Monitoring of Sweatshops Said to Be Inadequate

The government regulatory process is woefully inadequate to detect virtual slave labor operations, such as one that authorities say flourished in El Monte for years, or the less egregious sweatshops that proliferate throughout Southern California’s highly competitive garment industry, according to statements Tuesday by state and federal officials and labor and industry leaders.

The public acknowledgments came as authorities publicly identified more than 40 firms--including major retailers such as Macy’s, Sears and Neiman Marcus--that may have received goods from the El Monte factory and associated businesses. Other retailers named include the Broadway, Robinsons-May, Montgomery Ward and Mervyn’s.

“It is clear from our investigation that this merchandise found its way to the racks and shelves of some of this nation’s most prominent retailers,” U.S. Labor Secretary Robert B. Reich declared in a statement. “The evidence certainly shatters any perception that this operation produced merchandise only for back alley operations.”

Major retailers, Reich said, have agreed to join a summit meeting next month in Washington designed to identify ways “to protect the industry, workers and consumers from abusive contractors.”

At a joint news conference Tuesday with federal officials, California Labor Commissioner Victoria Bradshaw acknowledged that a suspected Los Angeles front operation for the alleged slave shop was state-licensed for two years--but was never inspected. Moreover, Bradshaw said, 13 of the 16 Los Angeles-area manufacturers that are believed to have served as the main conduits for the El Monte goods are themselves unlicensed garment manufacturers, though some have been in business for years.

And U.S. Department of Labor officials conceded that self-monitoring by the industry is the most practical way to police the high-pressure, often cutthroat field, which is characterized by thin profit margins and quick turnaround on orders.

“We’ll never have enough resources to do one-on-one inspections” at Southern California’s about 4,000 sewing shops, said Assistant U.S. Labor Secretary Bernard E. Anderson, who appeared before reporters in Downtown Los Angeles.

The broad scope of the El Monte operation, authorities said, dramatizes the glaring need for improved monitoring of the area’s bustling garment industry, now the nation’s largest, having surpassed New York.

While the Third World-like conditions bared at El Monte were unusually severe, authorities say, many other Los Angeles sewing contractors are unlicensed and exploit sub-minimum wage labor, typically performed by immigrant women, many of them undocumented. Low labor costs underpin the entire billion-dollar industry.

Authorities raided the converted apartment complex in El Monte Aug. 2, revealing the alleged near-enslavement of 72 Thai workers who toiled up to 22 hours a day, seven days a week, for an average of 69 cents an hour, officials say. Eight alleged overseers are being held on federal charges of harboring or transporting illegal immigrants. Law enforcement authorities are seeking two other suspects.

Investigators believe that the workers are owed more than $5 million in back wages, funds that authorities have vowed to recoup. But new questions arose Tuesday about just how difficult it may be to collect that sum.

In most cases, officials concede, the web of front operations, manufacturers and contractors has successfully shielded the big-name and deep-pocket retailers named Tuesday from any liability. While some manufacturers--the firms that sell the subcontracted, sweatshop-produced goods to retailers--may be legally required to pay some of the back wages, that amount seems unlikely to approach $5 million.

In fact, William C. Buhl, regional administrator of the U.S. Department of Labor, conceded that one motivation of naming the retailers publicly was the hope that many would “pony up” funds for a back-pay pool for the workers. Such an action, officials suggest, may help counter the stigma and negative publicity associated with selling garments from an alleged slave operation.

Workers’ representatives say they plan to file civil suits seeking damages from the retailers and other firms that profited from the alleged slave operation.

The 72 workers--all suspected illegal immigrants--were freed from custody of immigration officials last week, and many are now looking for jobs in the above-ground garment industry. Most are expected to be sent back to Thailand after acting as witnesses in the criminal case against the eight suspected sweatshop overseers.

Underlining the paucity of regulation in Los Angeles’ no-holds-barred garment industry, officials Tuesday unveiled a grid of both licensed and unlicensed firms that apparently helped market the sweatshop-produced clothing nationwide.

Several of the unlicensed manufacturers that probably purchased sweatshop-made goods are well-established. One manufacturer--Tomato Inc. of Los Angeles--did more than $3.3 million in business in 1993-94 with the Los Angeles sewing shop that is suspected of serving as a front for the El Monte operation, according to federal documents obtained by The Times. That purported front, D&R; Fashion, was itself state-licensed for two years, until its registration expired in March.

Even licensed manufacturers and some of the nation’s most prestigious retailers traded extensively in the sweatshop-produced goods. The loophole-ridden tableau, critics say, demonstrates the abysmal failure of the state licensing procedure and the federal enforcement of minimum wage and overtime laws.

“A license is just a piece of paper; it provides no protection for the workers,” said Steve Nutter, regional director of the Union of Needle Trades, Industrial and Textile Employees.

Legitimate garment industry firms, which complain that the heavily publicized case is marring their image, Tuesday denounced what they termed wildly deficient oversight.

“Existing regulations are fine,” said Robert Walter, president of the local Garment Contractors Assn., who spoke at a garment district news conference called by an alliance of manufacturers. “But the amount of police out there to enforce those regulations is terribly inadequate.”

Indeed, Bradshaw, the state labor commissioner, said that no more than 45 state and federal regulators oversee the entire Southern California garment industry, which employs more than 100,000 workers. And while a multi-agency task force uncovered the El Monte operation, more inspectors are only a stopgap solution, she said.

“There’s not going to be enough resources for enforcement to solve the problem,” said Bradshaw, who, like her federal counterparts, called for voluntary industry compliance, stiffer fines for repeat offenders and other steps to improve matters.

But union groups, immigrant activists and others see an alternative solution: They back a bill, now pending before the state Legislature, that would hold garment manufacturers “jointly liable” for wage and other violations committed at the sewing shops hired by the manufacturer.

The bill--similar to proposals vetoed by Gov. Pete Wilson in 1992 and 1994--is opposed by the California Department of Industrial Relations, Bradshaw’s employer. The proposal, Bradshaw and other opponents argue, may drive garment manufacturers further into the underground economy and could even force the industry to flee California.

Regarding the $5 million in back wages allegedly owed the Thai workers, state authorities have won a court order freezing about $1 million in seized assets linked to the alleged sweatshop operators, including $850,000 in cash found at the El Monte site. However, attorneys say such funds may also be sought for the legal defense of the eight alleged sweatshop operators.

All retailers and manufacturers contacted have denied knowing any merchandise was produced at the El Monte site. All have described their firms as unwitting victims of the sweatshop operators.

Jan Drummond, a Sears spokeswoman, said the giant Illinois-based retailer is not yet aware what contractor or garment manufacturer may have served as a conduit for the El Monte operation.

Sandra Salyer, a spokeswoman for Mervyn’s, said her firm can find no records showing any direct purchases from SK Fashions, D&R; or any affiliated firms.

Mervyn’s, the only retailer named by authorities as under investigation for possibly making direct purchases from the sweatshop operation, may actually have bought its wares through a manufacturer, Salyer said.

Erwin Gilbert, president of B.U.M. Equipment, said his leisure-wear firm purchased an order of women’s shorts from Tomato Inc., which may have been made at the El Monte factory.

Neiman Marcus issued a three-paragraph statement Tuesday stating that it is the firm’s policy “not to do business with any manufacturer that exploits its workers.”

The upscale retailer said that it is “exploring” the allegations with its vendors and that it has been assured by Santa Monica-based Jonquil Inc., whose intimate apparel Neiman Marcus sells, “that they do not contract with any such manufacturers.”

State and federal officials say they found Neiman Marcus labels at an unlicensed Panorama City garment factory that was one of three locations raided by a multi-agency task force Aug. 2.

One potential reverberation of the negative publicity is the possibility that manufacturers and retailers would become more cautious about buying inexpensive garments made in the United States.

On one hand, domestically made merchandise can be delivered on shorter notice with better quality control. On the other hand, the likelihood of retailers suffering a black eye for selling goods that may have been sewn by workers toiling in substandard conditions is more remote overseas.

“This is a situation that happened in America, and it’s an unfortunate thing,” said Gilbert, president of B.U.M. “Does it put a doubt in our mind? It really does.”

Times staff writer Karl Schoenberger contributed to this report.