Uncertainty over a possible second wave of covid-19 cases globally will prevent Salvadoran textile industry exports from recovering for the rest of 2020.
Official data show that from January to May 2020, El Salvador's exports in the textile and clothing sector amounted to $619 million, an amount that is 42% lower than the $1,072 million registered in the same period in 2019.
Following the spread of the virus globally and the suspension of some production in China, several garment companies in the region have reported increases in their orders.
The spread of the epidemic has stopped much of the economic activity of the Asian giant, which is the largest exporter of textiles in the world. This situation has forced buyers to look for alternatives.
Businessmen from the textile sector of El Salvador foresee that the entry into force of the agreement will increase opportunities to attract new investment from the Asian country.
The textile workers believe that the opportunities will not only be to export to the Asian country, since it is also possible to attract investment for the sector, because Korean companies have a large amount of raw material.
After two years of non-operation, El Salvador's government and business associations agreed to reactivate the institution dedicated to decision-making on customs matters and trade agreements.
The private sector was represented by the Presidents and Executive Directors of the guilds ASI, COEXPORT, CAMARASAL, CAMAGRO, AMCHAM, CAMTEX and ADES, which are part of the Inter-union Commission for Trade Facilitation (CIFACIL) and participate with voice and vote within the Committee, informed the Salvadoran government.
The sector's union says that the strategy focused on producing fabrics and yarns for export is already paying off, and they intend to continue in order to become the region's main supplier.
According to the Chamber of the Textile, Clothing and Free Trade Zone (Camtex), exports of raw materials from El Salvador have grown considerably in the last two years, as between 2016 and 2017 sales increased from $60,000 to $1.2 million.
According to the textile industry union, half of the $2.6 billion exported in 2017 corresponded to pullover sweaters, cotton t-shirts, cotton briefs, synthetic fiber t-shirts and synthetic socks.
The Chamber of Textile, Clothing and Free Trade Zones of El Salvador (Camtex) reported that in 2017 the sector exported $2.617 million worth of clothes, $95 million more than was reported in 2016, which is equivalent to an interannual increase of 3.8%.
The textile guild has stated that 2017 closed with $2.6 billion in exports and an increase of almost 4%, and for this year it plans to achieve similar growth.
The Chamber of the Textile, Clothing and Free Trade Zone (Camtex) exported $2.617 billion during the past year, $95 million more than the value of exports registered in the previous year.
Salvadoran textile companies state that the costs of labor, security and delivery times have made the sector's operations more expensive.
The recentincrease in the minimum wageis one of the factors that has had a direct impact on the cost structure of Salvadoran textile companies. Added to this are logistical difficulties in customs offices, which have caused companies from neighboring countries to obtain contracts that were originally planned for El Salvador.
Salvadoran textile companies report that between January and October exports of textiles and clothing grew by 3%, but the maquila sector went down by almost 9% compared to the same period in 2016.
Patricia Figueroa, executive director of the Chamber of the Textile, Clothing and Free Trade Zone (Camtex), explained to Laprensagrafica.com that"...
Developing e-commerce strategies and raising the final value of the products are some of the goals that the trade union of medium-term textile companies aims to achieve.
The Vision 2030 plan by the Chamber of Textile, Clothing and Free Trade Zones of El Salvador (Camtex), has ten goals that the industry aims to achieve in order to raise competitiveness and the development of the activity in the future.
The Textile Industry Association reported a reduction of almost $17 million in value exported in the first quarter of the year, compared to the same period in the previous year.
Figures from the Chamber of Textile, Apparel and Free Trade Zones (Camtex) indicate that exports from January to April totaled $816 million, down from $833 million exported in the same period in 2016.
The Salvadoran union has stated that excessive bureaucracy and high production costs are the main factors that could be encouraging some textile mills to reduce operations in the country.
José Antonio Escobar, president of the Chamber of the Textile Industry, Clothing and Free Zones of El Salvador (Camtex) told Elsalvador.com that one of the companies that has shut down part of its operations, to transfer them to another country, is Fruit of the Loom.Escobar said"...'In the plant owned by Fruit of the Loom in the industrial park American Park, where a thousand people work, the company will make a reduction of about 850 positions'."
To compensate for the loss of market which is expected once the Transpacific Agreement takes effect, the textile industry intends to resume FTA negotiations with the northern country.
A free trade agreement with Canada would allow the exporting textile companies to enter a market with high potential, since according to theexecutive director of Camtex, Patricia Figueroa, the country imports more than $14,000 million a year in textiles products and confection of synthetics such and towels, carpets, curtains and tablecloths. "
A meeting is being convened for the textile and clothing industry on March 16 in El Salvador, where the overall situation in the sector will be discussed.
From a statement issued by Proesa:
El Salvador is preparing for the third edition of the Forum of Textiles and Apparel (FOROTEX) 2016, a space where high-level international speakers present trends and strategies for competing in international markets.
In the first half of the year sales of textiles and clothing totaled $1.247 billion, with a noteworthy annual increase of 21% in exports of textiles.
Data from the Chamber of Textiles, Clothing and Free Zones of El Salvador (Camtex) indicates that "... textile exports totaled $155 million, 21% more than in the first half of 2014, while ready-made apparel reached $1.092 million, up 5%. "