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Los Angeles Group Seeks to Run Profitable Sweatshop-Free Apparel Firm

Across the United States, discount stores offer clothing at rock-bottom prices. They can do that and still make a profit because these shirts and dresses and pants are made in foreign factories where workers are paid as little as possible. Labor activists have been fighting to shut down these sweatshops by publicizing the low wages and poor working conditions.

The word sweatshops conjures up the image of a dimly lit space, the air thick with lint, the floor packed with people working 15 hour days, barred from bathroom breaks, barred from organizing to raise their living standards.

That's a far cry from the bright and airy TeamX factory in downtown Los Angeles. And the fact that it's a union shop makes Team-X even more of a rarity in the apparel industry, but that was the idea: to prove that profit doesn't have to come at the expense of the people who make the clothes. Textile workers traditionally occupy the bottom of the economic heap, proven easy to exploit both here in the United States and abroad. That caught the attention of Ben Cohn, whose brand of socially conscious capitalism flavored Ben & Jerry's ice cream: the company supported non-profit causes, opposed nuclear power, published left-wing political positions on their ice cream cartons, and used suppliers they simply believed in, like Vermont dairy farmers.

Since selling the company three years ago, Ben Cohn has been running two venture capital funds focused on promoting much the same brand of values in other start-ups. TeamX, led by Chris Mackin, was one of the first projects.

"I can't tell you the number of university student tours that have gone on here, because people want to come and see," he said. "Is this for real?"

From its start, a little over a year ago, the apparel maker has depended largely on labor and human rights activists to help land contracts. For example, university students willing to pressure their schools to guarantee their private-label clothes are not made in sweatshop-like environments.

"You know, they want to kick the tires," Mr. Mackin said. "They want to touch and feel and talk to the union stewards and so forth, and that is absolutely consistent with what we're trying to do. We're trying to break down the walls, you know, and the ignorance that consumers don't know where their stuff comes from."

TeamX still gets most of its orders from labor unions, and the occasional non-profit. But you don't have to be overtly political to wear the TeamX brand label, Sweat X.

Take the rock band Foo Fighters. Guitarist Chris Shiflett lobbied his band mates to sell at least one sweat-free t-shirt at their concerts. But he worried a political message might be lost on fans without the proper set-up.

"You know, if kids look at the label and they see SweatX, maybe they wouldn't necessarily get the point," he said.

He said they put a message on the back that said something like "This T-shirt was made in a sweatshop free, employee-owned and unionized garment factory." And then it has the Foo Fighters emblem, "Unite! the union, and SweatX."

The Foo Fighters are one of a growing roster of customers, but a few million dollars into the venture, TeamX has yet to meet a number of its stated goals, like inspiring converts to its way of doing business. For one thing, the start-up has yet to make a profit. TeamX pays its workers an average of $11 an hour, plus benefits, more than twice the U.S. minimum wage. Compare that to Chinese contractors who typically pay less than 50 cents an hour.

"There is no bottom if you're running after cheap labor," said Ilse Metchek, head of the California Fashion Association, an industry trade group.

"Who can make the cheapest T-shirt? Who can make the cheapest sheet? Who can make the cheapest anything? Then, it's not even China. After that, there's Bangladesh, and after that, there'll be another country," she said.

TeamX is also struggling to make good on its promise of employee ownership. CEO Chris Mackin says the company is waiting until it has three straight months in the black before inviting rank-and-file workers to share the risk. To that end, TeamX is considering something labor activists may find surprising: a foreign subcontractor.

"If we can work out a kind of an ethical, cross-border partnership, ideally with another unionized cooperative in one of these countries, and serve the same purpose, that would be fine. It hasn't been done yet, but we're exploring it," he said.

Mr. Mackin has just returned from a unionized plant in El Salvador. He's considering outsourcing TeamX T-shirts, a low-profit margin item. The workers in Los Angeles would keep their jobs, making the more profitable polo shirts and fleece blankets. If the strategy works, it just might make TeamX a more viable economic role model for other companies to emulate.