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Wed December 4, 2013
'Our Industry Follows Poverty': Success Threatens A T-Shirt Business
Originally published on Wed December 4, 2013 6:26 pm
The Planet Money men's T-shirt was made in Bangladesh, by workers who make about $3 a day, with overtime. The Planet Money women's T-shirt was made in Colombia, by workers who make roughly $13 a day, without overtime.
The wages in both places are remarkably low by U.S. standards. But the gap between them is huge. Workers in Colombia make more than four times what their counterparts make in Bangladesh. In our reporting, we saw that the workers in Colombia have a much higher standard of living than the workers in Bangladesh.
Noreli Morales, a Colombian worker who helped make our women's T-shirt, lives with her mom and her daughter in an apartment that has a kitchen and a bathroom. Shumi and Minu, Bangladeshi sisters who worked on our men's T-shirt, share a single room with Minu's husband. There's no running water, no kitchen. Noreli sends her daughter to day care; Minu can't afford day care, so her daughter lives back in the village, with her parents.
The workers in both places are doing essentially the same thing: sewing T-shirts together. So why the big difference in their wages?
With a long tradition of apparel manufacturing and better technology, the Colombians can make T-shirts much, much faster than the Bangladeshis can. In Bangladesh, on one sewing line for our T-shirt, 32 people can make about 80 shirts per hour. One sewing line in Colombia has eight people and can make about 140 T-shirts per hour. The two lines aren't perfectly parallel — the Bangladeshi workers are completing a few more details of the shirt than the Colombians are. But the difference is striking nevertheless.
It's not just the sewing machine operators who are more efficient in Colombia. The cotton for the men's shirt was spun into yarn in Indonesia, then shipped to Bangladesh to be knit, cut and sewn. Crystal, the Colombian company that made the women's shirts, does everything — from spinning the cotton into yarn to knitting the yarn into cloth to stitching sleeves on a shirt. That makes the process much faster and easier for Jockey, the company that coordinated the production of our T-shirt.
Colombia's economy has been growing like crazy for the past decade, and wages have been rising. That's good for the country as a whole, but it may wind up driving away the T-shirt industry.
"There is a saying that is going to sound horrible," Crystal's CEO, Luis Restrepo, told me. "Our industry follows poverty." It's an industry "on roller skates," he said, rolling from Latin America to China, to Bangladesh — wherever costs are lowest.
No matter how good Crystal is, Restrepo said, the breakup call from a big client can come at any moment.
"You are one phone call away," he told me.
When I visited the factory in Colombia, there was a rumor going around that Jockey, one of Crystal's most important clients, was going to cut its ties with the company. People were really worried. "Who are they gonna let go first?" a worker named Lina Maria Tascón said. "The people who worked on Jockey, of course."
When I got back to the U.S., I asked Marion Smith, a senior vice president at Jockey, about the rumors. He said they're true: He decided to put a stop to orders from Crystal. "We both like each other a lot," Smith said. "They've got great principles, they have great capabilities." The companies are trying to negotiate some new kind of deal, he said.
But the growth of Colombia's economy means it's getting expensive to make simple products like T-shirts there. "Wages continue to go up, costs continue to go up," Smith said. Jockey plans to move production to several other countries, where its cost per shirt will be 20 to 30 percent lower, according to Smith.
The loss of Jockey will be a blow to Crystal. But as Colombia's economy has grown, Crystal has been transforming itself from a manufacturer of low-end clothes into a company that sells higher-end clothes under its own brands. The company has already opened 160 of its own stores across Latin America, and has plans for more.
"We decided we want to control our own destiny," Restrepo said.