Rags to riches: U.S. castoffs clothe world Business: The eighth largest U.S. export is now secondhand clothing, most of it sold in Third World countries

September 28, 1997|By Joe Mathews | Joe Mathews,SPECIAL TO THE SUN

Inside John Cross Sr.'s brownish-yellow warehouse in West Baltimore, 50,000 pounds of valuable product piles up at the loading dock every day.

On the second floor, Salvadoran employees sort through bright colored dresses. On the first floor, a woman picks through a barrel of blouses marked "sequined." Every once in a while, trucks will swing around back to pick up the factory's finished product -- carefully sorted bales of used clothing -- and launch them on a trip to faraway countries.

One of the nation's biggest export industries begins in the dark corners of closets, attics and basements in every city in the nation. It cuts a swath through out-of-the-way warehouses run by business people like Cross. It ends in small towns or black markets from Cambodia to Zimbabwe.

For the U.S. charities that drive this international trade -- from the Salvation Army to churches to veterans' groups -- used clothing has become big business.

"People like to think the clothing they donate to charity is going to the homeless person down the street, but most of it is actually being resold overseas," says Bill Dawson, a federal trade specialist. "And for the most part, that's a good thing. It's an

entree for American goods and culture into a lot of markets and cultures that are somewhat closed."

The trade has grown so rapidly that, according to Department of Commerce estimates, the United States sent $500 million in used clothing overseas last year, making old clothes America's eighth largest export, trailing auto parts and wheat.

"We are now the world's rag bowl," says T. J. Clemente, owner of a used clothing business in upper Manhattan.

But despite its size, used clothing is an unorthodox trade with unorthodox problems. The industry is dominated by nonprofit charities and privately held family businesses, which have escaped public scrutiny. Basic figures -- total sales, the number of companies, the number of pounds of clothing being sold -- are hard to come by.

Many key players in the business are reluctant to acknowledge their role. The Salvation Army, widely considered to be the world's largest single supplier of used clothing, doesn't inform the public of its practice of reselling clothes for overseas trade in brochures and other official publications available to donors. The army also refuses to release its figures on used clothing sales.

Goodwill Industries, considered a close second to the army in clothing collections, says the 187 individual Goodwills collected a combined 900 million pounds of used clothing last year.

Half of that clothing was sold in Goodwill thrift stores. The other half -- the unsorted thrift store dregs known in the industry as "raw material" -- is resold to companies who sort the clothing and export it. Total revenue for this resale is $50 million, or about 10 percent of the money Goodwill needs to operate its job training and employment programs.

"We get everything from Gucci to near garbage, and we find a home for it," says Dave Barringer, director of brand management for Goodwill.

The industry is not without controversy. The growth of the exports and the tripling of the price of raw material, from 6 to 18 cents per pound, in 24 months have raised concerns about the unexamined influence of the charities that are the source of the used clothing.

Among those concerns are charges that some charities have cost American workers their jobs by sending the labor-intensive sorting work overseas. And Third World countries are concerned that used clothing exports hurt their own fledgling textile industries.

When charities such as the Salvation Army or Goodwill Industries accept clothing donations, they try to sell as much as possible in their thrift stores. But what can't be sold to the American public -- estimated at nearly half of what is received -- is resold to companies that export it.

Some of these exporters are used clothing brokers who arrange the transfer of raw material from the charities directly to customers in foreign markets. But many exporters are companies known as graders, which perform an essential step prior to export. They sort -- or "grade" -- the raw material by color, quality and style.

Grading is labor-intensive work: the nation's estimated 300 graders employ more than 10,000 people. And the trade has environmental benefits, salvaging more than 2.5 billion pounds of clothing each year that would otherwise end up in landfills.

Graders and brokers typically sell the clothing they buy from charities to customers in the Third World.

Some of these customers own retail stores; others resell the clothing yet again, creating a chain of clothes exchanges extending from the docks of the Third World's biggest cities to the markets of its smallest villages. The bulk of clothing exported from America ends up on the backs of people in Africa and Southeast Asia.

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