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Logo of Phnom Penh Post newspaper Phnom Penh Post - Desperation takes hold as textile industry losses begin to mount

Desperation takes hold as textile industry losses begin to mount

With the US clothing market under increasing pressure, garment workers are feeling the pinch as job losses and closures hit one of Cambodia’s most important industries

Photo by: Sam Rith

Workers representative Se Thy camps outside Phnom Penh Garment City in protest. The factory closed 10 months ago and fired all 500 of its workers due to declining sales.

IT'S an early December morning, and more than 100 garment workers make their daily rush to Supreme Garments PTE, one of Cambodia's largest factories, near the Takhmao bridge on Road 102 in Kandal province.

But today, several of the workers exit the factory about 40 minutes later and return to their homes.

"Nowadays, [garment workers] enter the factory and then leave about half an hour later to go home," said Ong Chantou, 55, who has sold fruit in front of Supreme Garments for about five years.

Ana, 27, is one of several who will not be working that day and says, more often than not, the factory has to send employees home because there is nothing for them to do.

"The factory has had much less work for us to do since the middle of November," she said.

The impact of the US slowdown is being felt by thousands of garment workers in what was once Cambodia's fastest-growing sector.

Cambodia's garment exports to the US - the Kingdom's largest foreign textile market - totaled US$1.8 billion in the first nine months of 2008, slightly down from the same period last year, according to data from the US Department of Commerce.

Last year, the sector exported $2.9 billion worth of garment produced in 319 factories that employed more than 380,000 workers, according to figures from Cambodia's Ministry of Commerce.

But some 30 garment factories have closed their doors so far this year, leaving nearly 20,000 workers unemployed, said Van Sou Ieng, president of the Garment Manufacturers Association of Cambodia (GMAC).

The effects of these wide-spread layoffs could be devastating for many impoverished families in the countryside, for whom the monthly salaries of relatives working in factories are one of the few sources of income available to them.

The Cambodian garment slowdown is rooted in the US recession, which has seen sharp drops in clothing sales, industry officials say.

US retailer sales tumbled in November, the worst monthly decline in almost four decades, according to Bloomberg, and the Dow Jones US Retail Index is down about 28 percent on the year.

We will temporarily lay off all our staff for two months in order to find new markets and generate purchase orders.

Clothing sales in the US are expected to fall further as consumers put off non-essential purchases.

In a bid to slow the losses, GMAC has tried to diversify away from the US market to Japan and China.

Less work

Photo by: Sam RITH

A court notice announcing the liquidation of the Phnom Penh Garment City's assets.

A 50-year-old worker who preferred not to give her name said this year has seen the sharpest decline in business since she began working at Supreme Garments in 1995.

Chhin Tak Khey, the factory's administrative manager, said the Singaporean-owned company has received none of their usual orders from European countries, Singapore or Hong Kong.

The beleaguered manager said he has lost between $20,000 to $40,000 per month since August.

Supreme Garments, which began operations in 1993, used to employ 2,000 workers, Chhin Tak Khey said. Now, they have only 624.

"Since November of this year, we have had to take clothes from other factories for our workers in order to pay their salaries," he said.

This downward trend has labour officials worried.

"Next year, Cambodia's garment industry will face increasing difficulties because there are no purchase orders coming in, particularly from buyers in the United States," Van Sou Ieng said.

"They [factories] can't stay open if there are no orders coming in," he said.

He added that factories nationwide are currently operating at only about 70 percent capacity.

Chuon Momthol, president of the government-aligned Cambodian Union Federation, said about 35 factories in total - employing from 1,000 to 5,000 workers each - are expected to shut down by the end of 2008 if global markets continue their downward spirals.

Oum Mean, a secretary of state for the Ministry of Labour and Vocational Training, said he could not give exact figures on factory closures.

He acknowledged that some had shut down, but said they were primarily small companies that closed in order to build larger factories.

But Supreme Garment's Chhin Tak Khey said his factory has lost more than $200,000 so far this year and could not remain open in the face of further losses.

In order to weather the crisis, the company will lay off all its staff for two months, beginning in January.

"We will temporarily lay off all our staff for two months in order to find new markets and generate purchase orders," he said.  

"After that, if the situation remains the same, we will not be able to continue our business."

Layoffs in store

Nuon Veasna, an employee education coordinator for the International Labour Organisation in Cambodia, said the increasing effects of international market turmoil has made it more difficult for unions to protect workers rights.

"It has always been difficult to demand worker protections from employers, but it has become harder as purchase orders continue to fall," he said.

But Chea Mony, president of the Free Trade Union of Workers, says Cambodia's garment sector has remained largely unaffected by international markets.

"For me, I do not believe the global economic crisis has affected factories much because the industry has made a lot of

progress recently," he said, saying instead that the decisions by individual investors to close shop in Cambodia were to blame for the layoffs.

"The closing of garment factories is the result of long-time investors who want to pull out of Cambodia ... in order to escape legal confrontations with their workers," he said.

"I remain sceptical as long as there is no confirmation from relevant ministries or [national auditors] that factories have closed because of the global crisis," he said.

Reasons for the growing decline in garment sales might vary, but the effects are not in dispute.

Sitting on a hammock beneath a plastic tarp, 29-year-old Se Thy has created a makeshift camp in front of Phnom Penh Garment City Ltd in Phnom Penh's Meanchey district.

He represents 500 workers seeking compensation for lost wages.

"I have been waiting here for 10 months since the factory closed," he said.

ADDITIONAL REPORTING BY GEORGE MCLEOD

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