European Textile Production Subcontracting and the Transformation of Apparel Factories in Yugoslavia and Morocco
By Goran Musić
The effects that the emergence of “fast fashion” and textile production subcontracting have had on gendered labor in the European periphery is a relatively well researched topic in recent years. Using the frameworks of global value chains/production network analysis, as well as anthropological approaches, academic researchers and NGO activists reveal the exploitative working conditions experienced by many female textile workers employed on finishing operations for multinational companies.[i] While authors acknowledge that the roots of these work regimes were established already during the final three decades of the last century, there is a lack of historical perspectives explaining how these labor relations originally gained ground inside protectionist and planned economies during the Cold War.
The proliferation of international trade and production outsourcing in the course of the 1970s and 1980s enabled (semi-)periphery economies to pursue previously unthinkable development strategies. With production split into different phases organized in various international locations, developing countries could integrate into emerging global production networks with the aim of obtaining new technologies and upgrading domestic industries. The apparel industry was the pioneering field for setting up delocalized value chains. Due to relatively low costs of establishing new production facilities, the clothing industry became the preferred entry point into the global production chains for Asian countries, such as Hong Kong, South Korea and Taiwan, dedicated to export-oriented industrialization in the late 1960s and throughout the 1970s.[ii]
The apparent success of export-led industrialization in East Asia caught the attention of developing countries around the globe. Considered less essential to the development of national economies than heavy industries, apparel and footwear production often served as testing grounds for new industrial policies of regimes hitherto dedicated to import substitution industrialization and relatively autarchic economic development. In the case of Eastern Europe and Northern Africa, the main mechanism for the spread of subcontracting in textile production during the 1980s was the so-called Outward Processing Trade (OPT) facilitated by the European Economic Community (EEC).
EEC and Outward Processing Trade
In the high years of the post-World War II economic boom, Western European economies typically relied more on the import of cheap labor within their own borders than exporting technology and intermediary products for assembly to low-wage countries. During the economic slowdown of the 1970s however, the largest producers were forced to revise this strategy because of the rising unemployment at home and increasing competitiveness on the world market. In the course of the 1980s, the EEC started implementing the so-called outward processing relief arrangements as a way of protecting domestic high value-added production, while tapping into the lower labor costs of countries on its periphery.[iii]
OPT implied “temporary export” of raw materials and intermediary products for further processing or assembly outside of the EEC and the subsequent return of the enhanced value products with partial or total relief from import duties. In other words, EEC companies were encouraged to search for subcontractors abroad and provide them with materials and blueprints for production. In return, the subcontractors were obliged to deliver the required quantities, meet the quality standards and respect the deadlines. Unlike the United States, which used production sharing schemes primarily for semi-conductors, office machines and automobile components, in the European case it was the clothing industry that fully embraced this new trend by the mid-1980s.[iv]
Faced with rival producers from East Asia, West German textile producers pioneered this practice already in the 1970s and evolved into the main users of the EEC’s production sharing scheme in the following decade.[v] The vast majority of West German subcontractors were located in Eastern Europe. In the early 1980s, it was the Yugoslav textile companies who positioned themselves as the main clients for German production sharing, due to their geographic proximity, trained workforce, relatively low wages and well-established connections with the capitalist economies.[vi]
On the European southern periphery, between 1984 and 1987, when Spain and Portugal intensified their EEC joining process, the broader Mediterranean became the second most important assembly and producing region for Western European entrepreneurs after Eastern Europe. In this case it was French textile companies extending most OPT agreements (Admissions Temporaires), primarily to Tunisia and Morocco, thus taking advantage of their colonial legacy and the common language to create its own regional production sharing network.
Textile subcontracting production in Yugoslavia and Morocco
The socialist textile companies in Eastern Europe were usually vertically integrated conglomerates encompassing all stages of textile production from the making of fiber and yarn, spinning and weaving, and design, to sewing and sales. While the Yugoslav textile industry was somewhat of an exception with many apparel producers buying fabrics in the open market and focusing on the higher production stages, the backbone of the industry was, however, made up of large producers with in-house weaving and spinning facilities. Another curiosity in the Yugoslav industry was the existence of workers’ self-management, which guaranteed the entire workforce a right to vote on the main business decisions and control over the work process. By the late 1980s, the Yugoslav textile industry employed 474,000 workers or some 17 percent of all workers in the industry, selling on the domestic market, but also successfully exporting its own brands to Comecon and developing countries’ markets.[vii]
The spread of OPT in the Yugoslav textile industry in the mid-1980s was tightly related to the debt crisis in the developing world that caused a fall in export, difficulty in procuring quality raw materials and the pressure to accumulate hard currency. It was in this context that the Yugoslav textile factories started repositioning themselves from classic exports to sewing and finishing operations for larger West European companies. The main attraction of this business practice, colloquially known as “lon”, was its apparent predictability. The Western contractor made sure the local finishing factory acquired raw materials and supplied all the necessary components. The local producers were able to secure export in advance and utilize the capacities previously made idle by the crisis.
After gaining independence from France in 1956, Morocco started orienting toward import substitution industrialization models during the 1960s and 1970s, favoring protection of established industrialist families who conducted business in tight coordination with the royal court and the political elites. The Moroccan state thus nurtured a layer of domestic entrepreneurs focused on the production of thread and cloth protected from imports through high duties. The textile sector was self-sufficient, characterized by large-scale private industrialists concentrated in lower stages of production and the underdeveloped production of ready-to-wear garments. The strategy of sovereign and politically controlled industrialization went hand in hand with extensive patronage networks between the state, industrialists, and organized labor.[viii]
As in the case of Yugoslavia, the initial impulse for the liberalization of industrial policies in Morocco was the second oil shock and increasing foreign debt in the early 1980s. Foreign ownerships restrictions were slowly lifted, and multinational companies guaranteed profit repatriation rights by the mid-1980s under the tutelage of the international creditors. The change in Moroccan state legislature combined with the pro-active search of French textile manufacturers for foreign partners paved the way for the creation of a series of new companies specialized in subcontracting agreements, sewing of apparel goods and export.[ix] As a result, the textile production almost tripled between 1983 and 1990, whereas textile exports increased by 358 percent during the same period. In the early 1990s Morocco’s garment factories employed 95,000 people, approximately a quarter of the country’s total industrial workforce.[x]
New Subjectivities and Work Regimes
In the case of the protectionist and planned economies in North Africa and Eastern Europe, the introduction of export-led growth was coupled with great economic and political challenges. A shift in the development paradigm demanded not only novel trade and industrial policies but the breaking of social contracts that postcolonial and socialist regimes had established with labor. The Yugoslav path to socialism was based on the notion of workers controlling their own workplaces through workers’ councils, which took decisions on all major business decisions.[xi] Labor also played a significant role in the decolonization movements and trade unions excreted strong influence inside the textile industry in Morocco.[xii]
The orientation toward processing trade transformed local textile industries in terms of the structure of production facilities and their spatial distribution. In Yugoslavia, the government tried to use the foreign demand for “lon” service to tackle the growing unemployment. New garment factories were established in underdeveloped regions, but the established producers also started employing new workers and setting up units specialized for finishing sewing services on order. In Morocco the spur of garment export changed the makeup of the entrepreneurial class. In contrast to the traditional, capital intensive factories specialized in the production of fibers and cloth, the founding of smaller garment factories did not demand great capital investments, enabling many middle-class professionals and entrepreneurs from non-elite backgrounds to enter the textile business. This was followed by the relocation of factories from the traditional manufacturing centers, such as Fez, to the newly established industrial zones along the coastal region, positioned closer to the European market.
It was the young female workers who were the main protagonists of these industrial transformations on the ground in both countries. The Yugoslav textile factories traditionally employed a female workforce. Yet, frantic production pace and irregular working hours on the “lon” orders made the management transfer mostly younger workers without children to the specialized export units. In Morocco, spinning and weaving, but also the sewing of garments behind machines, was traditionally a man’s job. The emerging smaller workshops along the coast, contracting Admissions Temporaires, radically changed the structure of the local labor market by employing low-skilled young women from working class families.
My preliminary study of a self-managed Yugoslav textile factory Textind[xiii], located in the Serbian northern province of Vojvodina, shows how the spread of OPT challenged enterprise unity and exacerbated the underlining generational and political gap among the workers. Strictly applying the chief principle of workers’ self-management, according to which workers were supposed to control all the income they created, a cleavage emerged between the factory units specialized in “lon”, attracting hard currency, and employing mostly younger workers, and other parts of the enterprise dedicated to domestic market and traditional exports. The “lon” workers considered it unfair to redistribute the income earned through cooperation with Western contractors to other, less profitable parts of the enterprise. This was followed by rising frustration about the inability of the ruling communist party to conduct more decisive market reforms and “catch up” with the latest global production trends.[xiv]
In Morocco, the liberalization of industrial policies implied a significant loss of socio-economic security for workers and the curbing of trade union prerogatives inside the factories. The bread riots in 1981 and 1984, as well as the general strike for higher wages and the social unrest that broke out across the country in 1990, were testaments to these rising social frictions.[xv] Yet, as the ethnographic research of young female textile workers in the city of Fez, conducted in the 1980s and 1990s, shows, the patriarchal managerial culture and workers’ prolonged attachment to traditional family structures prevented the rise of overt political subjectivities inside the new textile factories. As young female workers sent to factories by their families to earn additional family income before marriage, they were not seen as “proper workers” by the male workers or society at large. Their employment in apparel factories was rather seen as a side activity, generating income for frivolous consumerism. These women thus never truly entered the public sphere and did not assert themselves as full-fledged members of Morocco’s working class in those years.[xvi]
A more detailed comparative research of labor transformations on the factory level in the Balkans and Maghreb during the final three decades of the last century could give us an insight into different ways in which internal cleavages in local labor markets, and in terms of gender, skill, religion or geographical position, contributed to formations of new class alliances and ruptures of old social contracts within socialist and postcolonial states.
[i] See: Bonfiglioli, Chiara, “Gender, Labour and Precarity in the South East European Periphery: The Case of Textile Workers in Štip,” Contemporary Southeastern Europe, 1, 2 (2014), pp. 7‒23; Musiolek, Bettina, “Tools for Enforcing Labour Rights and Ensuring Corporate Social Responsibility in the Garment Sector: The South-East European Context,” SEER- South-East Europe Review for Labour and Social Affairs 3, 3 (2000), 123‒35; Plank, Leonhard, Cornelia Staritz and Karin Lukas, “Labour Rights in Global Production Networks: An Analysis of the Apparel and Electronics Sector in Romania,” Kammer für Arbeiter und Angestellte für Wien (2009); and Rossi, Arianna, “Does Economic Upgrading Lead to Social Upgrading in Global Production Networks? Evidence from Morocco,” World Development, 46, (2013), pp. 223–233.
[ii] Cammet, Melani, “Development and the Changing Dynamics of Global Production: Global Value Chains and Local Clusters in Apparel Manufacturing,” Competition & Change, Vol. 10, No. 1, (March 2006), pp. 29–30.
[iii] Textiles Intelligence, Internationalisation of European Textiles and Clothing Production: Eastern Europe and North Africa, Special Report No. 2643. (Brussels/London, 1997).
[iv] United States International Trade Commission, Production Sharing: U.S. Imports Under harmonized Tariff Schedule Subheadings 9802.00.60 and 9802.00.80, 1985-1988 (Washington DC: USITC, 1989), p. 9.
[v] Fröbel, Folker, Jurgen Heinrichs and Otto Kreye, Die Neue Internationale Arbeitsteilung: Strukturelle Arbeitslosigkeit in den Industrieländern und die Industrialisierung der Entwicklungsländer (Hamburg: Rowohlt, 1977), pp. 114–151.
[vi] The other main destinations for subcontracting in Eastern Europe were Hungary, Romania and Poland, together accounting for 47 percent of the total EEC production sharing imports from Eastern Europe, see: United States International Trade Commission, Production Sharing, p. 9–17.
[vii] Čulahović, Besim, “The Yugoslav Garment and Textile Industry,” Yugoslav Survey: A Record of Facts and Information, XXXI, 2 (1990), p. 75.
[viii] Cammet, Melani, “Business–Government Relations and Industrial Change: The Politics of Upgrading in Morocco and Tunisia,” World Development Vol. 35, No. 11 (2007), pp. 1889–1903.
[ix] Cammet, Melani, Globalization and Business Politics in Arab North Africa: A Comparative Perspective (Cambridge University Press, 2009), pp. 25–52.
[x] Cairoli, Laetitia, “Garment Factory Workers in the City of Fez,” Middle East Journal, Vol. 53, No. 1 (Winter, 1999), pp. 28–43.
[xi] Musić, Goran, “Yugoslavia: Workers’ Self-Management as State Paradigm,” in Immanuel Ness and Dario Azzellini (eds.), Ours to Master and to Own: Workers control from the commune to the present (Chicago: Haymarket books, 2011), pp. 172‒191.
[xii] Hahn Tina & Georgeta Vidican Auktor, “Industrial Policy in Morocco and its Potential Contribution to a New Social Contract,” Deutsches Institut für Entwicklungspolitik Discussion Paper 31 (2018), pp. 3–5.
[xiii] This research was conducted together with Rory Archer in the frame of the Austrian Science Fund (FWF) project: Between class and nation: Working class communities in 1980s Serbia and Montenegro (see: https://yulabour.wordpress.com). No archival research has been conducted in Morocco at this point. The pictures provided in the text thus depict only Yugoslav factories.
[xiv] Musić, Goran, “Outward Processing Production and the Yugoslav Self-Managed Textile Industry in the 1980s,” in Andrea Komlosy and Goran Musić (eds.), Global Commodity Chains and Labor Relations (Leiden: Brill, 2021), pp. 251–273
[xv] See: https://nvdatabase.swarthmore.edu/content/moroccans-general-strike-higher-wages-1990.
[xvi] See: Cairoli, Laetitia, “Factory as Home and Family: Female Workers in the Moroccan Garment Industry,” Human Organization, Vol. 57, No. 2 (Summer 1998), pp. 181–189; Cairoli, Laetitia, “Garment Factory Workers in the City of Fez”, Middle East Journal, Vol. 53, No. 1 (Winter, 1999), pp. 28–43; and Joekes, Susan, “Working for Lipstick? Male and Female Labour in the Clothing Industry in Morocco,” in H. Afshar (ed.), Women, Work and Ideology in the Third World. (London: Tavistock Publications, 1985), pp. 183–214.
Goran Musić is a Fellow at the Research Platform for the Study of Transformations and Eastern Europe, University of Vienna. He is the author of Making and Breaking the Yugoslav Working Class: A Story of Two Self-Managed Factories (CEU Press, 2021). The book tells the story of industrial labor in socialist Yugoslavia, looking into the altering ways in which blue-collar workers understood the recurring cycles of crisis and reform of workers’ self-management, the changing nature of the relationship between different occupational groups inside the factories, and the interplay between class and national identities.
Further articles in the Factory Reloaded series on TRAFO:
Görkem Akgöz, Malak Labib, and Nurçin İleri, Factory Reloaded: Transregional Perspectives on the Industrial Workplace, 18 February 2021.
Görkem Akgöz, Spaces of National-Industrial Modernity: Factories and Factory Women in Early Republican Turkey, 5 March 2021.
André Weißenfels, Middle Class Factory: The (partial) Privilege of industrial Labor in Tunisia, 19 March 2021.
Rick Halpern, “The Pictures Are the Thing”: Farm Security Administration Photographers Document the American Factory in the Depression Era, 30 March 2021.
Josefine Carla Hoffmann, Training as a Gatekeeper at the Indo-German Factory, 16 April 2021.
Malak Labib, Re-shaping the “Socialist Factory” in Egypt in the Late 1960s–1970s, 30 April 2021.
Nurçin İleri, Nationalism on the Shop Floor: The Silahtarağa Electric Power Plant in the Early 1920s, 18 May 2021.
Nico Pizzolato, Disassembling Fordism from the Inside: Transnational Radicals in Detroit and Turin in the 1960s, 28 May 2021.
Citation: Goran Musić, European Textile Production Subcontracting and the Transformation of Apparel Factories in Yugoslavia and Morocco, in: TRAFO – Blog for Transregional Research, 11.06.2021, http://trafo.hypotheses.org/29369.
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