By Haidee V. Eugenio
Variety Assistant Editor

FISCAL year 2007 garment industry sales are expected to decline to a historic low of some $400 million, with only 16 remaining garment factories on Saipan after Michigan Inc. in San Antonio shuts down on or about March 30.
Garment industry sales reached $531 million in FY 2006 compared to over $1 billion each in the peak years of 1999 and 2000 when there were 34 garment factories on Saipan.
Most of the Saipan factories shut down operations after the Jan, 2005 lifting of the world trade quota allowing Third World countries to export their cheaper products to the United States.
Gov. Benigno R. Fitial’s special assistant for trade relations Richard A. Pierce said “at the current rates of production, with all factories remaining through FY 2007, I wouldn’t expect the factories to sell more than $400 million in merchandise.”
Pierce said Ann Taylor, one of the largest apparel retailers in the United States and among the few remaining buyers on Saipan, has cancelled its orders because of competition and “negative publicity” about the CNMI.
Pierce, a former spokesman of the industry, said garment factory employment on island is now about 6,571. In the garment industry’s peak years, the number of workers was about 17,000, mostly from China.
“Other than Michigan and Poong In, we don’t see any other closures imminent, unless the cost of doing business takes an immediate jump.”
Besides wages, other factors affecting the cost of doing business include raw material costs, costs of production, electricity rates, taxes, and shipping rates. “These factors really will dictate if, and when, additional factory closures will occur this year,” Pierce said.
“Right now, we see only one option available that would actually slightly lower costs. That is the CNMI government’s attempt to amend General Headnote 3(a). It provides an option to Saipan factories, lessening production costs and allowing additional style variations to be made in on-island plants,” he said.
This proposal would allow factories here to use more imported materials for their “Made in USA” apparel.