Textile industry on a sinking ship

02 Jan '08

1 min read

The garment industry, which was once known to be the pride of Commonwealth of the Northern Mariana Islands (CNMI), is facing a near about collapse. The year 2007 was a virtual disaster for Saipan that saw closure of some of its most robust garment factories.

Earlier the region had around 34 garment factories that generated direct tax of over US $60 million.

Experts believe that adverse economic conditions after the implementation of federal minimum wage in CNMI, competition from China and Asian countries, lack of orders and increased cost of administering business in Saipan have been the major reasons behind the frequent closure of garment industries.

Besides, lifting of trade quotas by the World Trade Organization further complicated the situation after 2005 since developing countries employing cheap labor are being able to export price competitive garments to the US markets.

With the closing of L&S Apparel Inc, Saipan is left with only 14 other garment factories of which 8 have already announced closure by 2008. Besides, it believed that once the second 50-cent minimum wage increase comes into effect this summer, the remaining garment factories will also discontinue operations.
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