Their dreams unraveled

San Salvador —  IT was a story of hope: a Central American sweatshop transformed into a unionized, worker-run apparel factory, thanks to nearly $600,000 in loans and donations, including help from retailers Gap Inc. and Lands’ End and the AFL-CIO.

Boosters traveled to U.S. college campuses and church basements, touting the Just Garments plant in El Salvador as a company looking to do well by doing right by employees. Impoverished Salvadorans saw a chance to earn better wages and have a say in their future.

“We had a dream,” said sewing machine operator Esperanza Caridad Mejia.

In the end, that’s all it was.

Just Garments closed its doors in April, owing 55 former workers $65,000 in back pay and benefits, according to a union official. Employees say they never made more than minimum wage. Many weeks they didn’t get paid at all. Some have come forward alleging poor working conditions and unjust firings.

Despite the funds from major retailers and others, steady contracts never materialized. A lender is questioning how money was spent.

Just Garments is now caught in a tangle of recriminations and legal actions. The closing has unraveled the once close-knit workforce, split organizations that would normally be allied and put some U.S. anti-sweatshop groups in the position of having backed a project accused of engaging in some of the practices they condemn.

It has also prompted soul-searching by supporters who admit that operating a sweat-free factory profitably is easier in theory than reality. Just Garments, some say, was doomed from the outset, lacking sufficient capital, seasoned management or even a market for its products.

“It was not a recipe for success,” said Scott Nova, executive director of the Worker Rights Consortium, a Washington nonprofit that helped broker a contribution to the venture of $53,000 in machinery and textiles from Lands’ End.

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Just Garments emerged from the wreckage of a shuttered Taiwanese garment contractor called Tainan Enterprises. The firm closed its Salvadoran operations in 2002 after employees won legal recognition of a union and asked for contract negotiations. Jobless workers were blacklisted from nearby clothing plants, according to anti-sweatshop activists, who pressured some U.S. retailers doing business with Tainan to intervene.

A deal was reached in late 2002. Tainan provided sewing machines and $160,000 in capital to start a new factory controlled by unionized employees.

But the company struggled from the start. Tainan didn’t supply promised technical assistance. The fledgling shop couldn’t attract a veteran leader, settling on a manager with limited experience who didn’t stick around long. It spent months and much of its start-up capital rehabilitating a decrepit facility in Soyapango, an industrial suburb of the capital, San Salvador.

When Just Garments finally opened for business in early 2004, the plan was to manufacture cargo pants for Gap, a former Tainan customer that agreed to give the plant a test order as part of the settlement with workers. But the factory couldn’t meet the retailer’s quality standards.

So Gap paid for a consultant to help it improve its performance and kicked in a $124,000 development grant in exchange for ending the production relationship.

Most of that went for immediate needs such as rent, utilities and salaries, said company administrator Gilberto Garcia. A charismatic human rights activist who helped organize the union at Tainan, Garcia admitted he knew little about business.

Workers appointed him to the board of directors of the new company. He also served as the de facto chief executive and spokesman, largely because no one else was willing to do it.

Garcia called the settlement with Gap an “amicable divorce.” Still, he suspects that someone tampered with Just Garments’ test samples to sink its chances of winning the contract.

It’s one of a host of dark economic and political forces Garcia contends doomed the factory. El Salvador has a history of repression and violence against organized labor. Garcia said businesspeople wouldn’t rent affordable space to the upstart, major clothing labels didn’t want to deal with a union supplier and officials in El Salvador’s conservative government hamstrung the enterprise with red tape.

“They didn’t want us to succeed,” he said.

Others say many of Just Garments’ wounds were self-inflicted. The consultant’s report cited low worker productivity, high defect rates, poor supervision, blown delivery deadlines and no clearly defined business plan. The plant took money-losing subcontracting jobs to keep workers occupied. When the Gap contract fell through, it shifted its focus to making T-shirts, work for which it lacked proper equipment.

“They just didn’t seem to know what they were doing,” said Rick Roth, the owner of a unionized screen printing company in Rhode Island. The industry veteran visited the Just Garments plan last year on behalf of a Chilean friend named Carlos Salinas, who loaned the venture $88,000 and is now suing to get it back.

Massachusetts entrepreneur Adam Neiman, founder of a sportswear line called No Sweat that’s manufactured in unionized factories, ordered 500 pairs of trousers from Just Garments but never repeated. He said 20% of the clothes were labeled incorrectly.

“Unions should run unions and managers should run factories,” he said. “The idea that the union could somehow represent the workers and manage the factory simultaneously was a fundamentally flawed model.”

Central America’s garment industry has been shredded by low-cost competition from China. A slew of factories have closed in recent years. Supporters of Just Garments say it was a valiant effort that simply failed in the face of overwhelming odds.

Sewing operator Elena Molina, 36, said she was treated with respect. That’s a rarity in an industry where workers are subject to relentless pressure and endure daily humiliations such as having to ask permission to use the toilet. She said she and others hung on even when their pay envelopes were empty in the hope that Just Garments would succeed.

“It was like a family,” she said.

Others tell a different story.

They say operators who complained about sporadic pay were fired and laborers had little influence in how Just Garments was run. The plant lacked clean drinking water, they say, and the bathrooms sparkled only when potential investors or journalists showed up. Some older workers say they remained not out of loyalty, but because there was nowhere else to go.

“No one will hire someone of my age,” said Gloria Janetta Alvarado, 43. “They used that to their advantage.”

Former employee Mejia has struggled to feed her family since the factory closed, owing her about $1,000. Her husband lost his post at a furniture factory last year, and his new delivery job pays only half as much, $6 a day.

One of the couple’s three children confided that the rabbits hopping around the patio of the family’s tiny cinderblock home weren’t pets. They were dinner.

Mejia, 48, has worked as a sewing operator since her teens. She has pushed countless miles of material under the needle, never earning more than minimum wage, now $157.25 a month.

A deeply religious woman whose first names mean “hope” and “charity,” Mejia said the recent hardships have brought her closer to God. When she starts worrying about the overdue phone bill and school fees she can’t pay, she thinks about Psalm 46: “God is our refuge and strength, an ever-present help in trouble.”

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But the experience with Just Garments has shaken her faith that an enterprise founded to improve workers’ lives can actually deliver. “I would rather work for an exploiter who pays on time,” she said.

Former employees may eventually receive some funds from the liquidation of the factory’s equipment. A Chicago-based labor rights group called U.S./LEAP recently collected $10,000 to help pay workers’ back wages.

Still, the closing of the factory has opened what may prove to be irreparable rifts among people who have struggled for the same causes.

Salinas, a former human rights worker who provided emergency funding for Just Garments, said he and Garcia now communicated only through lawyers. He added that the company hadn’t thoroughly documented how funds were spent or produced complete audited financial statements.

Garcia said he couldn’t access some records because the landlord locked him out of the factory for failure to pay the rent. The landlord, Carlos Siman, denied that. He said Garcia padlocked the plant himself, then used the phony lockout as an excuse to pull the plug on Just Garments and paint Siman as the bad guy.

Sewing operators who once worked side by side at the plant are similarly estranged.

A group of 19 has distanced themselves from the union and enlisted 11 human rights groups in El Salvador to help them recoup their money.

Charles Kernaghan, executive director of the New York-based National Labor Committee, has gone public with some workers’ complaints and is raising funds on their behalf. He said all the do-good hype surrounding Just Garments made the workers’ allegations all the more troubling.

“It was a sweatshop,” he said. “How could they be promoting this as a model factory when workers weren’t even receiving their wages?”

But 26 other former sewing operators have remained loyal to the union and to Garcia, who retains the backing of most U.S. anti-sweatshop groups. The two camps have traded nasty public letters.

“It has been terribly divisive,” said Sergio Chavez, who works for the National Labor Committee in El Salvador. “But the ones suffering most are the ones who always suffer the most: the workers.”

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marla.dickerson@latimes.com

Times researcher Alex Renderos contributed to this report.