By Haidee V. Eugenio
Variety Assistant Editor

THE remaining garment factories on Saipan can operate into 2009 if the local wage rate remains the same and if Congress allows the industry to use more imported materials, according to former garment spokesman, Richard A. Pierce, who is now Gov. Benigno R. Fitial’s “special assistant for trade relations.”
Pierce told Variety that the January sales were the best in the past 12 months “but it’s a false read on the industry’s future.”
“It’s something, or nothing,” Pierce said when asked about projections for 2007 garment industry sales.
The $45.7 million in January garment sales marked a 0.9 percent drop from the same month in 2006 when it reached $46.1 million, and a 29 percent decrease from Jan. 2005’s $64.03 million when Saipan factories started closing once Third World countries were allowed to export more of their cheaper garment products to the United States.
Twelve garment factories on Saipan have shut down their operations since January, and another one — Michigan Inc. — will be closing on or about March 30 due to lack of orders from U.S. retailers. Some of those that closed reopened under new management and with smaller operations.
From 17,000 workers, the garment industry now has some 8,000 resident and nonresident workers mostly from China.
“Obviously, factories have been closing rapidly as their competitive edge disappears. For them, it’s all about the cost of doing business. That means wage rates, and whether we can get the general Headnote 3(a) amendment passed soon in the U.S. Congress,” said Pierce.
The Headnote 3(a) amendment seeks to reduce the value-added requirement for apparel manufactured in the CNMI.
Pierce said if wages go up, then the CNMI will witness the “end of the (garment) industry almost immediately.”
“If we can get wage rate hikes determined by the federal wage board we seek in the Congress, the board will determine these firms cannot endure higher costs. With that determination, and a successful tariff privilege amendment, there’s good reason to believe the factories left can operate into 2009,” he said.
The U.S. House of Representatives has already passed Congressman George Miller’s legislation increasing the federal minimum wage from $5.15 an hour to $7.25.
The bill, which is now pending in the U.S. Senate, will apply to the CNMI where the minimum wage has been $3.05 an hour since 1996.
Pierce said while the majority of the members of the CNMI delegation to Washington, D.C. will focus on the Feb. 8 hearing to be conducted by the U.S. Senate Energy and Natural Resources Committee, he will meet with U.S. lawmakers and their staffers regarding the federal wage bill.