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The American middle class is in distress. Here's what that means to the world's largest economy, and the rest of planet earth.

Philippines

America the Gutted: the global garment industry's fleeting hub

The new victims of US outsourcing? Asians who once took Americans’ jobs.

another $12. She is saving up to replace a refrigerator destroyed by August typhoons that flooded her home with chest-deep muck. 

“Growing up,” she said, “I just wanted to marry a rich man, live in a big house and do nothing.” But when that adolescent fantasy faded, she said, sewing clothes for Americans was the opportunity that gave her security and independence. “I’ve never worried that I took some American’s job,” she said, laughing. “I wasn’t the one who took it anyway. It was their factory owners.”

The widely held belief in America that overseas factories extract dehumanizing toil from workers is amusing to stitchers like Romeo Pallorina, a 38-year-old father of three. “It’s strange to me that anyone would consider this to be a bad job,” said Romeo, who works alongside Cabaliw making clothes for Wrangler, Lee, the girly US brand Dollhouse and others. “We think of Americans as educated people who watch CNN. We assume they know better.”

The job itself is maddeningly repetitive. In assembly-line fashion, each employee at the factory performs the same task — sewing buttonholes, stitching collars — on 400-plus shirts each day.

But Pallorina, a 38-year-old high school dropout, is mindful of the men and women who loiter outside the factory gates with applications. “They would like to have my job,” he said, his tone turning serious. “But it is essential to my family and I will do anything to keep it.”

The never-ending low-wage hunt

Locating countries fit to make cheap, US-branded clothing is a Goldilocks game. Well-off nations like America will no longer do: the costs of labor and benefits are simply too high. The poorest of the poor nations won’t do either. Their power grids short out and their governments are prone to dysfunction.

But if a country can offer dirt-cheap minimum wages and tax incentives, while keeping the lights on and the ports running, it can compete to stitch US brands. In this unprecedented era of Asian development, the number of eligible countries keeps growing.

America’s former battlefield foe, Vietnam, is now its second-largest apparel supplier to the tune of $7.2 billion per year. Indonesia, having stabilized after decades of strongman rule, is the third largest. US garment brands such as H&M and J.C. Penney have helped turn impoverished Bangladesh into America’s fifth-largest apparel supplier. Its minimum wage is among Asia’s lowest: a mere $10.75 per week.

At those prices, even China, America’s number one apparel provider, is sweating the competition. Why pay a Chinese laborer his weekly minimum wage, roughly $50-60, when a Bangladeshi will work the same shifts for a fraction of the price?

“The problem with profit is that it has no nationality,” said Ernesto Herrera, a long-time Philippine lawmaker and secretary general of the Trade Union Congress of the Philippines. “From the businessman’s standpoint, if he’s running a labor-intensive industry, he’ll always go for a country that provides the lower wage.”

Though the United States remains the top importer of clothes stitched by Filipinos, orders have dwindled and jobs have disappeared. Its current $1.2 billion in clothing exports to the US is now tripled by Cambodia, a tiny, deeply impoverished competitor. In the last five years alone, the Philippine garment industry’s workforce has shed 400,000 jobs and shriveled to just 180,000 workers.

The same Philippine government that once successfully lured US garment conglomerates is now tapping into America’s outsourcing anxiety. In a last-ditch effort to revive their apparel trade, Filipino politicians are proposing a new deal: send us shipments of American fabric, we’ll stitch it into clothing for you and we’ll both agree to waive duties and fees. The intent of this still-pending “Save Our Industries Act” is to revive the Philippine garment industry and America’s beleaguered textile trade in one go. 

Among the bill’s supporters is boxing dynamo and Philippine congressman Manny Pacquiao, who tells factory workers in a televised public-service announcement that “the Philippine garments industry needs champions like you to revive this dying industry.”

“It’s a shame about these layoffs,” Herrera said. “These Filipino workers are skilled. They have dexterity in their fingers. The regular Filipino can speak English. And they’re conscious of sanitation. When they come home, they take a bath and brush their teeth. This may not be true in some other Asian countries.” 

But none of these qualities are apt to sway factory bosses who know the cost of one Filipino worker pays for four workers in Vietnam. Herrera sees only one way out: producing high-quality clothing and selling more of it to rich and middle-class Filipinos with American tastes.

That is exactly what Curameng has started doing.

Finding an edge

Wrangler’s US advertising imagery evokes blue-collar grit: men in yellow hard hats, blondes leaning against antique gas pumps. Endorsements are provided by country music legend George Strait — who promotes his own “Cowboy Cut Collection” — and NASCAR’s Dale Earnhardt, Jr.

Wrangler’s ad campaigns in Asia, however, evoke indie cool. The waifish, fair-haired models in Wrangler’s regional “Find Your Edge” campaign are shown traipsing through fields while draped in American flags.

Wranglers, affordable and folksy in the US, are a pricey status symbol in the Philippines. “It’s very fashionable. You want people to see that brand name,” Cabaliw said. The cost of a pair of Wranglers in Manila, roughly $40, is equal to half her weekly pay. “They’re too expensive for me,” she said. “If my son walked in with a Wrangler shirt on, I’d say, ‘Hey, who bought that for you?’”

Curameng built her operation up by sewing American brands for Americans. But today, she must resort to sewing American brands, such as Wrangler, for rich Filipino shoppers.

“We mostly sell American clothes on the local market now. Exports are no longer profitable,” Curameng said. She last shipped orders to the US in 2008, the year America’s economic plunge nearly bankrupted her entire operation. Like US workers before her, who resent the American outsourcers who cash in on outsourcing jobs, Curameng despises Filipinos who now fly abroad to train droves of newly hired Cambodian or Vietnamese sewing machine operators.

“They’re stealing jobs from Filipinos. They’re robbing our industry,” she said. “It’s almost treasonous.”

But Curameng’s daughter, Epza, is not so cynical. 

Unlike her mother, who escaped farm life by sewing US military uniforms in the 1970s, Epza was born into relative affluence. Slight, pretty and fluent in English, she is the living embodiment of her family’s success. 

Now 23, she attended university thanks to profits saved by her family during the roaring era of lucrative US contracts. So did her little brother, Bepz, his name inspired by the government-run “Bataan Export Processing Zone.” (Curameng once ran two factories in her native Bataan province, best known for a World War II-era death march during Japanese occupation).

“I’m not worried about the future,” said Epza, who holds down a management job at the family factory as well as a product development gig with Wrangler’s Philippines division. “Western brands will have a hold here forever.”

“Maybe my Mom is too idealistic,” said Epza, clad in a hoodie, T-shirt and jeans. “I mean, of course American companies are going other places. All these fashionable clothes, like you find at H&M, the owners are just looking for the lowest possible labor costs. That’s just how it works.”

http://www.globalpost.com/dispatch/news/regions/asia-pacific/philippines/120914/race-the-bottom-the-shifting-front-lines-dirt-