rebecca Morales, labor scholar and UCLA professor.

"What we are developing is a two-tier economy, with a permanent underclass. The plan to import workers, either from Mexico or the Philippines, will just institutionalize this," she says.

As a partial solution, Morales recommends joint production agreements with other nations to stabilize markets and prevent labor from becoming the cost variable driven to the lowest common denominator. She also asks out loud, "You have to wonder if we can keep this kind of labor-intensive industry here."

Although 50 percent of garments sold in the U.S. today are made overseas, up from 20 percent in 1977, there are quotas in place limiting imports from 35 countries, says lary Martin, spokesman for the American Apparel Manufacturers Association in Washington, D.C. "We'd like tougher quotas ... but the quotas for sweaters, shirts and pants usually get filled, so some production gets shifted back here," he says.

Nevertheless, going overseas is exactly what Howard Leeds has in mind. Leeds, president-owner of the Cal Mart-based Singapore American Trading Corp., says that while local production provides quick turn-around to get trendy designs to market last, he can get the same results from the Far East.

"Hey, the FAX (facsimile) machine is one of the greatest inventions of all time. I can send the sketch (by telephone) to Hong Kong, and have the finished goods brought back on a jet," Leeds says, adding, "If I find a style that's right, that's what I do."