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Gildan Announces Closures of Canadian, US and Mexican Factories

March 27, 2007

Gildan labelsCanadian T-shirt manufacturer Gildan Activewear is closing its last two Montreal textile plants, a cutting operation in New York, and two sewing factories in Mexico. The North American factories will close in August, likely due to legal requirements under Quebec law for adequate notice to workers of a permanent closure. In contrast, the Mexican facilities, where no such legal requirement exists, stopped production one day after the company’s announcement.

An estimated 1,365 Mexican and 465 Canadian and US workers will be laid off once the closures are completed. This is a devastating decision for workers, their families and their communities in all three countries. Workers at the Mexican factories in Monclova were particularly hard hit, as the region is already reeling from another major plant closure by Gildan's competitor, Hanesbrands, which resulted in the lay off of another 1,700 workers when it closed its factory in December 2006.

The one day’s notice given to Mexican workers and their community provided the workers with little or no opportunity to develop their own proposals and negotiate with Gildan for fair compensation, retraining, assistance with job searches or other ways to lessen the negative impact they will suffer. Unlike the Canadian textile plants, workers at the two Mexican sewing factories were not represented by trade unions.

Gildan claims the closures were necessary to stay competitive. Gildan’s manufacturing hubs will now shift to lower-cost locations in Honduras, Nicaragua, Dominican Republic and Haiti. The company estimates it will save $45 million a year as a result of this restructuring decision.

With MSN’s assistance, our local Mexican partner organization in Monclova, SEDEPAC, put forward a series of proposals to Gildan to provide support to the laid-off workers that goes beyond the bare minimum of the legal requirements in Mexico. These included: additional compensation in recognition of the lack of notice (equal to the 16 weeks notice required by law in Quebec), a professional health assessment by the local government social security office (IMSS) concerning possible work-related illnesses and injuries, one year additional health care coverage, retraining and assistance with job searches, and independent monitoring of severance and other payments and the training process.

In response, Gildan agreed to provide six weeks compensation in lieu of notice, six months access to private doctors hired by the company, but not health insurance, job retraining through a government training program, but no assistance with job searches, and independent monitoring of severance payments and the training program by SEDEPAC. While these commitments go beyond legal compliance and provide more support than do most apparel manufacturers in Mexico, they will not begin to meet the serious needs of the unemployed former Gildan workers and their families.

Gildan is a highly profitable company that has made enormous profits off these workers' labour. Last year Gildan’s profit was US$105 million. Upon announcement of these layoffs, Gildan’s stock value went up by more than 20%, a gain of more than $US660 million for its shareholders. Gildan can therefore easily afford to provide the workers and community generous compensation and support in gaining alternative employment.

Mexican workers were promised huge benefits in employment and wages through the implementation of the North American Free Trade Agreement (NAFTA). But this and other recent announcements of factory closures in Mexico's garment export industry are exposing NAFTA's promise of jobs and decent wages as a pipe dream. Trade liberalization at the international level with the dismantling of the import quota system is overriding any supposed trade benefits of NAFTA.