TeamX: A Worker Co-op Joins The Fight Against The Sweatshop Apparel
By John W. Lawrence
The apparel industry stands out among capitalist enterprises in its zestful embrace of global production. In essence, the industrys global trekking is an eternal search for the cheapest, most compliant labor possible to sew clothes. Unable to compete with sweatshops that pay 25 cents an hour, sometimes less, apparel manufacturing in the United States is quickly disappearing. The Apparel Strategist (October, 1999), an industry newsletter, stated that employment in the apparel and textile industries in the United States has plunged more than 50% in the last 25 years. The newsletter predicts that apparel and textile manufacturing will be virtually nonexistent in the United States in the next 50 to 100 years.
The apparel industry is now organized into buyer-driven commodity chains. Sociologist Richard P. Appelbaum states, Transnational corporations (TNCs) such as Nike, Reebok, Liz Claiborne, and The Gap do not own any factories. They are marketeers that design and market but do not make, the products they sell. Such firms rely on a complex network of contractors that perform almost all their specialized tasks (manufacturing). Contractors around the globe with low profit margins engage in fierce competition for contracts with TNC retailers. This intense competition has placed severe limits on labors ability to organize in the industry. The TNCs tend to prefer to contract in countries, such as Mexico or China, where independent labor organizing is suppressed by the state.
The labor community has struck back with novel organizing strategies. The Union of Needletrades, Industrial and Textile Employees (UNITE!) and the National Labor Committee initiated global campaigns to educate people about human and labor rights abuses that pervade the entire industry. United Students Against Sweatshops (USAS) has forced universities across the United States and Canada to stop selling sweatshop clothing. This coalition of sweatshop and human right activists has put pressure on the entire industry to adopt minimum labor standards and independent monitoring procedures.
However, the logic of the market continues to undermine global standards because the survival of small manufacturers will depend on their ability to evade these standards and keep their prices competitive. Labor and human rights activists need other strategies to compliment the drive for minimum standards that will undermine the buying power of TNCs in the apparel labor market.
A New Strategy: TeamX
Sweatshop activist and garment workers now have a new, potentially powerful partner in the fight against the sweatshop apparel industryTeamX. TeamX is a worker-owned and unionized garment factory. It produces SweatX Clothes with a ConscienceTM. TeamX hosted its kick-off celebration at its state-of-the-art production facility in Los Angeles on April 9, 2002. It was a star-studded event with appearances by Ben Cohen of Ben & Jerrys Ice Cream, LA Mayor James K. Hahn, and special musical guest Michelle Shocked.
The Birth of Team X
Hot Fudge Social Venture Fund, an investment fund directed by Ben Cohen and other directors of Ben and Jerrys Ice Cream, provided the start-up capital for TeamX. The goal of Hot Fudge is to help working people achieve self-sufficiency and build wealth. As told by Chris Mackin, president of Ownership Associates (www.ownershipassociates.com), a cooperatively owned consulting firm based in Cambridge, MA that advised Team X throughout its start-up, the conception of TeamX was the product of both planning and serendipity. According to company folklore, soon after securing $5M in capitalization from the sale of Ben & Jerrys to the Unilever Corporation, Ben Cohen, Pierre Ferrari and Duane Peterson (of the Hot Fudge board) were discussing future investments. Sitting in the middle of the table was a copy of the New York Times with a lead article on the horrendous conditions of sweatshops in China. Aware of ongoing protests against sweatshops and confident that they could engage conscientious consumers, Hot Fudge directors decided they could both strike a blow against the sweatshop apparel industry and model economic development that really helps working people by building a moral alternativea unionized democratic worker cooperative that produced high quality apparel.
The People and Organization of TeamX
In advising TeamX about how to organize their business, Chris Mackin and his colleague Jeff Gates presented a range of options, including a conventional stock corporation, an ESOP and a worker cooperative. Following a brief technical introduction about cooperatives, they decided to let the BBC classic documentary The Mondragon Experiment do the rest of the work. After viewing the film, TeamX members unanimously embraced the Mondragon cooperative model. The entire co-op elects the board of directors. The board chooses the management team. Approximately half of the nine-member management team has management experience in the apparel industry. The other half has a labor or community activist background.
Currently there are 26 production workers. Most of the production workers are Latino and all have extensive experience in apparel manufacturing. The production workers are both worker owners and represented by The Union of Needletrades, Industrial, and Textile Employees (UNITE). The production workers participate in decision making through a number of avenues. First, they vote for the board of directors and have representatives on the board. Second, through UNITE, they negotiate wage, benefits and work conditions. Third, both union and management members sit on a joint labor-management committee dedicated to promoting labor management cooperation and to encouraging participation in the ownership of the enterprise. Fourth, union workers partake directly in day-to-day production decisions. Fifth, there are regular educational meetings that explicitly draw everyone into discussions of business planning.
Team X has borrowed another important structural principle from the Mondragon Cooperativesa solidarity ratio of top to bottom annual compensation. The highest paid employee at Team X cannot make any more than 8 times that of the lowest paid employee. This 8-to-1 ratio sends an important message within the apparel industry that it is possible to attract experienced management talent without punishing the lowest paid in the firm.
Hourly wages for production worker-owners range from $8.50 to $14.00 plus benefits. You might ask how TeamX can afford to pay labor costs much higher than the industry standard. When posed this question, Pierre Ferrari pointed out that labor costs in the apparel industry account for only about 5% of the retail price of clothing. Retail mark up, along with shipping and marketing costs, are the most expensive parts of the retail price. Sweatshop Watch (www.sweatshopwatch.org) reports, for example, some retailers, such as May Department Stores, insist that manufacturers make their private labels guarantee a profit margin, sometimes as high as 48%. A 1997 Global Exchange study found that if Nike cut its $560 million marketing budget by 2%, it could raise the daily salaries of the 25,000 Vietnamese workers who work for its subcontracts from a meager $1.60 to a decent $3.00 (the calculated living wage in Vietnam according to the Vietnam Labor Watch). In reality, the industry can pay a living wage to workers without increasing the retail price.
Survival in a Cutthroat Business
You might be thinking nice idea but how can TeamX survive in the take-no-prisoners apparel industry. First, TeamX is betting that there is a niche moral market for clothing with a conscience. According to the Textile and Apparel Trade Association, there are $160 billion in apparel consumption in the United States annually. Capturing just a small fraction of this market, TeamX could be quite successful. TeamX believes that in the context of the current global justice movement a niche conscientious market can expand rapidly. If consumers are educated about the slave-like conditions many garments are made under and they have the opportunity to buy clothes produced by a democratic workers cooperative, many people will make the obvious moral choice. TeamXs goal is to set the highest standard for sweat-free manufacturing.
At this time, TeamX provides only a limited number of retail purchasing options through its web site www.sweatx.net. To focus on its key institutional markets in universities, unions, faith based communities and the entertainment industry, Team X is relying on a wholesale sales strategy producing for bulk orders (at least 144 items). Team X has also performed a modest amount of private label manufacturing for other garment firms.
TeamXs business plan is not solely dependent on the good will of consumers. They are also confident that with their unique combination of innovative management, cooperative work and cutting-edge technology they will be more efficient than their competitors. TeamX believes there is a lot of money to be saved in intelligent purchasing, quick turn around time and using state-of-the-art machinery such as the $200,000 Gerber Technology computerized garment cutter which can cut patterns five times faster and is safer than a human cutter. TeamX is also setting itself apart by committing itself to making high quality apparel and promoting environmentally sustainable production.
TeamX: A Model of Democratic Synergy?
TeamX is a unique experiment among cooperatives. Potentially, TeamX will be a model of progressive synergy integrating various forms of activism (anti-sweatshop, union and cooperative). Its identity and concept is integrally linked to the global justice movement. Its raison detre is to distinguish itself from the rest of the garment industry as a model of humane production and democratic work. TeamXs marketing is essentially an educational campaign teaching people about the extremely exploitive apparel industry and enjoining consumers to buy a moral alternative. Moreover, given the fact that TeamXs market is national, possibly international, it is in a unique position to educate activist about cooperatives and to promote democratic work as an essential and realizable component of global justice.
How You Can Help
TeamXs success is predicated on activists spreading the word and buying TeamXs products. You can help by encouraging the organizations to which you belong to consider meeting their apparel needs from TeamX. In addition, you can educate your fellow activists on the role co-ops can play in the global justice movementpositive models of just work organization for an attainable future.
Much of this article is based on an interview with Chris Mackin of Ownership Associates (www.ownershipAssociates.com). I thank him for taking time to discuss TeamX.
Editors note: Contact the author at firstname.lastname@example.org . This is Johns correct email. We apologize for printing it incorrectly in Issue #51.