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SweatX: Discrediting the Sweatshop Model

Published by The Association for Humanist Sociology
in Humanity & Society, volume 16, number 3, August, 2002.
by Loren Rodgers and Christopher Mackin
Ownership Associates, Inc., Cambridge, MA

Making the case that labor conditions in the global garment industry are often deplorable is relatively easy--the real challenge facing responsible consumers is finding a viable alternative to sweatshops.

In response to this challenge, the Hot Fudge Venture Fund provided startup capital to create a new garment production company called TeamX. TeamX is a worker cooperative, and is organized by the garment-workers' union UNITE! Since March, 2002, TeamX has been producing clothes under the SweatX label at its factory in Los Angeles, CA. (See www.sweatx.net.)

The founders of TeamX intend to undermine the credibility of the sweatshop model by demonstrating that clothing can be produced while treating workers fairly and paying dignified "living" wages. Their mission statement reads, in part, "TeamX seeks to change the lives of garment workers, both those that it directly employs, as well as the hundreds of thousands of other workers in this global industry [by creating] a sustainable model that can be replicated worldwide."

The TeamX Economic Model

Average wages in garment production factories in Latin America are approximately $0.65 per hour, and in Asia the prevailing wage is closer to $0.13 per hour. Since it takes an efficient worker about 2.5 minutes to sew a t-shirt, the sewing labor costs of producing a final product (excluding embellishments such as screen printing) from raw cloth are between $0.01 and $0.03, out of a total retail price of $10 to $18.

At the federal U.S. minimum wage, sewing costs increase to $0.21 per t-shirt. Paying the Los Angeles living wage increases the sewing costs to $0.39. At TeamX, where the average wage is $10.78 an hour, the sewing costs per t-shirt are approximately $0.45.

Paying the "living wage" represents a small cost increase relative to the retail price, but still represents a challenge to TeamX's long-term viability. The company's goal is to overcome this challenge through a combination of four strategies:

1. Minimal Increase in Price
TeamX believes that some wholesalers and consumers are willing to pay a small premium for clothing that is responsibly manufactured. One example of such customers are labor unions, which are currently TeamX's single largest customer type. Environmental and other non-profit "cause-sensitive" groups, progressive companies, and universities and colleges, are also substantial markets. The college apparel market on its own represents approximately $1.4 billion in sales annually.

2. Quality, Features, and Style
TeamX uses state-of-the-art machines, employs highly skilled workers, incorporates cutting-edge designs, and works with high-quality materials. When possible, the cotton used in production is organic. The resulting clothes are desirable in their own right, independent of the perceived benefit of non-sweatshop labor.

3. Lower Marketing Expenses
TeamX will rely on avenues such as the Internet, unpaid media exposure, progressive political networks, and other alternative means of building recognition. This strategy allows the company to avoid the huge expenses of celebrity endorsements, such as the $100 million annually paid by Nike to Tiger Woods, or expensive print and TV advertising campaigns.

4. Productivity
The TeamX workforce is exceptionally skilled and motivated to maximize the success of the company they own. The worker-owners minimize fabric waste, reduce set-up times, and contribute their ideas to ensure the profitability of the company and the quality of the products.

Unique Characteristics

TeamX is not the only clothing manufacturer that claims to be sweatshop-free, but it will be hard to identify any other company that meets the standards maintained by TeamX. TeamX believes that it is insufficient simply to be "not a sweatshop," and it surpasses that minimum standard in many ways:

A Union Contract. UNITE!, the garment workers union, was involved in early stages of setting up TeamX, and actively recruited members to serve as employees. TeamX believes that a union contract is necessary for responsible garment production, but it is not enough.

Cooperative Structure. TeamX is a worker cooperative. No outsiders are permitted to be shareholders, and all employees, after serving a probationary period and meeting basic membership requirements, become member-owners. Member-owners have voting rights, will elect members of the board of directors, and share in company profits.

Internal Production. Rather than finding other companies making garments and attempting to ensure the working conditions under which they are made, TeamX actually makes garments itself.

Support for the Anti-Sweatshop Movement. The ways in which TeamX will support the anti-sweatshop movement are still being determined, but it is a fundamental part of company strategy. The founders and worker-owners of TeamX, many of whom have worked in sweatshops, are fundamentally committed to the anti-sweatshop movement. In addition, the pressure this movement puts on retailers, universities and consumers increases TeamX's viability.

Working Conditions. The factory where SweatX apparel is created was designed to create healthy, dignified working conditions. Workers have benefits including health insurance, a pension program, and vacation days--benefits rarely if ever found in the garment industry. And, of course, TeamX pays a living wage.

Transparency. The power of the SweatX model depends on the credibility of the claims it makes. Preserving this credibility is a fundamental goal, which the organization hopes to achieve through the transparency of its operations. In addition to the company's commitment to transparency, the union serves as a force to keep the company open.

Global Scope. The only TeamX factory is currently in Los Angeles. After this plant has demonstrated its success, TeamX will begin to put pressure on overseas sweatshops by opening plants in countries where sweatshops are typically located.

Current Status

TeamX is in its start-up phase. The company began with eight sewers and produced its first product in March, 2002. It now employs 50 people in production, and is meeting its financial projections with sales of over $200,000 in September. TeamX won the garment industry's Bobbin Award in October, 2002.

TeamX was started with financing from the Hot Fudge Venture Fund, a socially responsible venture fund set up by the board of directors of Ben & Jerry's following the purchase of Ben & Jerry's by Unilever in August, 2000. Ben Cohen and his colleagues Pierre Ferrari, Terry Mollner and Duane Peterson wanted to create a company that would prove that sweatshop conditions are not necessary for economic viability.

The company is currently manufacturing a range of products in addition to t-shirts, including sweatshirts, baseball caps, sweatshirts, fleece jackets, shorts, professional-quality athletic wear, blankets, and fashion tops.

Future Goals

TeamX is hoping to sell to an increasing array of customers, including campus bookstores, students and community groups, faith-based organizations, and individual sales via its presence on the Internet.

If you want to help TeamX provide a responsibly-made alternative to sweatshop labor, there are a number of ways to get involved.

1. Help coordinate with local anti-sweatshop activists. The movement is diverse and it can be difficult to locate members of local movements. TeamX is hoping to coordinate with the movements on as many campuses as possible.

2. Buy our products. Especially at this early stage in the company's launch, its strategy is to focus on larger orders whenever possible in order to operate as efficiently as possible. If you know of groups that want garments or if you would be willing to contact your campus bookstore to encourage them to stock SweatX clothes, the company can help support you. Small orders, as small as one shirt, can be accommodated through our website (www.sweatx.net) or by calling the company (213-362-9001). These orders can be serviced from items currently in stock.

TeamX may also be useful for you. It is interested in supporting research into consumer behavior regarding responsibly produced goods. And it can provide materials about sweatshops, our experience, cooperatives, and other issues that may be useful in a classroom.

The profitability of TeamX will demonstrate that the sweatshop model is not only morally bankrupt but financially unnecessary.

Loren Rodgers and Christopher Mackin work at Ownership Associates, a consulting firm based in Cambridge, Massachusetts. Ownership Associates serves as a consulting advisor to the Hot Fudge Venture Fund and to TeamX, Inc. of Los Angeles.

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