Sewing the seeds of entrepreneurship

Since 1992, when a workplace accident left Annette Moreno without her right arm - and eventually, without a job - this onetime seamstress and business owner had been in and out of jobs, and mostly living on public assistance.

Then she heard that a few dozen seamstresses in this tiny border town were going to take themselves off welfare by setting up their own sewing business. Ms. Moreno said, "Let me in."

"It's been my experience that in order for something to happen, one has to make it happen," she says in the coffee room of AriSEWna, the new sewing cooperative she owns with other seamstresses and embroiderers. "One cannot wait for others to make it happen."

Of all the welfare-to-work schemes to come out of the four-year-old welfare reform act - which turned welfare from an entitlement into a five-year limited benefit - cooperatives like AriSEWna are certainly among the most innovative. While the typical former welfare recipient gets off assistance by taking a temporary job in the low-paying service sector, a smaller self-selective crowd go into business for itself.

Within this latter group, cooperatives, which blend the for-profit drive of Wall Street with the vaguely leftish notion of common ownership, are definitely the road less traveled. But co-ops may be a good fit for isolated, oft-abandoned communities like Douglas, where factories come and go with little thought for the workers left behind.

If past studies are any gauge, the outlook for small businesses started by former welfare recipients looks remarkably good, says Catherine Alter, dean of the Graduate School of Social Work at the University of Denver. "Their survival rate is much better than for small businesses in general," she says. "Seventy-five percent are still in business two years later."

That said, Dr. Alter, like many sociologists, doesn't see self-employment as a cookie-cutter solution for poverty. "The women and men who have the resources, educational or financial, to start a microenterprise are usually quite successful, but they are not the solution to poverty in the USA," she says. "It warms your heat to see women's success stories, but not everyone in poverty is an entrepreneur."

Risks worth taking

For the nine women and two men who currently work for, and own part of AriSEWna, the risks of starting a business from scratch are ominous, but apparently well worth taking. In order to gain a microbusiness loan from state and federal agencies, each co-owner had to pledge $5,000 of her or his own money. This gave the owners a stake in the business's success, but also a potential liability if it failed.

"It's a risk. If the business flops in the first year, they could end up owing some money," says Ginny Jordan of the Arizona Council for Economic Cooperation.

But while the co-op members may lack business experience and formal education - only two members graduated from high school - they have a combined 195 years of sewing experience. Many have worked for months at factories that quickly closed, without handing out a single paycheck. If anybody can make a sewing business work in this town, they tell a visitor, it's them.

"We're the masters of our destiny here," says Moreno, taking a taco break. "They're training us in a lot of areas, in business and resolving conflicts, and legal aid, and creating an employee handbook. Some of us are learning English at night."

Walk amid the purring machines of AriSEWna's small, well-lit factory, and you're likely to hear gossip and laughter. If someone's daughter is doing well in school, or a son is home sick, you'll hear about it.

There are also clear sparks of entrepreneurial genius. When schools in Douglas decided to switch to uniforms, co-op members eagerly pounced on this as a business opportunity.

When the local Roman Catholic church prepared to host religious relics from a famous French saint, members brainstormed for products they could sew and sell to the expected throngs of faithful Catholics. (Alas for the co-op, local officials sealed off the border, keeping the crowds to a very small, and unprofitable, level.)

Rave reviews from customers

Local customers, from city agencies to hospitals, rave about the quality of AriSEWna's work, and say they love supporting a locally owned business.

Shannon Harris, staff development coordinator for the Hacienda Rehabilitation Center in Sierra Vista, says the nurses and doctors at her center are quite pleased with the hospital scrubs they bought from AriSEWna. The quality of the workmanship is good, she says, and "if we can help a local company instead of someone out of state, we'll probably go local."

"Some people just like the fact they can go in there and get their scrubs embroidered within a half an hour," says Sue Middagh, director of social services at Southeast Arizona Medical Center in Douglas. "Besides, the sewing is excellent."

Sergio Garcia, manager of the Hispanic employee program at the US Department of Agriculture in Douglas, says he bought polo shirts for his employees there because "I wanted to support the idea of a co-op."

At one time, there was such a large sewing industry in Douglas that he could have bought similar polo shirts at four or five different factories. Now, he says, "I would probably have to go to Tucson."

Co-op members and advisors are highly optimistic that the new business can not only survive, but thrive. The key, says Connie Gastelum, general manager of AriSEWna, is the efforts of the owners themselves.

For instance, the owners are currently being paid an hourly rate as the business gets started. But as their productivity increases, seamstresses will be paid by the piece, which potentially could increase their earnings.

Still, everyone here knows that one fundamental fact remains true: As long as wages are cheaper in Mexico or China or Malaysia, the clothes will be cheaper as well. This fact alone is likely to keep AriSEWna from growing much larger than it is today.

"We're paying $7 an hour, which is great for Douglas, where most jobs pay $5.15," says Ms. Gastelum, a veteran floor manager at US and Mexican factories. But as owners now, they also know that their competitors make better profits by paying their workers less. "Everyone here knows that over in Mexico, they earn $5 a day."

(c) Copyright 2000. The Christian Science Publishing Society