By Haidee V. Eugenio
Variety Assistant Editor

MICHIGAN Inc. will close its garment factory on or about March 30, 2007, the 13th garment factory on Saipan to shut down since the Jan. 2005 liberalization of trade rules that now allow Third World countries to export their garment products to the U.S.
Some 200 resident and nonresident workers will be affected by this latest factory closure, in addition to the thousands who were displaced since early 2005.
Michigan Inc., which manufactures Gap and Banana Republic brands of apparel, has been in operation since Sept. 1987.
“I feel sad about the factory closure. Imagine, it’s been like a home to me for the past 10 years and it will soon close. The economy is bad and it is difficult to find another job. But I will wait until the last day of operations before looking for another job. Here, I get paid $3.75 an hour, and we have overtime pay,” 32-year-old Teresita Blas, a sewing line helper at the factory, told Variety.
Blas and many others interviewed yesterday said Michigan Inc. has been on time in its payment of wages to employees.
Wanlee Saelim, 44, said she will look for another employer when Michigan Inc. closes, but if there’s none, she will go back to Thailand. She has also been working as sewer in the factory for 10 years.
“I hope the company helps us find another employer until our contracts expire. My contract will expire in July,” she said.
Sooho Jo, acting general manager of Michigan Inc., issued a memorandum to employees on Friday notifying them of the factory shutdown, citing “financial difficulties and deficit because of competition with the lower wages of countries in Asia.”
“After many months of serious discussions and deep thought, we have determined that our company can not compete with those low wage countries on price anymore, which can export their cheaper garments to the U.S.A. and, therefore, we have decided to close our factory operations,” Jo said in a one-page notice obtained by Variety.
Jo said while the company regrets the factory closure, “we believe it is the right thing to do under the circumstances.”
“Therefore, I am formally informing everyone that our factory will close its operations on or about March 30, 2007, at which time, our last order is expected to be finalized and shipped out,” Jo told employees.
Just a few years back, Michigan Inc. had over 600 workers, but due to the decreasing volume of apparel orders it reduced its workforce from six lines to only three.
Mohammed Tariqul Islam, 32, a security guard for Michigan Inc., said he’s not at all surprised about the management announcement for he has long been hearing unconfirmed stories that the factory he has been working for the last 10 years is closing.
“But I feel sad. I worked so long for this company,” he said.
The management, as stated in Jo’s memorandum dated Jan. 26, 2007, said it intends that all nonresident employment contracts will end at the same time as the factory closure.
Jo says that Michigan Inc. will strictly adhere to all applicable local and federal statutes, particularly with regard to payroll and repatriation.
“Everyone will be paid up to the last day of work, and every contract worker will receive a return plane ticket. However, for those who find a new employer, we will not purchase your return ticket, but we will approve your transfer,” said Jo.
The acting general manager thanked Michigan Inc. employees for their “hard work, dedication, loyalty and contribution to our company during all these years.”
“May you have all the luck and a great success in your search for a new employer and your future endeavors,” Jo said in his memorandum.
Besides the garment industry’s growing number of factory closures, the CNMI’s other major industry — tourism — has also been in a decline especially since the pull out of Japan Airlines in October 2005.
Garment industry sales dropped by $170 million or 26 percent — from $662.7 million in calendar year 2005 to $492.16 million in 2006. The latest sales figure is a steep drop from the over $1 billion annual sales during the garment industry’s peak years of 1999 and 2000.
As a result, the government collected only $18.21 million in garment user’s fees for 2006, compared to $24.52 million in 2005 and $30.25 million in 2004.
The user’s fee is the tax paid by businesses on locally manufactured and finished garment products. It is equivalent to 3.7 percent of the garment sales.
Since the lifting of world trade quotas in Jan. 2005, 12 factories on Saipan have shut down although some of them reopened under different owners with smaller operations. The latest to close its factory was Concorde Garment Manufacturing Corp. of Tan Holdings, which used to be one of the largest factory operations on Saipan.
From 17,000 workers, the CNMI garment industry now has only 8,000 resident and nonresident workers mostly from China.
Besides Concorde Garment Manufacturing Corp., other Saipan factories that have closed include Mariana Fashions Inc. in San Antonio, Sako Corp. in San Antonio, La Mode (Saipan) Inc. in As Lito, Neo Fashion Inc. in San Antonio, Express Manufacturing in Puerto Rico, Winners Corp. 2 in Chalan Laulau, Hyunjin Saipan Inc. in Gualo Rai, American Pacific Textile in Tanapag, Hansae Saipan Inc. in Gualo Rai, Handsome (Saipan) Inc. in Tanapag, and Poong In (Saipan) Inc. also in Tanapag.