When Garment Factory, Textile and Shoe Relocating

Alfian Al-Ayyubi Pelu dan Syarif Arifin

Factory
relocation and expansion are not new events in Indonesia. In 2002,
Sony Electronics, Inc., moved its factory from Cikarang Bekasi to
Malaysia. Then Satria Sejati Multi Industry moved its factory from
West Bandung to Central Bandung in 2006. Honey Lady, Inc. moved its
factory from KBN Cakung to Bawen Central Java in 2007. Sepatu Bata,
Inc. relocated its factory from Kalibata to Purwakarta in 2008. The
tendency of factory relocation also surges few countries in Southeast
and South Asia, even have been going on since the 1970s. Of course,
the establishment of Unilever and Philips factory in the Dutch
colonial era is one of the parts in the expansion.

Relocation
and expansion are one of the strategies to maximize the advantage by
suppressing production cost. Some are pressing the logistics and
transportation costs, thus concentrating their entire supply chain in
one industrial zone. Some also reduce their labor costs, because they
unable to suppress the logistics and transportation costs.

Relocation
is the transfer of a factory to a relatively new area by maintaining
an old name or using a new name. The old factory was closed. Old
factories will turn into warehouses or offices.

There
is a method of closure that is done suddenly and some are done
gradually. In the transfer, the company carried the machine, the
remaining raw materials, and a set of management. Leaving workers,
trade unions and the practice of fulfilling labor rights.

Kahoindah
Citragarment 2 Bekasi, Inc. closed its factory and continued its
production at the Cakung KBN, in October 2018. Workers, their labor
unions were abandoned and management of labor rights followed the
mechanism at the Cakung KBN. While Dada Indonesia Purwakarta, Inc.
closed the factory suddenly after opening a new factory, Laspo, Inc.,
in Boyolali. Panarub Dwikarya Benoa Tangerang Banten, Inc., closed
its factory by abandoning more than 2000 workers and opening a new
factory in Brebes under the name Bintang Indokarya Gemilang, Inc.

In
addition to relocation, there is also expansion or expansion of
business in the same field in the same place or in another area with
the same name or other name. As PT Pan Brothers Tbk opened a new
factory in Boyolali Central Java under the name PT Eco Smart Garment
Indonesia. Molax International Cakung, Inc. and Daehan Global Bogor,
Inc. opened a new factory with the same name in Sukabumi.

Expansion
can also be done by opening a new business or in the form of stock
investments. Like Astra International, Inc., Astra Infra, Inc. is
engaged in toll road business by controlling six toll roads, namely
the Tangerang-Merak Toll Road, Jombang-Mojokerto Toll Road,
Kunciran-Serpong, Semarang-Solo, Serpong Balaraja and
Cikopo-Palimanan. Mitsubishi UFJ Financial Group annexed 40 percent
of Bank Danamon, Inc.’s shares, in August 2018.

In
the practice of relocation and expansion, management brought the
experience of ‘labor conquest’ in the previous factory. Sometimes,
some workers, especially leaders are invited to provide training at
the new factory. Along with the operation of the new factory, the
number of workers in the old factory is gradually reduced or the
workers’ rights are stripped down. The usual reason stated, companies
are making efficiency.

On
average, relocation and expansion factories are well-known brand
suppliers, such as The North Face, Adidas, Nike, H & M. These
brands are often referred to as brands or buyers. Brand owners order
goods to the factory through their parent company or supplier. When
ordering goods, the brand owner determines the quality of raw
materials, design of goods, number of orders, delivery time and
production costs. With the discovery of automatic machines and online
stores, the designs and types of goods are increasingly varied. The
number of goods produced also increases, while production costs do
not change. All brand owner policies can affect the supply chain. The
brand owner can decide to reduce, even revoke the order at his own
discretion.

As
recipients of orders, suppliers control several factories in various
places. Average operating in Asia. The order is divided into
factories owned by suppliers. As an industry that relies on raw
materials and imported machinery, relocation is not merely due to
rising minimum wages. But it also relates to the carrying capacity of
nature and changes in spatial planning, which are considered unable
to accommodate changes and increases in production capacity, while
zones around the factory experience seasonal flooding, fires,
availability of ground water, decreased electricity supply and
increased land prices.

Relocation
is a reorganization of space (the regulation and re-dismantling of
new and old production spaces), which is carried out continuously by
capital and the state with the aim of multiplying profits and
avoiding losses. These benefits are basically derived from the
privatization of land and natural resources, the separation between
producers and owners of goods, and the exploitation of labor to
produce value-added merchandise (Fauzi, 2015: 36). David Harvey
mentions the ability of capital to create new production spaces and
new accumulations to save itself from the crisis it created itself in
the term spatio-temporal fix.

Factory
relocation and expansion are legal actions. The government also
supports this practice. The type of support, from the ease of
establishing a factory, security, and of course there is no need to
question that the company relocated the factory was having a problem
with the workers it left behind. As a labor-intensive industry that
is only willing to employ women, relocation and expansion lead to
mass dismissals, a decline in the quality of life of workers, and
sometimes accompanied by demonstrations of workers who are not
willing to hold their rights suspended continuously. Not a few
workers lose their jobs without getting compensation or getting
compensation unfairly. A small number of women workers who have been
fired still have the opportunity to get new jobs elsewhere. But, most
do not work anymore, because working age is increasingly limited.
When the practice of relocation and expansion takes place, women are
the ones who bear the suffering.

In
addition to harming female workers, relocation and expansion has also
been one of the reasons for trade union membership to decline. In the
trade union constitution, it can be said that the membership period
ends when he resigns, is dismissed or dies. In fact, after the tenure
in a company ends, the membership bond disappears.

Facing
the practice of relocation or expansion of trade unions exerted all
its strength; demonstrations, mobilizing solidarity to deal with the
government and the court. Sometimes the advocacy of dismissal cases
related to relocation and expansion did not go as expected. Two trade
unions that process dismissals due to relocation were defeated at the
Industrial Relations Court (PHI). The PHI decided that workers and
companies were ‘not harmonious’. Workers only receive one-time
compensation from the regulations regarding compensation.

There
are many trade unions taking other ways. There are those who bankrupt
the company and auction off the remaining items in the form of
machinery and raw materials. Obstacles, often the machines left
behind do not have a sale value or have been pledged to the bank. So
that the sale of the remaining items is not comparable to the period
of questioning the case.

Another
way is to move the international network to collect responsibility
for ordering goods, aka brands. This method was not popular even
though it had begun in the late 1990s. Assuming that the
international network has a greater impact and can reach brand
owners. The language gap is one of the obstacles to the international
campaign method. However, often attempts to invite the international
network to ignore internal reinforcement in trade unions. In large
cases such as mass dismissal, sometimes international campaign
methods have to take longer, while energy continues to decline.

Factory
relocation and expansion are not only labor problems in Indonesia.
Faced with capital mobility, workers in other countries also
experience the same thing. Elsewhere, efforts to fight relocation and
expansion take place. There is a network that forces international
bodies such as the International Labor Organization (ILO) to make new
conventions on the responsibilities of brand owners and expand the
meaning of workplaces not just factories. There is also a network of
trade unions “No Chains”, which seeks to manage the factory
left by the businessman and force the state to support efforts to
manage the plant.

Relocation:
Hunting for Abundant Water, Cheap Land and Labor Obey

The
construction of export processing zones (EPZs) took place during the
oil boom period (1976 – 1981). EPZ is a major marker of economic
policy transition in Indonesia. The transition of industrial strategy
from import substitution to export-oriented. Bonded zones offer easy
investment such as tax breaks, an easy and fast licensing process,
and the availability of good infrastructure networks to facilitate
production, logistics and transportation processes.

These
facilities have even been guaranteed with a low wage policy and a
wage deferral practice. The current minimum wage policy effectively
has been implemented since 1980.
In
the late 1980s, the government rolled out minimum wage policies as
one of the strategies to attract foreign investment into the country
through low-wage policies
.
Until now, most of the bonded areas in Indonesia have been inhabited
by labor-intensive manufacturing companies, especially in the
garment, textile, footwear, food, beverage and assembled electronics
sectors.

Cakung
KBN is one of the bonded areas managed by PT KBN (Nusantara Bonded
Zone) which was established in 1986. Initially Cakung was one of the
largest bonded areas in Indonesia. Spatially, the Cakung KBN is
linked to the toll road and the main port of Tanjung Priok, the
bonded area and Marunda’s warehousing, as well as the bonded areas of
export and labor-intensive industries in Bekasi, Depok, Bogor,
Karawang, and Purwakarta.

DKI
Jakarta’s One-Stop Integrated Investment and Service Office

said, with an area of 176.7 hectares, Cakung was leased by 104
investors, with 15 investors engaged in the warehousing sector, and
34 investors for other service businesses, and the remaining
processing plants. There is no adequate data — which can be
accessed by the public — regarding the capacity of the Cakung KBN
and the exact number of factories operating. However, the results of
an investigation collected by one of the labor unions, the
Cross-Factory Labor Federation (FBLP) in 2014, stated that the
capacity of the Cakung KBN could accommodate approximately 130
factories. In
other data
, in 2013, more than 90 factories were
operating and more than 70,000 workers worked to produce expensive
clothing and exported to foreign countries, such as GAP, Zara,
Adidas, and H & M.

In
2015 while doing research at the Cakung KBN, I watched the area
crowded with young female workers. At lunchtime, workers spill into
small streets between factories, grabbing food sold by sellers. Most
factories in the Cakung KBN do not have adequate canteens. While the
canteen provided by the KBN manager is relatively far away, it is not
possible to go with the rest of the staff after work. After all, with
the work system produksi production target ’even though the average
work rest time is 1 hour, in fact only 30 minutes is realized.

As
an area managed by the DKI Jakarta Regional Government, the Cakung
KBN receives water, electricity, road networks, waste disposal and
telecommunications supplies provided by the state. PLN provides 233
KVA electricity supply per plant unit for the entire area managed by
PT KBN. The PDAM provides clean water supply of 23,000 m3 per month
for plant and household needs. Because the water and electricity
supply is low, the average factory in Cakung only applies one work
shift. With this capacity, the Cakung KBN is unlikely to meet mass
production targets.

In
July 2018, one of the union administrators in Cakung stated that
every 5pm the electricity in the factory was turned off. Even toilets
in factories often lack clean water. Five months before, a fire
factory. In 2008, Cakung was charged with a two-hour turnover from
PLN. Not only that. The road network around Cakung was damaged and
jammed. If floods, factories, machines, and raw materials are
submerged in water. Labor is closed. Garment
business owners feel loss, because production targets and working
hours are disrupted
. The
opportunity arrived. In 2010-2013, workers in Jabodetabek declared
resistance to low wages and outsourced workers: conducting regional
strikes demanding an increase in minimum wage wages and demanding the
abolition of contract and outsourcing workers. In 2013, DKI Jakarta’s
minimum wage rose 40 percent. Apindo
threatens to replace workers with robots and relocate factories
overseas
. After all, lately
the problems of laborers in Cakung have increasingly spread in the
mass media.

Mid-2018,
when I had the opportunity to come again to the Cakung KBN, I did not
find a crowded and crowded atmosphere like before. Crowds and thrusts
on the small streets of the usual area are created when the hours of
entry, rest, and hours of work return, looking deserted. The back
gate of the Cakung KBN which is usually filled with ojek, KBN angkot,
and market traders, is no longer boisterous. Many factory doors close
and the environment is neglected.

The
situation that began to be quiet in the Cakung KBN was related to the
relocation (and expansion) of the factory. Some laborers and union
officials who have a membership base in Cakung say that currently
there are only about 30 factories operating. Several companies
at the Cakung KBN
have
reportedly terminated employment (layoffs) for their workers on the
grounds that they are quiet orders or efficiency.

Not
only the Cakung KBN, relocation and expansion were also carried out
by textile garment and shoe factories formed in the other 1980s, such
as Bogor, Bekasi, Purwakarta, Tangerang, Serang, Bekasi, Bandung,
Gresik, Surabaya and Batam. The target of relocation and expansion is
new areas, around West Java (Majalengka, Cirebon, Sukabumi, Cianjur,
Subang), Central Java (Sukaharjo, Boyolali, Seragen, Jepara), East
Java (Jombang, Ngawi, Pasuruan). The main feature, in the areas where
the relocation of trade unions has not been formed and the minimum
wage is half that of Jabodetabek. The unavoidable fact that the
location is moved is based on other considerations, namely, support
from the government, water availability, labor and cheap land prices.

The
Indonesian Employers’ Association (Apindo) said there were 90
factories from industrial areas in Jabodetabek deciding to relocate
to Central Java since 2013. While the Indonesian
Textile Association
(API) in 2015 said 47 factories from West Java and Banten relocated
to the Central Java area. In 2016, 5 labor-intensive companies moved
from Gresik to Lamongan.

As
far as can be noted (see table 1), relocation and expansion are
carried out by labor-intensive companies with the majority of women
workers. Generally, these companies are suppliers to international
brands, such as Nike, Adidas, Puma, Uniqlo, H & M, The North
Face, Tommy Hilfiger, JC Penney, GAP, and other international brands.
The various well-known brands are actually owned by a group of brand
holders who control the retail network in various parts of the world.

Table
1: 20 Relocation and Expansion Companies in Jabodetabek

No Factory Origin Destination Area Sector
1 Muara
Krakatau, Inc.
Bogor
City
Semarang
and Sukabumi Districts
Garment
2 Liebra
Permana, Inc.
Bogor
District
Majalengka
and Semarang District
Garment
3 Citra
Abadi Sejati, Inc.
Bogor
District
Semarang
District
Garment
4 Sahabat
Unggul Internasional, Inc.
Bogor
City
Semarang
District
Garment
5 Tainan,
Inc.
Cakung,
Jakarta
Cianjur
and Solo District
Garment
6 Sungintex,
Inc.
Bekasi
City
Semarang
City
Garment
7 Misung,
Inc.
Cakung,
Jakarta
Banjarnegara
District
Textiles
/ Synthetic
8 Dong
An Kreasi Indonesia, Inc.
Bekasi
District
Subang Wig
9 Kukdong
International, Inc.
Bekasi
District
Semarang
District
Garment
10 Daehan
Global, Inc.
Bogor
District
Sukabumi
District
Footwear
11 KMK
Global Sport, Inc.
Tangerang
District
Salatiga
City
Footwear
12 Hansai,
Inc.
Cakung,
Jakarta
Semarang
City
Footwear
13 Panarub
Dwikarya Benoa, Inc.
Tangerang
City
Brebes
District
Footwear
14 Asia
Dwimitra Industri,
Inc.
(Shoetown
Grup)
Tangerang
District
Majalengka
and Subang District
Footwear
15 Putra
Indonesia,
Inc.
Bogor
District
Wonogiri Garment
16 Pan
Brothers Grup, Inc.
Tangerang
City
Boyolali Garment
17 Kahoindah,
Inc.
KBN
Cakung
Sukabumi
and KBN Cakung
Garment
18 Pratama
Abadi Industri, Inc.
South
Tangerang
Sukabumi Garment
19 Leaders
World,
Inc.
Bogor
District
Sukabumi Garment
20 Doosan
Cipta Busana,
Inc.
KBN
Cakung
Sukabumi Garment

Data
is collected from various sources.

Facts
Behind the Relocation and Expansion of Garment Factories

Factory
relocation and expansion can be carried out by the brand owner
company or the order giver or the supplier company alias the order
maker. Brand owners can move their production orders from one
supplier to another. Brand-holding companies, in fact, do not have a
production base, in the sense of owning a factory. They are only
involved in research and design efforts, while the manufacturing
process is broken down to supplier companies. In this sense, brand
companies give work orders for certain types of goods within a
certain time to the supplier company.

Even
so for supplier companies, they can relocate their factories to
industrial areas in one country or across countries. Supplier
companies are generally in the form of business groups. Usually, the
business group receives orders from other brands as well. For
example, the Hojeon Group, based in South Korea, received orders for
Nike, Under Armor, Adidas, The North Face, Athleta, Majestic, Vf,
Oakley, Swix, Fanatic, Berghaus, Bauer, Salomon, Ulvine, Kjus. Goods
orders are carried out in factories owned by Hojeon in Indonesia and
Vietnam. Another example, PT Dada, is domiciled in South Korea. Its
factories are spread in Indonesia, Bangladesh and Vietnam. The
ordering consists of Puma, Tommy Hilfiger, CCM, Nike, Adidas, Under
Armor, Forty Seven, American Needle, Billabong, Columbia, Costa, GAP,
Hurley, Kenzo, Mitcell & Ness, Skechers.

The
following are conditions that enable the relocation and expansion of
labor-intensive plants. First, it is low wages. Relocation
considering the difference in wages can reduce the cost of production
in large quantities, and even called boost
the value of exports. There is a considerable wage gap in the old
industrial base areas with regions that are the new industrial base.

With
the adoption of Government Regulation Number 78 of 2015 concerning
Wages, the increase in minimum wages from year to year can be
predicted. In PP 78, the price survey of merchandise in the component
of decent living needs (KHL) that must be carried out by the wage
council as one of the references in determining the minimum wage
increase, is deleted. The formula for determining wages is
sufficiently based on current wages, inflation assumptions and
national economic growth. Data on inflation and national economic
growth are determined by the Central Statistics Agency (BPS). In
fact, by conducting a market survey, the prices of goods and services
included in the KHL item can be known for certain real increases.
Politically, PP 78 also closed the role of trade unions in the fight
for discussion of wage increases in the wage council, as well as
trade union battles on the streets – by conducting demonstrations in
industrial zones and government offices – to suppress the decision to
increase minimum wages.

In
new industrial locations where the labor movement is weak in pushing
for its interests, the situation is increasingly beneficial for the
state and capital. Even now new forms of wages have emerged which are
nothing but legal tricks to pay lower labor costs. In
Bojonegoro there is a rural wage policy, in Sumedang there is a
sub-district wage policy
.
Also recently the West Java Government arbitrarily
established labor-intensive wages which were then sued by
representatives of trade unions in the State Administrative Court
(PTUN)
.
In the name of attracting investment, governments in the new
industrial areas are competing to reduce wages to be cheaper (race to
the bottom).

Second,
cheap land, abundant clean water and spatial changes. Daily traffic,
seasonal flooding, and turmoil in industrial relations are considered
obstacles to economic activity. Capital then chose ‘lift your feet’
from these industrial areas by leaving a number of already chronic
social problems. But of course the old industrial areas will not be
completely abandoned. Old industrial areas will be rearranged to
relaunch the accumulated profits that are clogged. For example, the
Cakung KBN, by looking at industrial projections and future space
requirements, will be used as warehousing areas. This is to
anticipate the increasing activity and volume of loading and
unloading at the port of Tanjung Priok which has experienced
continuous expansion in the next few years and has become
the largest port in Asia
.

Regions
that have long been exploited for industrial purposes are
increasingly not possible to serve production activities that follow
the fast
fashion

trend. Water availability continues to shrink and is expensive and
land
prices continue to rise
.
Tangerang Regency, for example, as one of the old regions producing
clothing and shoes, has experienced a critical point of groundwater
availability. With the method of Groundwater Basin, in 2033 it is
estimated that ground water is only available at 383.26 million m3
while industrial water needs are 280.32 million m3. If using the
hydrogeology method, in 2013, only 7.56 million m3 was available,
while the industry needed 115.53 million m3 (Pratiknyo, 2016).
Available and sufficient water is only surface water that has been
mixed with industrial waste.

The
landowners in the old industrial zone changed the layout of the
industrial space to offices and warehousing. The transfer of the PT
Sepatu Bata factory from Kalibata to Purwakarta, followed by the sale
of its land to PT Pradani Sukses Abadi (PT PSA), a subsidiary of the
Agung Podomoro Group. The land turned into an apartment. The
production closure at PT Kahoindah Citragarment 2 and PT Dada
Indonesia, seems to be following changes in the function of the land
around the two factories. PT Kahoindah Citragarment 2 for example.
Located along the Kalimalang river Bekasi, which has established
offices and hospitality. Less than 4 kilometers from the company is
the East Bekasi toll gate, which has established the Grand Dhika City
hotel. To the front of the Kalimalang river will be converted into a
tourist area.

Third,
the availability of electricity, toll roads and warehousing. The
areas in Central Java, West Java and East Java which are the
destination of relocation have been established with export-oriented
bonded zones. These areas have also been connected to the Trans Java
toll road. A number of sea ports, dams, airports, and electricity
supplies are being intensified. Moreover, infrastructure projects are
increasingly being promoted by opening a number of export-based
special areas in various regions outside Java, where the average
wages are relatively low from areas in Java.

Fourth,
government support and legal structure. He admitted lockout rights
and dismissed workers for reasons of efficiency for the company and
flexible work relations were conditions that made it easier for
companies to leave. As of 2009, almost every region opened industrial
estates and offered fast service and ease of business licensing.
Government Regulation Number 24 of 2009 confirms that every industry
is obliged in industrial estates. Through these regulations, the
government guarantees energy, electricity, telecommunications, water
resources, sanitation and transportation networks (Article 62
Paragraph 3). Companies that open factories in industrial estates do
not need location permits, disturbance permits, or environmental
impact analysis (Amdal). The government also provides facilities for
industrial
estates to become national vital objects
.
The
government also promised to provide incentives for industries to move
their factories to areas with lower wages.

Two
trade unions in Cimahi and in Bekasi have filed cases of dismissals
due to company relocation with a one-time offer of compensation
provisions. The Industrial Relations Court (PHI) issued a decision
that workers and employers were not in harmony. The amount of
compensation decided by the PHI is in accordance with the amount
submitted by the employer.

Of
the 16 economic policy packages, which were launched in September
2015, it is encouraging economic competitiveness and infrastructure
development that relies on foreign capital, while inviting foreign
investment. PP 78 of 2015 concerning Wages, incentives for
entrepreneurs and the opening of industrial estates are some of the
realization of the policy.

Factory
relocation and expansion is made possible by the political policy of
deregulation of legal regulations that limit the movement and
mobility of capital. Such as deregulation of environmental permits,
taxation, and labor law regulations. This deregulation political
policy gave capital freedom to move to find new production spaces
without obstacles. And encourage the expansion of the agenda of
flexibility in the labor market. In new locations, companies have the
freedom to recruit and fire workers. This means that factory
relocation to new production sites cannot run perfectly in the midst
of a rigid and persistent labor market.

Fifth,
technological innovation. Fast
fashion, speed factory, manufacturing revolution
,
is a term that has developed in the last five years. The design of
clothing and shoes is no longer season dependent. With the
availability of internet networks, the design and ordering of goods
can be done in a matter of days. With automatic machines goods can be
produced quickly in bulk. There is no more time and the rest of the
material is wasted, including rest, worship or just to the toilet.
Everything is dedicated to the production of goods. In that context
brand holders and suppliers can move production as they please.

In
the story of relocation and expansion, a fairly prominent practice is
increasing production capacity by suppressing labor rights. As of
2017, the Central Statistics Agency (BPS) said garment exports grew
9.89 percent from the previous year. This
number is the largest in the last 18 years
.
An increase in exports also occurred in shoe production. Shoe exports
from Indonesia occupy the 5th position in the world. The
Ministry of Industry

said that the growth of Indonesian shoe exports exceeded the growth
of world exports.

Sixth,
the strengthening of the labor movement in the old industrial area.
Industrial areas in Jabodetabek are areas with large numbers of
workers, as well as high levels of association. Some of the
achievements of the labor movement’s street actions in challenging
capital and government occurred in industrial estates in these areas.
The events of “open warfare” against capital and state such
as factory raid, regional strike, national strike I, II, and III,
blockade of toll roads, forced capital and the state to fulfill a
number of labor demands. The strengthening of the labor movement then
forced capital and the state to seek new strategies to counterattack
and subjugate the union. Relocation and expansion is one form of
counter-attack launched by capital and the state.

Repeated
labor protests with various methods indirectly embarrass
entrepreneurs. As it turned out, the demands of the workers were not
far from the normative problems, aka basic rights that must be
fulfilled by employers or around the increase in wages. This means
that entrepreneurs in Indonesia operate by impoverishing workers and
violating labor regulations.

Another
form of counter-attack was the granting of national vital object
status (obvitnas) to several factories and industrial estates. By
providing obvitnas status, industrial estate managers can
legitimately summon soldiers or police to be involved in maintaining
the production process and dissolving legitimate demonstrations from
trade unions.

Table
2: Comparison of Wages in the Old and New Industrial Areas

Year

Old
Industrial Areas
Tangerang
City
DKI
Jakarta
Bogor
District
Bekasi
City
Karawang
District
Bandung
District
2014 Rp
2.444.301
Rp
2.441.000
2.242.240 Rp
2.441.954
Rp
2.447.450
Rp
1.735.473
2015 2.730.000  2.700.000 2.655.000 2.954.031 2.957.450 2.041.000
2016 3.043.950 3.100.000 2.960.325 3.327.160 3.330.505 2.275.715
2017 3.295.075 3.355.750 3.204.551 3.601.650 3.605.272 2.463.461
2018 3.582.076 3.648.035 3.483.667 3.915.353 3.919.291 2.678.028

Year

New
Industrial Area
Boyolali
District
Demak
District
Jepara
District
Semarang
District
Kendal
District
Majalengka
District
2014 Rp
1.116.000
Rp
1.280.000
Rp
1.000.000
Rp
1.208.000
Rp
1.206.000
Rp
1.000.000
2015 1.197.800 1.535.000 1.150.000 1.419.000 1.383.450 1.264.000
2016 1.403.500 1.745.000 1.350.000 1.610.000 1.639.600 1.409.360
2017 1.519.289 1.900.000 1.600.000 1.745.000 1.774.867 1.525.632
2018 1.651.619 2.065.490 1.739.360 1.900.000 1.929.458 1.658.514

Data
is collected from various sources.

Relocation
and ‘Leg Feet’ Brand Owners

October
2018, Kahoindah Citragarment 2,
Inc.
relocated the factory to KBC Cakung, after Nike revoked the order.
Dada Indonesia,
Inc.
closed its factory after Adidas revoked the order. Dean Shoes
Indonesia,
Inc.
fired 2000 workers after Nike stopped its order. Nikomas Gemilang,
Inc.,
a supplier of Nike shoes, opens new factories in Sukabumi and
Cianjur. Adidas suppliers, Uniqlo, Zara, Billabong, Pan Brothers,
Inc.,
opened a new factory in Boyolali. The buyers ordered more goods to
Nikomas Gemilang,
Inc.
and Pan Brothers,
Inc.

In
general, brand holders have a very strong position in the global
supply chain system. The company’s brand decision to move or reduce
orders can force the supplier company to follow it, even close it
completely. For example, the two biggest sports brand companies,
Adidas and Nike, since 2008 began to move their orders from China
to Vietnam

(also to Myanmar and Cambodia) with an increasing volume of orders
from year to year. Transfer of orders resulted in the closure of
companies supplying both brands in China. While in Indonesia, word
got out that Nike apparel reduced and moved orders to suppliers
equipped with
automatic machines or not too far from its supply chain
.

Unlike
brand products such as electronics, food and automotive,
international clothing and footwear brands only control the chain of
stores. The store range is spread in various countries. Through these
stores, brand owners connect with consumers. Now brand owners are
opening businesses online. Not only that. Brand owners have contracts
to sell goods with universities in Europe and the United States or
sports clubs.

Brand
owners sometimes master one type of item, such as clothing and sports
equipment. Also mastering other brands. In order to reduce production
costs, usually goods orders are divided into various suppliers. From
suppliers it is further divided into factories. In one factory it
usually works on various brands.

Brand
owners, do not produce goods but have goods, even the name of the
item is popular. Known throughout the world as a quality product. The
brand owners are not bothered with the establishment and operation of
the factory. Will not be faced with youth organizations who offer 17
Agustusan proposals or request holiday allowances (THR). Free from
the pressure of workers who demand an increase in minimum wages every
year. Not worried that the engine and raw materials will be flooded.

If
workers protest because they are able to see the benefits of brand
owners from their suppliers, simply say, ‘We do not have a working
relationship with the workers concerned’, or just say, ‘We have set
standards that each of our suppliers is required to comply with the
laws in their respective countries ‘ A rather complete answer is more
or less like this, ‘We have a CSR (Corporate Social Responsibility)
program, an audit and provide a complaint room in the form of
telephone and email numbers to ensure that goods suppliers fulfill
the rights of workers. If there is a problem, it means that it is a
labor problem and the factory management is concerned. The brand
owner does not care if the goods are subcontracted to another factory
or done by homeworkers.

The
average brand owners are headquartered in Europe, the United States
and Japan. The goods are produced in Asia. These items are ordered
through a supplier group in South Korea, Taiwan, Singapore. Buyers
order goods to factory owners; in a certain amount, special quality,
and at a specified time. The contents of the agreement are not
public. It’s hard to know how long the agreement was made and how
many.

These
supplier groups divide the production of their goods in their
factories, which are spread across Asia. Availability of raw
materials, low-cost policies and abundant labor, which encouraged
brand owners to shift their production to Asia. Brand owners also
benefit from the international trade agreement on copyright and
intellectual property as well as regional or bilateral trade
agreements that regulate the reduction of import duty rates.

Although
it is difficult to know, the profitability of brand owners can be
estimated. The easiest way is to compare these branded prices with
minimum wages in an area.

The
following is one of the calculations made by workers at Panarub
Dwikarya Benoa Banten,
Inc.,
one of the Adidas shoemakers, Mizuno and Specs.

In
January-June 2012, workers made Adidas shoes in various models:

a.
Predatory Model LZ TRF, per 1 hour 140 pairs of shoes. The price of
shoes on the market is Rp. 750 thousand per pair to Rp. 1 million per
pair. Depending on the type of store that sells.

b.
Besulik Trainer model, per 1 hour 150 pairs of shoes. The market
price is around Rp. 500 thousand per pair.

c.
Model Core, per 1 hour 160 pairs of shoes. The price is Rp. 475
thousand per pair.

d.
Model Mali 10, per 1 hour 160 pairs of shoes. The price is Rp. 475
thousand per pair.

Various
models of Adidas shoes above the production target are different and
the prices vary. This is common in the sales mechanism. From one item
the profit margin is not too large, but will get a bigger profit than
other types of goods.

If
averaged, the target for making shoes is 150 pairs per hour. The
average price is Rp. 581,250.

In
a day the worker works 8 hours for 22 days a month. Accidental
overtime does not count. Means 150 x 8 x 22. In other words that in a
month 26400 pairs of shoes have been made.

If
the number of shoes multiplied by the average price of shoes, it
means that 26400 x Rp. 581,250 = Rp. 15,345,000,000. This is the
total price of shoes on the market in a month. If the price of shoes
is reduced by the amount of money spent to pay the minimum wage to
workers. The number of workers is 2000 people. At that time, in 2012,
shoe factories in Tangerang City received sectoral wages worth Rp.
1,680,000. Means, Rp. 15,345,000,000 – (2000 x Rp. 1,680,000). The
result is Rp. 11,985,000,000 per month. Because it was made in the
January-June period, it was Rp. 11,985,000,000 x 6 months = Rp.
71,910,000,000 which was not received by shoemakers.

The
profit is new from one buyer. At the factory there were other buyers,
namely Mizuno and Specs. In other words, with production costs from
one buyer, the supplier has been able to pay the laborer as a whole
to make three products at once.

According
to Steve
Bence, a person who has worked for Nike since 1977
.
From a USD 100 pair of shoes, Nike only allocated USD 28.50 as
production costs. Of that amount, 25 dollars for factory and labor
costs and 1 dollar for shipping costs. That means that 2.50 dollars
is a supplier’s profit. A total of 15 USD is allocated for office
overhead, 2 USD pays tax. Then Nike marks the wholesale shoes price
of 50 USD, as a wholesale price. That means Nike has pocketed a
profit of 4.50 USD. In Nike’s retail stores, shoes are priced at 100
USD. As a result, Nike has pocketed a profit of 54.50 dollars.

What
about retail stores, not Nike? To other retailers, the average price
sold is 60 USD.

What
if the order of an item in a factory is not too large. For example,
Hansoll Hyunn Subang,
Inc.,
works on Christopher & Banks (25 percent), New York & Company
(25 percent), Abercombie & Fitch (20 percent), Kohl’s (20
percent) Walmart, Aeropostale and other brands (10 percent).
Illustration of Adidas profits and the formula Steve Bence revealed
still apply. No matter how small the goods produced, is the work
completed by workers. Not the rest of the raw materials can still be
used to make other products, so there is no need to spend production
costs.

However,
Steve Bence estimates that workers who produce large brands are paid
per unit of goods. In fact, workers who work in supplier factories
are paid based on minimum wages for a number of predetermined items
and various brands. Homeworkers are indeed paid per unit of goods,
but the price and quantity of goods are determined unilaterally by
‘agents’.

Several
brands operating in Indonesia

Factory
Relocation, Labors Fight

Three
months before closing, on October 2018, Kahoindah Bekasi Citragarment
2, Inc. offered workers to resign or also move to the Cakung KBN
Jakarta. Out of 3000 people, 90 percent are women. Two labor unions
at the factory refused an offer from the company. They demanded that
they work at the Cakung KBN without changing rights or terminating
employment relations with fair compensation.

Workers
know that compensation through the mechanism of resignation makes no
sense. They have worked for more than ten years. Every day they make
1800 to 2000 pieces of Nike brand clothing. During work they always
give in. One time, if there was a strike in Bekasi, the workers were
willing to look after the company so that other workers would not be
swept away to strike. On some production lines, excess work hours
have never been questioned.

In
the midst of negotiating efforts, the machines have been moved to the
Cakung KBN. The company management representative ya guerrilla ’met
with workers to accept the resignation scheme. Confused information
spread among workers, “If you do not accept offers from
employers, workers will get nothing”, “If you process cases
through the courts, it will be long and not necessarily win”,
and all other forms of pressure. One by one, workers at Kahoindah
Citragarment 2, Inc. accept the company’s offer. Hundreds of workers
who tried to survive demanded were employed or demanded fair
compensation, did not last long. They accept the offer of
compensation as desired by the company. Only 65 people were employed
at the Cakung KBN. The factory was closed.

A
similar story is experienced by Dada Indonesia, Inc. workers, who
have been operating since 1989. Three garment unions have been
established at the Purwakarta garment company. End of October 2018,
the company closes without notice. As many as 1300 workers were
abandoned. In 2017, Dada, Inc. also suspended the minimum wage.
However, before closing the factory, Dada Indonesia, Inc. opened a
new factory in Boyolali, Central Java under the name Laspo, Inc.

If
added together, the workers at Kahoindah 2, Inc. and Dada Indonesia,
Inc., 4300 people lost their jobs in October 2018. Almost all of them
were women with decades of work. This means that four trade unions
that have a base in the two companies lose their members.

In
the past five years, garment, footwear and textile companies moved
their factories to lower-paid areas around West Java, Central Java or
East Java. The practice of relocation poses problems for workers and
trade unions and damages the labor market. If the company moves to a
location with lower wages, there is no guarantee that the company
will be more obedient. In Subang with lower labor costs than
Jabodetabek, 1700 workers from Hansoll Hyun, Inc. were left behind by
the owner of the company. In
the same area, SJ Mode, Inc., thousands of workers are not paid
wages.

Relocation
is one of the explanations for the decreasing number of trade union
membership. In 2013, total factory-level unions reached 11,852 trade
unions with 3.4 million members. The number of trade unions and their
membership declined in August 2018 to 7,294 trade unions with 2.7
million members in August 2018.

***

Treated
inhumane workers against. In various locations, trade unions maintain
their honor and dignity as human beings. In Tangerang, Banten,
hundreds of women workers, shoe makers, Adidas and Mizuno, have been
struggling for more than 6 years for the responsibility of company
owners and brand owners. They held a weekly picket action in front of
the factory and reported their case to the International Labor
Organization (ILO) and the Organization for Economic Cooperation and
Development (OECD). Every day use social media to campaign for their
cases.

Since
the factory was closed in 2014, Jaba Garmindo Tangerang, Inc. workers
have been fighting for the responsibility of the brand owner, Uniqlo.
There are also Shinwoon Ebenener workers in Karawang, who have been
struggling for almost a year. Hansoll Labor Hyun Subang is still
questioning their rights.

Among
the stories of resistance to relocation are the ‘No
Chains’ or ‘No Chains’ movements of companies left behind and managed
by workers
.
‘No Chains’ is a labor solidarity network in Thailand, Argentina, the
Philippines, Indonesia and Hong Kong, which was formed in 2009. The
story from Argentina began in 2002, when factories were abandoned by
their owners, while politicians competed for power. The workers
discuss and decide to operate the factory. Operation of factories,
division of labor including payment of wages are discussed together.
They call themselves La Alameda. In Thailand it happened the same.
The garment factory was left behind by the owners, in 2002. They
decided to run the factory democratically. Factory without boss.
Laborers in Thailand call it Dignity Return.

Similar
practices have occurred in North Jakarta, in 2007. The factory was
left behind by the owner. Out of 1000 workers only survive 85
workers. In
two years the workers tried to manage the plant together
.

Regarding
the story of factory management in Thailand and Argentina can be seen
below:

Dignity
Return:

La
Alameda


***

It
is well known that garment factories, textiles and shoes have
experienced labor rights violations. However, in normal ‘normal’
conditions, workers are rarely willing to say the practice of
violating labor rights within the company. If
there is an unknown person or is suspected by the auditor, asking
about conditions in the workplace will try to be covered up
.
Everything is alright. In such conditions, trade unions have
difficulty inviting members to engage in discussion activities or
simply gather at the secretariat. On the other hand, in conditions of
being hit by cases, workers are usually not too difficult to gather,
even willing to visit the trade union secretariat.

In
‘normal’ conditions, union officials are challenged to think of
various methods of education and organization. Gathering difficulties
must be placed in the context of workload and work time. For this
reason the character of the trade union program must consider the
context. It is also necessary to consider the types of programs that
value family workers and women workers. Among the material worthy of
discussion is about managing the factory democratically.