Neo Fashion shutting down
Saipan Tribune, Micronesia
4th garment factory to announce closure in a month
By Ferdie de la Torre
Reporter
Garment manufacturer Neo Fashion Inc. is shutting down operations on Saipan by Jan. 13, 2014. The closure will affect 78 employees who are mostly nonresident workers.
The San Antonio-based Neo Fashion is the fourth garment factory to announce closure and suspension of factory operations on the island within the last month.
Neo Fashion, through its general manager Hee Chan Lee, recently informed Department of Labor acting director James Ulloa about its plan to cease operations.
In the company’s letter to Ulloa, Lee said it is an unfortunate decision for the management.
“But due to adverse economic conditions brought by the application of the federal minimum wage act in the CNMI, and the trade competition in China and other Asian neighboring countries, the increased costs of conducting business in the CNMI, and the lack of orders overseas prompted us to cease the garment operation,†Lee said.
The general manager provided the notice to Labor pursuant to the Worker Adjustment and Retraining Notification Act, which requires employers to give official notice to certain government office of a business closure.
“It is with deep regret on our part that we will be closing, but it leaves us no choice but through this drastic action,†Lee added.
Labor investigator for garment section Carlos Camacho told Saipan Tribune on Friday that due to the notice he will conduct an on-site visit at Neo Fashion’s factory tomorrow, Tuesday, at 1:30pm. The visit is intended to ensure that all applicable laws and rules are followed as the company winds up business in the Commonwealth.
With the closure of Neo Fashion, the island will be left with only 18 garment factories.
On Nov. 16, Sam Kwang Saipan Corp. notified Labor about its closure of its factory in Afetnas effective Jan. 19, 2014. The shutdown will affect 117 alien workers and 23 resident workers.
On Nov. 2, L&S Apparel Inc. notified Labor about its intention to cease operations effective Dec. 31, 2014.
On Oct. 31, Jin Apparel Inc. filed a formal notice to Labor about its plan to suspend business operations from Dec. 31, 2014 until March 31, 2014.
L&S currently has 126 alien workers and 51 resident workers. Jin’s Apparel has 81 nonresident workers and 37 resident workers.
Neo Fashion will be the 18th garment factory to close down on Saipan since January 2005, when the World Trade Organization lifted trade quotas.
The liberalization of trade rules has allowed Third World countries to export their garments to the U.S. As a result, many garment factories in the CNMI were forced to shut down operations as they could not compete with the lower wages and more liberal regulations of these countries.
CNMI’s garment industry used to contribute some $60 million in direct taxes a year to the local government. For user fee alone, which represents 3.7 percent of total industry sales, the government used to collect an average of $30 million a year.
