Why Has the Arse Fallen Out of the Clothing Manufacturing Industry?

"[T]he key to the TCF industry's viability is establishing brand names, improved quality, quicker response times, identifying niche markets and a preparedness to be innovative".

INTRODUCTION

The Australian Textiles Clothing and Footwear (TCF) industry is under the hammer.  It has all the appearances of a dying industry, with media reports of redundancies, closures and collapses seeming to occur every week.  It is an industry that has been researched and reported on at length with a view to keeping it viable in an environment of declining tariffs.

The TCF industry has a future, but faces a difficult task to re-orient its ethos towards the demands of consumers.  All reports indicated that this would require a major change in work culture at every level in the industry.

This report attests that the necessary changes have not happened.  As a result, the clothing industry is in rapid decline and is failing to live up to its potential.  Tariffs cuts did reduce employment levels, but the imminent death of Australian clothing manufacturing is a result of the inability of all players to find new paths.

What is worse is the emergence of an anti-industry coalition of government, union, church and community groups, which has assaulted the industry in co-ordinated campaigns of intimidation and harassment.  These attacks have been directed at business people and workers who fled the factories to find new systems of production.  These well-executed, well-funded and professional campaigns denigrate people as "immoral", "unethical", "exploitative" and "inhuman" if they dare to work outside the conservative status quo of factory production.  The anti-industry campaigners have targeted the core commercial values upon which the industry depends, and have induced a climate of uncertainty and fear amongst industry decision-makers.

The outlook is bleak.  But this need not be the case.

This report is as much a story as it is a report.  It draws its conclusions from the experiences of typical players in the industry -- contractors, outworkers, manufacturers and importers.  The report:

• Tells the stories of a cross-section of people in the industry.
• Provides a snapshot of the work regulation systems controlling the industry.
• Studies the anti-worker campaigns conducted against people in the industry.
• Makes some comment on how and why the campaigns have harmed the industry.

Prelude:  They Say "...".

I came from Italy.  Over there, they have Mafia who come around and rob people with guns.  In Australia, we have unions they come and rob people like me with their law.

-- Antonio of CF Apparel P/L.

If I made a mistake, you would fine me $15,000.  How about, here is my keys and you run the business and make sure you pay my employees right?

-- Antonio of CF Apparel P/L to a union official.

The unions were bloody dumb with their stupid campaigns.  They do more harm than good.  Where do they get these people that are earning $2.00 an hour from?

-- Dean Johns, Wholesaler/Manufacturer.

It is too late.  The horse has bolted.

-- Paul Smith, an ex-wholesaler, commenting on government claims of wanting to save jobs in the clothing industry.

How could we regulate what people do in their homes?  These people do not want anything to do with government people.

-- Paul Smith, an ex-wholesaler, commenting on outworker regulation requirements.

Their hands were tied behind their backs.  Owners and managers were at the mercy of union demands and in the end the companies closed and the employees have not got their jobs any more.

-- Paul Smith, an ex-wholesaler, commenting on manufacturers.

To continue in business I would have had to put my family home up as collateral and I was not prepared to do that.

-- Paul Smith, an ex-wholesaler, commenting on his decision to pull out of the clothing industry.

If you treat people nice, they work with you, and if not, they will go somewhere else.

-- Mr M Lim commenting on the alleged abuse of outworkers.

Unfortunately, to the detriment of the workers and the company, there is very little flexibility in the conditions of employment.  This is generally brought about by the insistence of the relevant unions to dictate what can and can't be done regardless of the wishes of their members.  We have had occasions where the workers have made requests to the company to work on a public holiday and then to have a day off in lieu to make a long weekend or have the holiday when it suits them.  Regardless of the request of their members the union would not agree to this. ...

-- Mr Gercovich, a dye-house manager. ⁽¹⁾

Part A:  Their Stories

In preparing this report, we interviewed a large number of people who have worked, or who still work, in the industry.  These people included outworkers, owners of small factories who also use outworkers, wholesalers, owners and managers of medium and large manufacturers, people who have left the industry and industry consultants.  None of these people are prepared to be identified for fear that identification would subject them to harassment by the anti-industry campaigners.  A selection of their stories are reported.  Names have been changed.

Dean Johns (A manager and salesman)

Dean still sees himself as young, ambitious and committed to success.  He has always been a hard worker, but now recognises the importance of being with his family and two young children.  These days, he has time to take his children to school and make them meals -- although he admits he is not a great cook.  He says that he now can afford to "smell the flowers".  His wife works full-time and sometimes she is out of town.

Dean has many career choices.  He lives in an upper-class suburb and does not need to work.  He likes Australian-made products, however, and sees himself as a patriot.  He sees his work in the clothing industry as a challenge and not simply a job.

Dean has been in the clothing industry for more than 30 years.  He left school and became an apprentice in the industry at the tender age of 16.  He was a fabric cutter for a large clothing company producing jeans.

Dean says that, 30 years ago, the local manufacturing industry was thriving and there were plenty of opportunities.  He started as an apprentice and then became a manager.  As time went by, Dean could pick from various positions:  production manager to sales.  It was as a salesperson that Dean built a vast network around the industry.  He enjoyed this period the most.  When he left the firm after 18 years, he was national sales manager.

Having 18 years experience under his belt, Dean was confident of his knowledge and contacts in the industry.  He decided to become both a manufacturer and a retailer.  He teamed up with a friend who was already a retailer.  Together they ran a factory in inner Melbourne.  Initially, he started with a team of five people.  He was the brains behind design and sales, while his partner was in charge of production.  At their peak, they had 30 staff members.

Dean realised the importance of using "outworkers".  Although he did not have much to do with production, he was nonetheless hands-on.  He frequently went to outworkers' houses and became friends with them.  He says that his business relied on the friendship, loyalty and the commitment of outworkers.  It was a relationship from which both parties benefited.

If garments needed to be done urgently, then outworkers always managed to deliver.  If the garments were incorrectly finished, they would fix them.  He was always amazed that the quality being produced in homes was better than that produced in his factory.  Dean says that, when there were problems with garments, the outworkers would always fix them.  In turn, he strived to have good relationships and always paid on time.

Tariff reductions hurt Dean's company.  Customers opted for cheaper imports, but Dean had a strong belief that his garments were better in style and quality.  "The final nail in the coffin were the bloody unions", he said.  "The unions were bloody dumb with their stupid campaigns.  They did more harm than good.  Where do they get these people that are earning $2 an hour from?" Dean says, "It's ridiculous to claim that people are earning $2 an hour and being forced to work".  In fact, sometimes it's manufacturers like Dean who are at the mercy of outworkers.  Dean says that, from his experience, some outworkers took the garments home and a week before delivery they would ring up and say that they wanted more money or that they could not do the garments.  Dean believed that they were too busy sewing for others manufacturers and he would stop dealing with them.

The rules with which manufacturers had to comply were outrageous.  Dean says that he was angry that the awards were designed by bureaucrats and unions, rather than by people in the industry.  The award is not practical and that is why it's not working.

Looking back, Dean also blamed problems on the practices of some retailers.  "They were bloody greedy and do not understand how garments are made and they choose to be ignorant".  He recalled one occasion when he had a meeting with a retailer.  They had already agreed, in principle, that he would supply 30,000 garments that were made from imported stencil fabric.  At that time, the fabric was already with cutters and some garments were being made.  The meeting was to formalise the process with the group of buyers from the retailer.  They agreed on price and quantity.  On the way back to his office, Dean received a phone call on his mobile from the retailer to say that they were opting for overseas garments.  They also told Dean that he could not sell garments made with this particular fabric to other retailers.  Faced with 30,000 garments on his hands he had to battle an expensive court case in order to gain the right to sell.  Dean was angry.

In 1996, Dean decided to pull out and finished his partnership with his friend.  It was the toughest decision in his life, he says.  He was frustrated and angry to see his garments being "raked in the mud" by organisations such as Fair Wear.  If he did not close, he says that he would have gone broke.  It was hard to cope initially.  He only knows the clothing industry and has no experience in other industries.

In 1996, Dean was commissioned to work with a local manufacturer as the salesman.  The business is now strong, with 40 employees and a large number of outworkers.  The company is owned by a Lebanese family.  They work hard and use two outside manufacturers.  All family members participate.  The company is now making garments on quick response for a large retailer.  The retailer imports 97% of its garments and the rest is locally made.

Dean is critical of this particular retailer, who boasts about buying Australian-made.  "If you go to their shops, they would have large Australian flags promoting 'buy Australian-made products'".  This particular retailer is always under pressure from the unions and Fair Wear and has signed the Code of Practice.  Every time the retailer asks Dean where the garments are made, he looks at him in the eye and responds "in the factories -- where else?".  The retailer knows that it is impossible to have garments made in factories fast enough to meet the quick response requirements.  Dean expressed his anger at retailers for succumbing to campaigns by various organisations such as Fair Wear.  He added that they do not have the guts to fight for products to be made locally.

"All outworkers are business people like everyone else", Dean claims.  They have their own ABN numbers, registered business names and TFNs, and pay tax and GST like everyone else.  They operate like a business and no-one has control over them.  He added that real exploitation occurred overseas.  Dean had been to Vietnam and China where the garments are made for the Australian market.  He had seen the squalid conditions and the workers' sleeping quarters.  It is shocking by comparison with Australian "outworkers" conditions.

Having been overseas, Dean is more determined to help the local manufacturing industry.  He sources locally-made products and puts his best effort into reviving the industry.  Dean hopes that manufacturing will come back to Australia in the future.

Paul Smith (An industry researcher and consultant)

Paul stumbled into the clothing industry.  In 1975, he was undertaking an agricultural science degree at the University of Melbourne.  Being young and restless, he changed his mind and wanted a career in music.  He was a part-time music teacher.

In late 1975, he was asked by a friend to work with a clothing wholesaler.  The company was of medium size and supplied major retailers around Australia.  Paul never looked back.  He learned the trade very quickly and realised the potential of the industry.  There was profit to be made.  He moved from position to position within the company.  He learned how to produce garments and to sell them and, at the same time, he established an impressive network of contacts in the rag trade.  Furthermore, he developed his business skills and understood what it took to have a successful wholesale company.  Having nine years of hands-on experience, Paul decided to leave and establish his own company.

It was late 1984, and at that time the industry was considered to be lucrative.  Tariffs were high and local manufacturing was safe.  Paul sub-let a factory in Richmond and decided to become a wholesaler.  The sub-let area became his show room and warehouse.  Initially, he was hands-on in all areas of operations.  He would participate in the initial stages of designing all the way through to sales.  The number of staff increased gradually.

Paul understands the rag trade well.  In order to survive, he had to outsource his production.  The clothing industry is seasonal.  Basically, there are two seasons according to Paul -- Summer and Winter.  Hence, production is not constant -- that is simply the nature of the beast.  He only used two manufacturers.  He said that out-sourcing gave him the necessary flexibility and efficiency.  With production problems out of the way, Paul said that he concentrated only on design concepts and sales.

One manufacturer he used was in Altona.  It directly employed staff.  When they needed people they would take more on.  At that time, the manufacturer made garments for other wholesalers and retailers and employed about 100 people.

Another manufacturer used was Tony Ng, a Vietnamese immigrant.  Tony established his family business in 1982 as a manufacturer.  Paul learnt quickly that the clothing industry relied on people like Tony for its existence.  Tony was able to network within his community and able to source outworkers.  Outworkers gave Tony the flexibility to meet deadlines.

Paul met many outworkers through Tony.  He said that he has been to many outworkers' houses on many occasions, both business and social.  He made many outworker friends and still has contact with a few of them today.  Having seen outworkers' houses, Paul was amazed with the way they worked from home at odd hours.  As time went by, Paul could see that some of these people acquired new items such as TVs, cars and houses.  Paul was pleased to see how his business could benefit these people.

The reduction in tariffs hurt Paul.  As the tariff rate reduced, the pain grew more intense.  Paul felt that the market overflowed with cheap imports.  In 1991, he folded his company in order to limit his losses.  "To continue in business I would have had to put my family home up as collateral, and I was not prepared to do that", he said.  Looking back, he says he made the right decision.  If he had stayed in business, there is no doubt that he would have lost his family.

The hardest part in closing his business was letting his staff go.  It happened gradually.  Paul said it was not easy because he had to select which friends he had to fire and which friends he had to keep.  It was also hard to tell Tony that there was no more work.

Although Paul's business was not directly effected by union activities, he predicted that it would be.  He says that the award for "outworkers" is a joke and that there is no way that any manufacturer can comply.  Paul asks, "how could we regulate what people do in their homes?  These people do not want anything to do with government people".

Paul is in a prime position to know about "outworkers" and the clothing industry.  He is now an expert consultant who is often involved in the production of government reports and in attempts to try to salvage the clothing industry.  His conclusion, however, is that "It is too late.  The horse bolted".  His big concern is that major companies involved in the supply side of the industry are on the brink of collapse.  He says that transport companies, dyeing companies, fabric companies and trim suppliers are all in vulnerable positions.  Paul is also critical of the union movement and its contribution to the demise of the clothing industry.  He gave examples of large textile-producing companies that were heavily unionised.  The strikes and the high cost of labour definitely sent some companies broke.  "Their hands were tied behind their backs.  Owners and managers were at the mercy of union demands and in the end the companies closed and the employees have not got their jobs any more".

Paul also sees a danger in relying on imports.  First, jobs obviously go overseas.  Second, the clothing industry (or what is left of it) will fall behind other countries because of the lack of investment in technology and development.  We will lose "economies of efficiency to other countries", he claims.  Third, he says that we will not have a choice of garments, because Australia is a relatively small country and garment-producing countries tend to cater for big orders.  Australia is forced to pick up the ends of production runs.  Fourth, he predicts that the price of producing garments overseas will rise anyway.

Looking back, Paul was glad that he made the decision to get out of the industry when he did.  He is, however, seriously considering returning to it.  The industry is in his blood and he sees opportunity in providing styles and flexibility that are not currently provided by large retailers.  If he returns, he says he will start as an "outworker" working from his large garage.  But if he returns, he will stay small so as not to attract bad publicity from the unions or Fair Wear.

Mr Lim (A surviving manufacturer)

Mr M Lim migrated from Cambodia in 1981 through a camp in Thailand.  Being a refugee, he did not have any valuable possessions when he arrived in Australia.  He had two young children and a wife.  His greatest asset was that he had many relatives.  His first job was working on a farm picking strawberries in Lilydale, Victoria.  Later on, he moved to a food company in Port Melbourne.  He remained there for three years.  His wife worked in a clothing company as a machinist in Richmond.  In 1985, they bought sewing machines and joined forces to operate a business from their home in Oakleigh.

Mr Lim is lucky.  He has a retired mother.  She looked after the children and was able to relieve him of some household chores.  Both husband and wife worked hard and they bought a house in Oakleigh.

In 1986, Mr Lim joined his brother-in-law to open a factory in Oakleigh.  They used their houses as collateral.  They were successful.  Business grew dramatically.  In 1990, they purchased a building in Springvale, Victoria.  As time went by, they modernised their operations by getting state-of-the-art machines.  They have accumulated assets, such as good cars and a delivery van.  They are generous to their workers and outworkers.  They believe in an honest work ethic to maintain good relationships both with workers and clients.  Mr Lim said "if you treat people nice, then they work with you, and if not, they will go somewhere else".  They have about 30 workers inside the factory and 30 outworkers.

Mr Lim would act as the public face of the company.  He is a good salesman and, at the same time, steered the company in the right direction.  In 1998, he decided to capture a niche market in producing jeans.  He acquired new assets for this operation.  As a result, he is now a large local manufacturer of jeans.  His brother-in-law acts as a head cutter;  and his wife, who speaks five languages, is able to talk both to workers and outworkers in their mother tongues.

Business was not always rosy for Mr Lim.  During the recession in the late '80s, the company faced closure, as it could not meet its debt repayment.  The business is now functioning well because of its jeans operation.  For the last five years, however, Mr Lim has lost five clients (wholesalers) who shifted to Fiji and China.

Cheap labour in other countries has posed a real threat to his company.  Furthermore, he said that the clothing industry is dying in Australia.  Compliance with clothing awards is hard for manufacturers.  There are too many rules and it is a joke.  No-one can comply with those rules in business.  He added that all of his workers get paid according to Level 2 of the Award and those who are experienced in operating machines get the Level 3 pay rate.  For outworkers, they get piece-rate pay based on agreement.  His rule of thumb is 50% to 60% for outworkers of what he can get, but he has to pay workcover and superannuation for some people.  He has to pay his overheads and other costs, such as trimming, embroidery, pressing, washing, packaging, delivery -- and these are just a few of the costs that he could list off the top of his head.  Mr Lim understands the associated cost of running his business, but he said that the "unknowns" are what he fears the most.  He does not know what is happening the next day, he said.  He fears that his wholesalers will go overseas.

He recalled that the union wondered why his employees were not paying their union dues in 1995.  "They came and they make trouble.  They pointed out all the little rules and that I did not comply", he said.  In the end, he had to bring in his accountant to help mediate.  The problem was that the people in the factories did not want to be members, because most of them were relatives.  Finally, he paid dues on their behalf to keep the union away for a while.  He recalled that his partner wanted to close down the factory.  Keeping the business open was a hard task and the additional intimidation by the union was just what they did not want.

Financially, Mr M Lim is not doing well.  He recalled that, when he started the business, he and his partner used their houses as collateral for business loans.  Now, to be competitive again, they have invested heavily in equipment, and they still use their houses as collateral.  He owes the bank about $500,000.

If he went bust tomorrow, he may hold on to his house.  Looking back, he said that he enjoyed working with his family and the freedom of running his own business.  There were many times, however, when he considered closing down.  He blamed it on the unions and on those organisations that drove the industry overseas.

Now Mr Lim and his brother-in-law live in large houses in a middle-class suburb.  Their children are growing up fast.  Mr Lim and his brother-in-law managed to send their children to private schools, hoping that this would give their children a good start in life.  Mr Lim's children are all at university undertaking business degrees.  None of the children want to take over the business.

Mr Tu (A once successful manufacturer)

Standing behind a counter serving his customers, Mr Tu could not help but reminisce.  His family now owns a petrol station in Cabrammatta.  This is a new business started just last year.  "It is going ok for now ... less stress than before.  Customers come and go and they are faceless to me.  It is different", he said.  The income is stable and you do not have to worry, according to Mr Tu.

Mr Tu used to own a clothing manufacturing business in Fairfield, which he started in 1985.  He had family members working in that factory.  He recalled that he would start early in the morning and would finish late most nights trying to meet delivery schedules.  Some weeks he would work seven days.  He felt sorry for his wife because she spent most of her time behind a sewing machine and did not have much time to spend with their two children.  He admitted that the children grew up very fast.  His eldest son is going to university doing a computer course, while his daughter is still at high school.

He recalled the good times in the clothing business in the late '80s to the mid-'90s.  It was good because there was plenty of work.  His garments were for expensive markets and he would get, on average, $10-15 per garment.  At the peak, he had about 30 people working in the factory and about 30 outworkers.

The Australian clothing business gave Mr Tu a good start in life.  He came to Australia as a refugee in 1982.  His first job was working in a factory.  His wife worked as a machinist in a clothing company.  He attributes his success to the large number of members in his family and to good friends.  He lives in a large double-storey house with his mother-in-law, his sister-in-law and, of course, his wife and two children.  They all worked in the factory.  When the children were young, he said that he allocated a playroom for them in the factory, but most of the time their grandmother was fit enough to look after them.

By 1994, Mr Tu and his family managed to buy a second house in Cabrammatta.  There is no doubt that Mr Tu likes to flaunt his success.  Besides his big house, he had a four-wheel drive and a Mercedes.  He was well known within his community and the local area.  Through his business activities he knows the clothing industry well -- especially the "outworkers".  He recalled that the relationship with the outworkers was not just business, it was social as well.  He really misses the outworkers, as they were his extended family, he said.

After 1996, it was downhill for Mr Tu.  He said that he held on to false hopes that things were going to get better.  Orders were diminishing.  Wholesalers started to move overseas.  It was a harrowing experience.  Mr Tu borrowed money from friends to repay his business loans.  It was difficult to see the things for which he had worked so hard disappearing.  First it was the beloved Mercedes, then the company assets, such as sewing machines.  The price he received for assets was a fraction of the purchase price.

In September 1999, Mr Tu decided to pull out of the clothing industry.  He sold his factory and his second house to settle debt.  He knew that, if he stayed in the business, he would have lost his home.  He recalled that the late '90s was not a happy period for him.  The financial strain harmed relationships at home.  Everyone was unhappy and seemed to be quarrelling everyday, he said.

Mr Tu blamed the government for not helping clothing manufacturers.  He said that the government created "rules" that were not workable.  They were meant to help outworkers but at the same time they pushed the wholesalers and retailers overseas.  He was angry every time he saw his garments being shown in the media as examples of articles made by "outworkers".  "Bad campaigns were being run by government and the union.  If there are no outworkers, there is no clothing manufacturing in Australia.  What are outworkers going to do if there are no jobs?" he said.

"The regulations were too tough and not practicable.  Like many other businesses, when we start to lose money we have to go somewhere else.  My problem is that I should have left back in 1996-97.  I would not have lost as much, I would still have that house", Mr Tu said.

Now his gas station is doing well.  Mr Tu is happy that he did not have the pressure that he used to have.  His family members are taking turns to operate the till and his eldest son helps him a lot.

Mrs C. (An outworker)

Mrs C lives in a large house in Clayton.  Her house is on a double block of land.  Everyone who visits her is astounded by the large block of land and recognises the potential value of future development.  Mrs C and her husband own another house that is earning rental income.

Her husband was at work when we visited her.  He is building warships in Williamstown.  He is a foreman there.  Her husband is a hard-working person.  Since arriving in Australia in 1983, he has worked on farms, he then moved to factory jobs.  He has worked installing industrial insulation and was also a tram conductor.  His skills and versatility have meant that he has never been out of a job.  Both are ambitious about building a secure future.

They have three children.  Two children were born in the camps in Thailand and one was born in Australia.  The eldest two are going to university and the youngest is entering high school this year.

Mrs C's life has revolved around her children.  Having escaped a communist regime in Cambodia, she always wanted the best for her children.  They went to private schools.  They have the latest model computers, accessories, games and books.  Her eldest children have their own cars.  Both children work part-time.

Mrs C showed us her workplace where she has a television and video, set up in front of the sewing machine.  On the wall there was a phone and a certificate of her business registration.  She has 5 machines in a large room.  She sometimes uses her Honda Legend to deliver or pick up accessories.  She said that this is a typical set-up.  She mentioned that all her relatives are in the clothing industry.  Some are manufacturers and most are working from home like her.  They all live in the Clayton area and there are ten families.

Mrs C's daily routine consists of her getting up at around 8 o'clock.  She used to get up earlier when her children were young.  Now she has only one child that she has to look after.  She drops off her youngest child at school and gets back home at around 9.30 am if there is no shopping to be done.  She sometimes does household chores for an hour.  Her work starts between 10.30 to 11.00 a.m.  She has a quick lunch at noon.  While working, the television is on.  Most of the time the video is playing, otherwise she is content with midday soapies.  At 3.30 p.m. she goes to school to pick up her youngest son.  If he has after school activities, she would attend to those.  Then she comes home to prepare dinner for the family.  About 7.30 to 8.00 p.m. she commences her work again.  This time her husband helps her.  They work up to 11.00 p.m. or midnight.  Her children hardly help her.  She mentioned that she would appreciate it if they could just clean up their own mess and study hard.

Being at home, Mrs C can look after her children.  She said that she is financially better off then working in a factory.  She does not have to pay childcare.  She is the mother of her children and there is no-one else who can take better care of her children then her.  She is a successful outworker.  She has high skills of garment construction and she has never run out of work.

Having only worked from home she is isolated from the outside world.  Her English is limited and she has never worked in factories before.  She only knows how to sew.

Mr Norman Kings of Good Clothing Pty Ltd (A wholesaler)

Mr Norman Kings started his clothing business more than 20 years ago.  He is now one of the main players in the industry, with turnover of more than $35 million.  His garments are sold at major retailers.  Operating from his office in an inner-city suburb, he has a crew of 60 people running a modern warehouse to meet retailers' demand.

When he was in his mid-twenties, Norman worked in a clothing manufacturing company in Richmond.  He was passionate about his job and fascinated by the rag trade.  He was promoted to various positions and then to production manager of that company.  Today that company no longer exists.

With a passion for the clothing industry and a burning desire to succeed, Norman started his own business in the rag trade.  Being young, he had no business acumen and it was hard to get finance.  Fortunately, he was able to convince his mother to use her home as collateral for a $10,000 business loan.

He set up in an old rented factory in Prahran.  There were a few sewing machines to start with and five employees.  At that time, Norman made garments for his old employer.  His client base increased as his reputation for being a good manufacturer rose dramatically.

Norman is personable, friendly and is an Aussie larrikin.  He likes his cars fast, his beer cold and he is mad about sport.  It is hard not to like him.  His personal attributes contribute to his success.  He realises the importance of his relationship with his garment-makers.  Most of his makers are recent migrants from Vietnam and Cambodia.  He admires the desire of these migrants to succeed and their materialistic mentality.  It is never enough for them.  It is always the next new car and the next new house on their acquisition list.  Norman is friends with these people, who he says he can rely on.  He attends their children's birthdays, graduation parties and weddings.  He visits their homes.  As his business increased in size, he had about 30 makers.  He noticed that these makers became manufacturers as their operations became too big to operate from home.

After being in business as a manufacturer for 5 years, Norman realised that he had to move from manufacturing to wholesaling in 1990.  His operations had changed and he needed a bigger warehouse.  He moved to Richmond.  After surviving the recession, Norman was more determined than ever to succeed.  His business grew dramatically.  The industry faced tariff reductions and mass imports from overseas.  Norman saw other businesses fall around him as the economic climate changed.  To add to the problems, there was the union push against the use of "outworkers".  Campaigns run by Fair Wear certainly had a negative effect on the clothing industry.

Norman commented that there are a lot of ignorant people who think that they help the industry, but in fact hinder the clothing business.  He admitted that there are some unscrupulous operators who may not pay on time, or who don't pay their makers at all.  But he also added that that happens across the board.  Furthermore, he said, the sinister campaigns run by unions cause the loss of Australian jobs.  "These people do not understand the clothing industry", he added.

If there were no "outworkers", there would be no clothing industry.  Relationships are determined by market forces.  Norman stressed that the reason he has manufacturers as friends is because he always treats them correctly.  They are paid every Friday.  Norman knows that his business is built on his manufacturers' ability to turn fabric into garments.  He relies on their effort.  He knows that the moment he squeezes the price, he would have no manufacturers to work for him.  His philosophy is that you must always leave something for the next guy.  Today, Norman has a $7 million bank facility to ensure that his manufacturers get paid on time.

Norman is disappointed with the way the media is looking at only one side of the coin.  The rags-to-riches stories are never told.  His manufacturers and outworkers work hard.  This is the 21st century and people in Australia will not allow themselves to be exploited.  He shares the success of their achievement and their children's achievements.  He knows some of the outworkers' children who have become doctors, lawyers and computer programmers -- and all of this attained because of their parents' hard work.

The secret to Norman's success is his business relationships and the ability to manage a low profile.  He was shocked to see his garments being attacked by unions and Fair Wear.  He wished he could tell the real story, but realised that it would jeopardise his business if he created any publicity.  He was absolutely sure that he would be hounded by unions as an exploiter of "outworkers" and that would be the end of his business.  He wishes he could say that he directly contributes about $7 million (one million garments) a year to the Vietnamese and Cambodian communities.  Further, he wants to tell of the benefits that these people derived from the industry.  When garments are produced in Australia, there are other businesses that benefit as well, such as trimming, fabrics, dye factories, transport, and so on.

In 1997, Norman made a strategic move.  It was a heart-wrenching decision when he told his manufacturers, who were his friends, that he was taking his operation overseas.  His says that the decision to move was 20 per cent because of cost increases and 80 per cent because of the union's campaigns.

The continued union campaign against Norman's using "outworkers" hurt Good Clothing P/L.  Retailers pressured Norman to sign the Code of Practice and he did.  His company was one of the early companies to sign.  However, everyone in the industry knew that it was hard to monitor the use of "outworkers" and that the document would kill the industry and its people rather than help them.  Norman says that he signed to buy time so that he could make the transition to producing overseas.

Now Good Clothing P/L produces 80 per cent overseas and 20 per cent in Australia.  In August 2001, all of Norman's manufacturers signed the Code of Practice document.  The document is not worth the ink that forms their signatures, according to Norman.  Norman would find it really hard to monitor what outworkers do at their homes.  When they do it, and how they do it, is up to them.

There is no doubt that Norman will move all of his production overseas and will import and maintain his warehouse.

Antonio (Manufacturer about to close)

Antonio is an immigrant from Italy who came to Australia in 1968.  In Italy, his parents were clothing manufacturers -- tailors to be exact.  That is where Antonio learnt his skills -- he recalls helping his parents when he was ten years old.

In 1969, Antonio started his own business.  He rented a house in Clayton in which to live and he also operated a tailoring business from home.  Business thrived.  He boasted that he learnt quickly about the industry and dreamt of becoming big one day.

In 1974, Antonio rented a factory in Oakleigh and became a manufacturer, predominantly making garments for children.  He said that business was good and he managed to have other investments on the side.  Although successful, Antonio wanted to produce for the high end of the market for two reasons.  First, he wanted to utilise his skills in making elegant clothes;  and second, he knew that children's clothing would not continue to give him the profit that he then enjoyed because cheap imports would arrive.

In 1995, Antonio opened a new factory in Springvale.  He bought a building and invested in modern machinery.  With a strong belief in his ability, he borrowed heavily.  His new business produced up-market products.  Clients ranged from Country Road, Sportscraft and Portmans.  The business never used "outworkers", Antonio boasted.  First, he could not speak the outworkers' language -- Vietnamese or Cambodian.  Second, he wanted to have total control over the quality of goods being produced inside the factory.  At the beginning of 1995, Antonio had about 10 employees, a number which peaked in 1997-1998 at about 40 employees.  Antonio is proud of his contribution to Australia and to local employment.  Although the rates in the award were high, he never paid anyone below those rates.  He always had permanent employees and said that it was more expensive to have casual employees.

Having done the right thing, Antonio was still being scrutinised by the union.  He blamed his clients/retailers for putting pressure on him to have a unionised workforce.  Retailers forced Antonio to sign contracts that garments must be made inside the factory otherwise he would not receive any work.  He blamed his clients/retailers for passing the union issue to him.  "If I made a mistake, you would fine me $15,000.  How about, here is my keys and you run the business and make sure you pay my employees right?" Antonio quoted what he said to a union official who could not find any award breaches.  "I came from Italy.  Over there, they have Mafia who come around and rob people with guns.  In Australia, we have unions.  They come and rob people like me with their law", Antonio said angrily.

Antonio is also angry with his clients for taking their operations overseas.  He knows that it is cheaper to manufacture overseas, but he believes that the quality produced locally is unmatched.  He knows of other contributing factors that forced his clients to go overseas.  Factors such as campaigns that gave his clients' brands bad names.  Furthermore, the government did not help.  "The government is not helping the industry at all.  Liberal and Labour they are all the same", said Antonio.  "Government should give some incentive for businesses to stay in Australia", he added.

Now, sitting in his office, Antonio says that he is not used to the quiet sound.  It is like a ghost town here.  He misses the noise of sewing machines, people, and the ring of the phone.  Now the only noise he can hear is the loud siren reminding him that it is time to start work, tea time, lunch time and time to go home.  "I only come here to clean or to meet my appointments here", he said.

The company closed in July this year (2001).  Antonio said that he could not meet the expenses.  Orders from clients used to be 1,200 units on average per style and now it is only 100 or 200.  Sometimes there are no orders at all and long periods without any orders that cause big losses.  It is hard and expensive to have just a casual workforce, he says.

With a large debt, Antonio gave notice to his bank that he cannot pay.  He is trying to sell the equipment and business, if possible.  At purchase price the equipment cost about $300,000 and Antonio knows that he will get a fraction of the original price.  He fears that no-one will want to buy his equipment.  He realises that he is almost the last man standing in this business in Springvale.  There used to be more than 15 manufacturers in this local area when Antonio started, but now there are only a few.

What Antonio fears most is the future.  At 50 years of age, and a long way from retiring, he admitted that he cannot find any other career.

PART B:  SETTING THE SCENE

A RAPID AND CONTINUING DECLINE

Textile Clothing Footwear (TCF) -- What has happened to the industry? ⁽²⁾

From 1990 to 1999:
Turnover	dropped 2%	while the rest of manufacturing increased 31%
Employment	dropped 25%	while the rest of manufacturing dropped 3%
Wages	dropped 5%	while the rest of manufacturing rose 26%
Imports	increased from $3.5 billion to $6.4 billion
Exports	increased to $2.4 billion
Clothing imports as a percentage of domestic demand	rose from 18.5% to 37.6%

Persons Employed (3) & (37)
1960s	180,000
1974	140,000
1985	116,900
1997	103,500
2000	95,000 (estimate) and based on trend lines
2014	40,000 to 73,000 (forecast range)

Location where persons are employed (4)
Victoria	44.3%
NSW	35.1%
Qld	9.4%
SA	6.9%
WA	2.7%
Tas & NT	1.5%

Union membership (5)
1992	40,000
2001	20,000 but some reports indicate 13,000

• There has been a shift in the nature of the labour force, from manufacturing process workers to wholesaling and retailing managers and professionals.  This reflects a shift to service orientation, in part based on greater importation of goods, but also a move towards servicing niche markets. ⁽⁶⁾

Reductions in Tariff Taxes (7)
1974	25% tariff cut in Australia.
1991	Decision to accelerate Australian tariff reductions/removal of quotas.
1993	Australia abolishes quotas on imported goods.
1999	Australia pauses tariff reductions
2005	Schedule for termination of the international agreement that imposes TCF tariffs and quotas world wide.
2006	Free TCF trade in APEC scheduled to become reality.  All international tariffs to be removed/equalised.

THE INDUSTRY DOES HAVE A FUTURE!

According to the Industry Commission report of 1997:

...in the right policy environment, the Australian TCF manufacturing industries can be expected to play a positive role in the future economic development of Australia. ... This may not mean that industries maintain their present structure or size. ⁽⁸⁾

The Australian Labour Party (Vic) perhaps provided the best summary:

...the key to the TCF industry's viability is establishing brand names, improved quality, quicker response times, identifying niche markets and a preparedness to be innovative. (1997) ⁽⁹⁾

Others have said

...there will be a major migration in the TCF workforce from labour intensive processes to sectors and niches of competitive advantage, provided that the industry's transition is managed properly, with a minimum of trauma. (1997) ⁽¹⁰⁾

The future viability and prosperity of Australia's TCF industries lie in higher productivity and enhanced international competitiveness. (1997) ⁽¹¹⁾

There are "four critical and difficult challenges that must be met if the industries are to secure a future".  One of these is "improve their capacity to innovate;  both in how they do business and in developing new products and services (2000)" ⁽¹²⁾

What has happened?

The performance of TCF firms is highly disparate -- some firms have made great strides towards becoming internationally competitive;  others still have a substantial way to go.  New companies are continuing to emerge. (1997) ⁽¹³⁾

New management approaches have been implemented -- quick response production, alliance formation, product and process quality, identification of market niches, benchmarking and training have all become increasingly common. ⁽¹⁴⁾

For the foreseeable future the trend to outsourcing production will continue. ⁽¹⁵⁾

BUT!

Australia's TCF labour productivity as a proportion of manufacturing labour productivity in 1994-95 remained well below that of other OECD countries. ⁽¹⁶⁾

Industrial relations remain dogged by defensive attitudes and feelings of powerlessness ... ⁽¹⁷⁾

There is a severe image problem limiting the industries' ability to progress.

... to help overcome the industries' "bad press" there is support for a coordinated and holistic marketing and promotional campaign to develop a positive image of the industries. ⁽¹⁸⁾

PART C:  THE CAMPAIGN AGAINST THE INDUSTRY

THE PLAYERS.  HOW IT EVOLVED

Union/Government/Church Campaigns ⁽¹⁹⁾

Until the 1990s, the view of the TCF unions was that they could most effectively control labour when production was organised around the industrial factory model.  A prime objective was to ensure that production was concentrated in factories.  In this context, the clothing union had considered and treated outworkers as scabs whose existence threatened the union's business model.

• 1939.  The clothing union had a clause inserted into the award to restrict outworkers.
• 1957.  The union allowed a system where outworkers had to apply for a permit to work.  This forced outworking underground.
• Mid-1980s.  The use of workers in factories was in rapid decline.  The union changed their attitude and recognised that they needed to unionise outworkers to retain control of labour.
• 1987.  After application from the union, the Australian Industrial Relations Commission deemed all outworkers to be employees unless they could prove otherwise.  The union campaigns to force award conditions on outworkers and achieve membership did not work largely due to award-based restrictions on the union's right of entry to outworkers' homes.
• Early 1990s.  The union found that membership was continuing to decline and decided to shift their emphasis from award enforcement to media campaigns directed at harming business reputations.
• 1993.  The union obtained Federal Government funding to conduct campaigns against firms in their "Outworkers Awareness Campaign".  High-profile businesses were targeted with the aim of damaging brand names.  The union accused named retailers of
  • Paying low prices for their clothing merchandise.
  • Having high-mark ups on their clothing merchandise.
  • Making profits on clothing merchandise.

  The union joined with internationally funded activist networks and claimed that local outworkers suffered the same hardship as Third World workers.

• 1995.  The Federal Government gave the union an additional $400,000 for campaigning.  The union released a report listing companies that used outworkers.  The list was tabled in Federal Parliament.  The integrated designer, manufacturer and retailer, Country Road, received special attention and later admitted their business suffered as a result of the campaign.
• 1996.  A seminal year.  The organisation Fair Wear was formed under the auspices of the Uniting Church and a coalition of other church, union and community groups.  Fair Wear was to become the spearhead of the anti-clothing industry campaigns with the express intent of damaging brand names of high-profile clothing businesses.  The union brought in Greenpeace to train Fair Wear operatives.  Coles-Myer and Sportsgirl were early targets of this church/union coalition.  The strategies adopted were modelled on USA-based corporate campaigns'.
• 1997.  The NSW Government gave $150,000 to the union to establish "clothing industry homeworker co-operatives" and $80,000 to a refugee council to "educate" homeworkers. ⁽²⁰⁾
• 1996-2000.  Sustained campaigns conducted by the church/union Fair Wear coalition against targeted businesses.  Extensive media coverage was achieved.  Targeted retailers, designers and manufacturers recognised their brand names were damaged and commercial harm had been inflicted.  The campaigning is directed at coercing companies into signing a "voluntary" Code of Practice.
• 2000.  The NSW government operates a unit within their department of industrial relations called "Behind the Label". ⁽²¹⁾  The NSW Government funds Fair Wear to conduct anti-clothing industry campaigns, including the targeting of 3,000 schools.  The multi-conglomerate advertising firm Saatchi & Saatchi have been commissioned to undertake the project.  Nonetheless, the industry, and union membership, continue to collapse.
• In a key strategic move, the union sued a large number of manufacturers for breaching the award.  This created bad publicity for the companies.  The "breaches", however, consisted of nothing more than a failure to provide the union with the names of their contracted suppliers.  This illustrated that the award extends well beyond worker payment issues to methods of controlling commercial business and business relationships.
• 2000-2001.  The NSW and Victorian Governments attempt to introduce new anti-contractor industrial relations legislation.  Both pieces of legislation seek to control and determine commercial contracts between persons.  Both governments rely on public relations campaigns making allegations of exploitation of outworkers to justify their legislation.  Fair Wear is at maximum activity.  Church groups associated with Fair Wear publicly enter the political debate to support Fair Wear and the legislation.  The Victorian legislation is rejected in the Upper House.  The NSW Government withdraws the legislation due to lack of Upper House support.
• A group of outworkers speak out against the Fair Wear campaign alleging misrepresentation by Fair Wear and others. ⁽²²⁾
• 2001.  The union is in membership and financial crisis ⁽²³⁾ with the federal division suing the Victorian division.  The NSW Government announces that it will step into the role of campaigning against clothing businesses through the Department of Industrial Relations and allocates:
• $900,000 to enforce a mandatory clothing code of practice.
• $1.5 million to increase clothing industry inspectors.
• $300,000 to find ways to reduce the clothing industry supply chain. ⁽²⁴⁾
• The NSW government announces that it will again attempt to introduce "outworker" legislation and separate anti-independent contractor legislation.

SOME BRANDS TARGETED:

Country Road, Adidas, Portmans, Motto, Sussans, Nike, Westco, Katies, Laura Ashley, JAG, Perri Cutten, Ojay, Anthea Crawford, Apple Apparel, Swiss Model.

BUT NOT THE "NO-BRAND" LABELS!

The union/church/government campaigns focus on allegations of outworker/homeworker exploitation.  Yet, "no brand" labels and streetstall and market-retailed clothing are also manufactured by outworkers.  The anti-clothing industry campaigns do not target these areas of manufacturing and retailing.  The focus is exclusively on profile brand names.

ABOUT FAIR WEAR AND ITS CAMPAIGNS

The organisation Fair Wear was launched in Melbourne in 1996.  Nominally headed by the Uniting Church and a coalition of other church and community groups, the unions were the driving force in its creation.  Fair Wear is located at the Uniting Church, XXX Little Collins St, Melbourne.

Fair Wear's funding in NSW comes from:

• The Uniting Church in Australia -- New South Wales Synod and Assembly.
• The Mercy Foundation, NSW
• The NSW Department of Industrial Relations
• Asian Women at Work Inc
• Sisters of Charity Foundation Ltd ⁽²⁵⁾

Other Financial Contributors in 2001 were:

• Australian Manufacturing Workers Union, NSW State Office
• Labor Council of NSW
• Federated Municipal and Shire Council Employees' Union of Australia
• Flight Attendants Association of Australia, Domestic/Regional Division
• Textile, Clothing and Footwear Union of Australia, NSW Branch

Fair Wear in Victoria does not disclose where its funding comes from, although the Website for the Stegley Foundation does confirm that it is a financial supporter of Fair Wear. ⁽²⁶⁾  The various Victorian branches of the TCFU and AMWU have been funders. ⁽²⁷⁾

Fair Wear copies a union "surrogate" organising tool developed by US unions.  A director of the ACTU Organising Centre said:  "We have done some things well.  Fairwear is well known to us all -- at least in Australia".

Fair Wear campaign tactics include

• Intimidation of shop assistants by activists.
• Demonstrations outside targeted retailers.
• Activists "stripping" in clothing shops.
• Professional advertising campaigns.
• Organised media/photo events.
• Statements of support from clergy.
• Use of professional models in "catwalk" photo opportunities.
• Press release campaigns.
• Campaigns outside politicians' electorate offices.
• School activist campaigns' enticing school children into being activists against clothing firms.

Fair Wear claims that Australian outworkers

• Work in sweatshops.
• Are being paid $2 an hour.
• Work 12-18 hour days.
• Employ child labour. ⁽²⁸⁾

Fair Wear campaigners also claim that

• There are 330,000 outworkers, being 14 outworkers for each clothing factory award worker. ⁽¹¹⁾
• The closure of factories is the fault of outworkers ⁽²⁹⁾
• If retailers cut their mark-up margins by 25 per cent, it would fix the outworker "problem". ⁽³⁰⁾
• Outworkers cannot speak for themselves and that Fair Wear can claim the right to speak for outworkers.  Fair Wear has, however, been unsuccessful in attracting large numbers of outworkers to their cause, and have received criticism from outworkers and some ethnic communities.

Fair Wear and its supporters accept that many outworkers, whom they allege are victims of exploitation, are

• Illegal immigrants (or)
• Immigrants who do not have a valid work permit (and/or)
• Persons who work for cash money and don't pay tax (and/or)
• Persons who work and claim the dole (or)
• Persons who are new and inexperienced at production.

The Fair Wear campaigns are directed at coercing companies into signing "Codes of Practice" which dictate the nature of the commercial contracts into which companies can enter.  Brand-name destruction is the main tool of coercion.

Government Funding of Campaigns
1993-94	$ unknown	Federal
1995	$400,000	Federal
1997	$230,000	NSW
2000	$ unknown	NSW
2001	$2,700,000	NSW

*Fair Wear states that the NSW Government has allocated $4,000,000 in 2001 but this cannot be substantiated.

HOW MANY OUTWORKERS?

Estimates of the numbers of outworkers range from 7,000 (ABS 1991) to 50,000 (ATO 1991) to 330,000 (Union and Fair Wear claims from 1993 to 2001).

The Industry Commission estimated that, in 1997, the number of outworkers was equivalent to about 23,000 full-time jobs ⁽³¹⁾

HOW VALID ARE THE CLAIMS OF OUTWORKER EXPLOITATION?

The importance of resolving the outworker issues was highlighted in a strategic audit of the industry released by the Victorian Government in 2000.  The audit said:

The resolution of these issues (outworkers) is likely to have a major impact on the public perception of these industries. ... The way in which issues surrounding homework are resolved by the stakeholders, balancing concerns about wages and working conditions with the recognition that homeworkers are an integral component of a competitive and flexible supply chain for the local clothing industry, is a threshold issue. ⁽³²⁾

In 1997, The Industry Commission said the following:

While piece rate payments equivalent to as low as $2 per hour have been reported in the media, it is thought that typical piece rates are currently equivalent to around $7 per hour ... it is believed that payments to homeworkers are often in cash and rarely declared as income for taxation or social security purposes. ⁽³³⁾

A senior journalist for the Herald-Sun said the following in 2001:

Last year, this paper interviewed two outworkers supplied by the union to tell sob stories of being forced (by whom?) to work for as little as $75 a week.  How sad if true.  But both said they and their friends had ended this cruel slavery by going on the dole instead, which paid a heap better.  This exposes the fallacy of the union claim that outworkers are mercilessly exploited on starvation wages. ⁽³⁴⁾

Claims of exploitation were further denounced by an Asian community organisation which stated that outworkers were scared of the union:

Most outworkers are happy with the piece rate they are getting.  They are well aware of the economic benefit for not working in the factory.  A person with a full time job doing packing and cleaning would clear around $400 for 38 hours a week. ... The cost of childcare and after school activity is approximately $200. ... Assuming that an average outworker can earn $12 per hour and the total weekly input by husband and wife is 50 hours then they gross $600.  There is no childcare cost. ⁽³⁵⁾

The following tables, supplied by several outworkers, show actual income received for given work and estimates of hours, and payments converted into hourly estimates.

E.A Fashions
Label:					No	Estimate	Earning
Garment	Maker	QTY	Unit Cost	Total $	Outworkers	Hours	per hour
Skirt	Tran	373	2.8	1044	2	80	$13.06
Skirt	Sinoun	287	2.8	804	1	72	$11.16
Skirt	Thai	361	3	1083	2	80	$13.54
Skirt	Quoc	410	3.5	1435	2	128	$11.2
Skirt	Duong	305	5.1	1556	1	104	$14.96
Skirt	ANH	1153	5.9	6803	3	312	$21.80
Pants	Duong	211	8.7	1836	3	144	$12.75
Skirt	Duong	232	7.5	1740	3	144	$12.08
							$110.56
					Average per hour		$13.82

B.F Fashions
Label:					No	Estimate	Earning
Garment	Maker	QTY	Unit Cost	Total $	Outworkers	Hours	per hour
Jeans	Lim	1031	5.6	5774	3	384	$15.04
Jeans	Vanh	1036	6.5	6734	3	480	$14.03
Jeans	Vanh	244	6.7	1635	3	144	$11.35
Jeans	Vanh	95	6.7	637	3	48	$13.26
Jeans	Vanh	313	6.7	2097	3	168	$12.48
Jeans	Vanh	456	5.5	2508	3	192	$13.06
Jeans	Minh	1002	5.7	5711	2	400	$14.28
Jeans	Tan	284	5.5	1562	1	80	$19.53
							$113.03
					Average per hour		$14.13

B.C Fashions
Label:					No	Estimate	Earning
Garment	Maker	QTY	Unit Cost	Total $	Outworkers	Hours	per hour
3993+6	May Van	720	3.1	2232	1	240	$9.30
2998	Ross	128	4.5	576	1	64	$9.00
2994	Vuong	469	5	2345	1	120	$19.54
2995	Emmy	106	5	530	1	40	$13.25
2997	Khemerak	45	5	225	1	16	$14.06
	Khemerak	328	5	1640	1	120	$13.67
2999	Ross	47	5.5	259	1	24	$10.77
	Ross	29	4	116	1	8	$14.50
3000	Dinh	295	5.5	1623	2	96	$16.90
							$120.99
					Average per hour		$13.44

G.F Fashions
Label:					No	Estimate	Earning
Garment	Maker	QTY	Unit Cost	Total $	Outworkers	Hours	per hour
4538	Xuan	280	5.2	1456	1	96	$15.17
4549	Minh	963	5.6	5393	3	288	$18.73
4567	Minh	958	5.7	5461	3	384	$14.22
4573	Vanh	195	12	2340	3	216	$10.83
							$58.95
					Average per hour		$14.74

Summary
Number of Outworkers = 58
No. Garments		12356
Hours		4672
Average Unit Cost		$5.44	range of unit costs	$2.80 to $12.00
Average Hours cost		$14.41	range of hourly costs	$9.00 to $21.80

PART D:  CONTROLLING THE INDUSTRY

THE FEDERAL CLOTHING TRADES AWARD ⁽³⁶⁾ WHAT IT DOES!

Several awards operate in TCF as well as some Enterprise Bargaining Agreements.  The Federal Clothing Trades Award is perhaps the industrial instrument of greatest coverage and sets benchmarks for other awards and EBA's in the industry.

More than 4,300 companies are listed in the award and are required to comply.

• The Award contains more than 850 clauses and sub clauses.
• It covers all the usual issues of leave, wages, allowances and redundancies, and stipulates the committees that businesses are required to establish to be allowed to run their business.

It goes further, however, than most awards in ways which effectively determine the management processes that firms can use.

• A high casual loading of 33% which thereby makes casuals too expensive to use when demand fluctuates.  This forces manufacturers to outsource significant production.
• Is highly prescriptive of the skills people must have for different tasks and the pay levels to be applied.  Prevents firms tailoring pay and work to accommodate the varying demands of customers.
• Is highly prescriptive on wages (eg) "an employee who is the head of a table or bench of machines in charge of 4 or more employees must be paid as follows ... $12.25 above their skill level".  This inhibits the ability to pay more or create motivations based on work requirements.
• Describes in detail how machines are to be operated and what pay rates are to apply to each machine.  (eg) Describes how scissors are to be used and pay rates to apply.
• Describes what a team is (eg) "group of people work closely, flexibly and in co-operation with each other" and pay rates that are attached.
• Details how results-based pay is to be structured and how minute-by-minute pay is to be calculated and the involvement of the union in such processes.
• Stipulates the recording of every detail of production and that records are to be made available for inspection by the union.  The cost of managing such records is significant.
• Defines outworkers as people who are employed and not working on the premises of the employer.  Requires retention of records of all work.  Very significant record-keeping required.  A business must be registered to be allowed to employ outworkers.  The requirements for outworkers are near mirror-images of the requirements for full-time employees on the site of the business (eg) annual leave to be paid to outworkers.
• Makes outworkers full time employees.  "An employer may stand down an outworker without pay where no work can be offered. ..".  BUT "An employer may only stand-down an outworker for a maximum of 10 days per year, and no more than 2 days in any consecutive four-week period".

Comment.  The impact of the award is that it effectively turns outworkers into wage-slave employees, enforces factory-style sweatshop production as the only method of production allowed, ignores the reality of the need to respond to peaks and troughs in consumer demand, prohibits the development of creative responses to niche markets and denies people the right to run their own clothing production business at home.

SUMMARY OF THE HOMEWORKERS' CODE OF PRACTICE

What is the Homeworkers' Code of Practice?

The Code was conceived around 1998 to get companies "voluntarily" to agree to operate their business according to the dictates laid out in the Code.  The code removes the right of retailers and manufacturers to negotiate contract terms within their supply chains and, when signed, effectively imposes award-type provisions as the supply contracts.  It is the agreement which the anti-industry campaigners are trying to intimidate companies into signing by conducting brand-name destruction.

Formally, it is an agreement between:

• Council of Textile Fashion Industries Ltd;
• Australia Business Chamber of Commerce;
• Australian Chamber of Manufacturers;
• Textile Clothing Footwear Union of Australia;  and
• the companies who sign.

It is controlled by a committee of half union and half employer representatives.

Costs

• $2,000 per year, per company, for registration.
• Once registered, a firm may purchase the "No Sweat" labels at additional cost.
• Firms that sign are required to contribute to public campaigns.  Cost not specified.

Fund

• To have at least $450,000 which is controlled by the committee.
• Money for the fund to come from firms and also from Federal and State Governments.
• $300,000 is to be allocated to the union.
• Monies are also to be allocated to publicity campaigns.

Its features

It effectively controls the managerial processes of production and distribution from home worker through the entire supply chain to retailer.  It does this by stipulating the terms and prices of the commercial relationships to operate between firms and gives the committee power over those commercial relationships.

The Code:

• Is tied to the award and is in effect a de facto industrial instrument.
• Requires retailers to give to the union lists of all their suppliers every quarter.
• Gives the union powers to police the Code.
• Requires the Australian Retailers Association to compile all information on suppliers and to give this to the union.  The union can then contact retailers to require enforcement of the Code against a supplier.
• Stipulates the skills levels and hourly rates to be applied throughout the production chain.
• Stipulates the minimum and maximum work that must be given to an outworker.
• If home workers do not have work they must be given a notice of termination.
• Detailed records must be kept, including the identity of home workers and this must be supplied to the union upon the union's request.
• Pro forma letters promoting the union must be given by firms to outworkers.  The letter states that the employer supports the union and that the outworker should join the union.
• It contains what is known as a "snowball clause".  Not only are companies which sign to it bound, but also those companies that have dealings with the signer become bound.
• The records to be kept and made available to the union are a complete record of a manufacturer's commercial relationships.  That is, details of every supplier, dates of delivery, prices, quantities, etc.
• "General sewing data". When firms organise work for outworkers, they must submit work details to the Code's management group, who then work out the charge rates that are to apply.  This means that there is no discretion by the firm or the outworker on pricing because the Code "... provides the contractor or outworker with the legal sewing time".

Some Problems

• The "general sewing data" that determine the hours to be allocated to each product are still in the development stage some 4 years after the Code was conceived.  The documents indicate that this is the lynch-pin to the Code.  Manufacturers and retailers are being asked to adhere to a Code that has its pricing lynch-pin missing.
• The Code indicates that action can be taken against a manufacturer in instances of exploitation, but fails to detail what a "provable case of exploitation" is, or what constitutes proof, or what appeals or what recourse exists if commercial damage is caused to a supplier for accusations that may prove to be false.
• The Code states that no negative publicity will be directed against a retailer while a charge of exploitation is being investigated.  It does not state who would conduct the negative publicity or what sanctions would apply to a person conducting negative publicity.
• There is no indication of how the positive promotional activity, promised under the "No Sweat" label, will be conducted.
• The Website referred to as listing the accredited companies (www.no-sweatshop.com) is not operational.  It is registered to a Maggie McOmie of Santa Monica, California, USA.
• As of 26 September 2001, only six companies are reported as accredited.

Questions

• What if an outworker wants to do more work than the maximums or less than the minimums?  Is the outworker allowed to do a lot of work in one week and not much in another week?
• What if an outworker sews in less time than required?  Is a refund required?
• What if an outworker sews in more time than required?  Must extra money be paid?
• Who polices the hours an outworker does?
• Are outworkers required to keep a time clock?  What if an outworker stops to go to the toilet, have a snack, look after a child?  What if an outworker watches TV while sewing?  Is this allowed within the legal time?
• Should TV monitors be put in outworkers' homes to monitor their work and to check that they are working within the required legal times?

PART E:  SOME COMMENTS

The seeds of the campaign against the Australian domestic clothing industry were sown when a seismic shift occurred in the clothing union's attitude to its relationships with manufacturers and retailers.  The union's shift was a reaction to massive industry change that threatened the core of the union's business.

Up until the late 1980s, the industry operated under an unofficial "deal" between business, union and government in which manufactures and retailers were guaranteed profit-protecting margins within certain limits.  Two mechanisms delivered the deal:

Taxes (tariffs) on imported clothing effectively increased and maintained high retail prices of clothing.

Labour costs were contained and controlled by the unions through the industrial relations system.

This system of price control and cost suppression was legally, politically and culturally sanctioned.  The trade-off for the unions in the deal was that, in return for delivering some measure of cost control, they were delivered membership by manufacturers and retailers.  An additional advantage for larger manufacturers was that the control of labour costs through strong relationships with the union, and across the system, restrained the ability of new local manufacturers to grow into serious domestic competitors.  The system delivered a measure of protection to larger companies from importers and from new local start-ups.

When tariff taxes began to reduce, this "deal" was broken and a new dynamic was unleashed.  As tariff taxes were lowered, retail and wholesale prices of merchandise dropped thereby squeezing the profit margins of manufacturers.  It was impossible for unions to reduce or contain labour costs to secure manufacturers' profit margins, which narrowed to levels unsustainable for business viability.  Something had to give -- and it did, with speed, in several directions.

First.  Some manufacturers turned themselves principally into importers, distributors and marketing businesses, while retaining a small residual local manufacturing base.  With some companies this occurred within 18 months;  a speed that was dramatic and traumatising for all in the business.

Second.  Other manufacturers made large financial commitments to new technology and explored the export market with some success.  A key to success, however, was to produce more using significantly fewer people.  In many instances, investment led to excessive and unserviceable debt.  The current wave of closures and collapses may reflect these high debt levels.

Third.  Other manufacturers rapidly turned away from sweatshop, factory manufacturing, because sufficient productivity increases could not be achieved to restore profit margins.  These producers turned themselves into coordinators of cascading contracts, where manufacturing was (and is) done by large numbers of specialised, small manufacturers and "outworkers" in extended complex supply chains.  This effectively reflected an unleashing of the latent small business dynamic that had been suppressed under the prior tariff-IR "deal".

Fourth.  Significant numbers of manufacturers collapsed or closed their doors.

Each of these dynamics remains in play.  No end to the process is in sight.  The outcome is unclear and confidence is nearly non-existent.  One government reports states "... the conventional view of these industries is that they will inevitably disappear". ⁽³⁾

The outcome for the union has been a spectacular membership collapse, predominantly due to the collapse of sweatshop factory production.  Membership is so low that the union federal secretariat has almost ceased to function, ⁽⁶⁾ and the union is investigating their absorption by one of the super unions.  Divisions within the union are suing each other.  Further, the unions de facto managerial role as controllers of labour prices and processes, and as competition suppressors in the industry, has severely diminished.

In implementing its plans, the union realised that it was under-funded and lacked public perceptions of moral integrity.  So they entered alliances with government, churches and others which resolved both the funding and integrity problems.  The resultant campaigns have been multi-tiered, integrated, well-funded and professionally executed.  The campaigns failed, however, because their designers erred in their analysis of their potential contribution to a viable industry.  Instead of being a contributor, they chose to be an aggressor.

Tariffs.  The union was aware that tariff tax reductions threatened them, because they could not sufficiently contain factory labour costs to keep manufacturers' profit margins intact.  They tried, and continue to try, along with other operatives, to stop tariff tax reductions.  That campaign, however, has only been marginally effective in slowing the pace of tariff tax reduction.

Overseas production.  The campaigners could not stop local manufacturers from shifting production overseas.  They have made an attempt to force up the cost of overseas production by joining with the international union movement and other international campaigning organisations to impose higher labour costs on developing countries.  This has not succeeded, principally because they have been ignored by the targeted developing countries.

Brandmail.  The campaigners turned against local manufacturers and retailers to destroy the core commercial value of brand names.  In effect, they began, and continue to wage, a campaign of brand-name terrorism.  They conduct "brandmail".  They joined with the international labour movement and activist third parties in coordinated, professionally funded and executed marketing campaigns against the brand names of major clothing and footwear companies.  The motivation is to intimidate major businesses into adhering to their demands by attacking the core brand name value of their businesses.

The campaigners have been highly effective in creating terror within business marketing departments, and have induced a stalling of business decision-making.  The campaigns are a new form of industrial relations war that operates outside the industrial relations system.  Unfortunately, the attack against brand names kills a key element upon which the future of the industry rests -- and one identified by the Victorian ALP.  Without brand name value, companies cannot develop niche markets.  Companies collapse, whither or never develop.  Without security of brand name, investment cannot be made and profit opportunity in Australian is lost.  This is a process of self-induced cultural and business annihilation.

The production chain.  Tied to the brand-name destruction, the campaigners have sought to gain control of the domestic production chain that has developed since the tariff tax reductions.  This has principally involved approaching legislatures and industrial relations regulators to give legal sanction to union control of the commercial contracts operating between parties in the production chain.  Where legislation and/or regulation could not be achieved, the union has intimidated firms through brand-name terrorism to try and force them to sign agreements handing over contract control to the union.

The union has had significant success in creating legislative and industrial relations regulatory control -- particularly in NSW.

Retail Price Maintenance.  Part of the complaint of the campaigners is that a problem would not exist if retailers and wholesalers did not insist on squeezing manufacturers' margins.  This analysis fails to comprehend that retailers and wholesalers are under similar margin squeezes as manufacturers.  The only solution to squeezed profit margins is to retail price-fix.  The anti-industry campaigners have not initiated a campaign to convince the Australian consuming public to accept this solution.

Illegal Workers.  The evidence is clear and accepted that, in many instances of alleged "underpayment" of outworkers, the outworkers have been illegal immigrant workers or have not been paying tax.  There are no indications of a concerted effort by the anti-industry campaigns to fix the illegal worker problem.

New Phase.  With the near-collapse of the clothing union, indications are that, as of September 2001, the NSW Government has decided to step in and directly take up the campaign against the industry.  Through the NSW Department of Industrial Relations, it would appear that a new phase of brand-name destruction campaigning, and intimidation to enter a 'Code of Practice, is about to begin.  This is likely to further hasten the destruction of the clothing industry, particularly in NSW.

CONCLUSION

Union authority in Australia has always relied on a mix of legal privilege and management compliance.  In many firms and industries, unions and management have operated as one, while maintaining an outward facade of conflicting interests.  In the TCF industry, this union-management oneness was tied to tariff taxes.  The need for firms to change in the face of changing markets broke the oneness.  The union has not been able to define a new role for itself and has instead turned aggressively against its once management partners.  This anti-industry campaigning has been done in collaboration with churches, government and other community activists groups.  The scale of the financial and strategic resources mobilised against individual businesses has vastly exceeded the capacity of any business, or the industry, to defend themselves.  The reaction of managers within the industry has first been that of shock;  second, fear;  but finally, to flee.

As an example of the capacity for destruction, the campaign against people working in the Australian TCF industry is an outstanding case study.  Every government report indicated that the transition out of tariff protection would be difficult, that creative forces would need to be let loose to respond, that trauma should be minimised and that niche markets and brand-name development would be central to the industry's having a future.  The anti-industry campaigners have attacked these core industry values.  The process has effectively traumatised decision-makers in the industry.  Given that this destructive campaigning looks set to continue, the way forward for the industry looks difficult.

The industry should be in a positive change process in preparation for 2010, when the prospect of the removal of TCF tariffs and quotas worldwide is real.  What the industry needs is an environment where people working in the industry can be creative, flexible, niche-market-oriented and dynamic.  For this they need to feel secure.  It is doubtful that this can be achieved in an atmosphere of coordinated, well funded and strategic aggression.

REFERENCES

1.  Industry Commission, The Textiles Clothing and Footwear Industries, Report No. 59 September 1997, page 98.

2.  Victorian Government, Submission by Victorian Government to Industry Commission inquiry into the Textiles, Clothing and Footwear Industries, April 1997.

3.  Industry Commission, op. cit., page 129.

4.  Ibid., page 46.

5.  Woolgar v O'Neill [2001] Federal Court of Australia FCA 1149 (23 August 2001).

6.  Victorian Government, Strategic Audit of Victorian Industry.  A report on Victoria's textile, clothing, footwear and leather industries, October 2000, page 13.

7.  Ibid., page iii;  Submission by Victorian Government to Industry Commission inquiry into the Textiles, Clothing and Footwear Industries.  April 1997.

8.  Industry Commission, op. cit., page 46.

9.  Ibid.

10.  Ibid., page 381.

11.  Ibid., page xliv.

12.  Victorian Government, Strategic Audit of Victorian Industry, page iii.

13.  Industry Commission, op. cit., page xxvi.

14.  Ibid., page 1.

15.  Victorian Government, Strategic Audit of Victorian Industry, page 20.

16.  Industry Commission, op. cit., page 23.

17.  Victorian Government, Strategic Audit of Victorian Industry, page 12.

18.  Ibid., page 3.

19.  Sally Weller, "Clothing Outwork:  Union Strategy, Labour Regulation and Labour Market Restructuring", The Journal of Industrial Relations, Volume 4, no. 2, June 1999.

20.  Industry Commission, op. cit., page 127.

21.  http://www.dir.nsw.gov.au/outworkers/activities/education.html

22.  Annie Delaney, "My home is my haven, my home is my workplace", Alternate Law Journal, Volume 21, no. 5, October 1996.

23.  Woolgar v O'Neill [2001] Federal Court of Australia FCA 1149 (23 August 2001).

24.  Media Release, Minister for Industrial Relations, NSW, 29 May 2001.

25.  http://www.awatw.org.au/fairwear/fairwear/sponsor.html

26.  According to the Mercy Foundation's Website.

27.  The Stegley Foundation is a private philanthropic trust established in 1973 by the late Brian and Shelagh Stegley, in Victoria.  http://www.users.bigpond.com/stegley

28.  Annie Delaney (National Coordinator Outworker Information Campaign), Outworking In Australia, December 1994.

29.  Annie Delaney, "My home is my haven, my home is my workplace", Alternate Law Journal, Volume 21, no. 5, October 1996.

30.  Carolyn Penfold, "Fighting outworker exploitation", Alternate Law Journal, Volume 24, no. 2, April 1999.

31.  Industry Commission, op. cit., page xxxv.

32.  Victorian Government, Strategic Audit of Victorian Industry, page vii.

33.  Industry Commission, op. cit., page 123.

34.  Andrew Bolt, "Outworkers are scared of being 'saved' by the union", Herald-Sun, 5 March 2001.

35.  Outworkers Speak Out.  A report circulated in February 2001.

36.  Clothing Trades Award 1982 AIRC (C No 00281 of 1999).

37.  Home Workers Code of Practice.  Available from Textile Fashion Industry Association on (03) 9866 8962.