Transnational Clothing Factories Return to Central America

The lower labor costs offered by China are no longer such, due to the 22% increase in the minimum wage for workers.

Tuesday, January 3, 2012

There are positive expectations for the maquila and textile sectors in Central America regarding the return of companies who had migrated to China because of the lower labor costs.

With the disappearance of this advantage, Central America is once again among the best options for multinationals, having as an advantage its proximity to the U.S., which reduces transportation costs and delivery times.

An article in reports that "The domestic textile industry will be the fabric supplier for the Adidas brand after the company announced the installation of a factory in El Salvador. According to the president of the Commission for Clothing and Textiles (Vestex) of the Guatemalan Association of Exporters (Agexport), Carlos Arias, the return of several companies to Central America is creating positive expectations for the sector, as it will mean an increase in the distribution of fabrics in neighboring countries. Arias said that the Adidas investment is important for the region, as Guatemala produces textiles which are used in sportswear made in El Salvador."

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JC Penney May Buy More from Central America

May 2012

The rising costs in China have caused companies like this north American firm to look once again towards the isthmus to buy their clothing.

Carlos Arias, president of the Committee on Textiles and Clothing (Vestex) of Guatemala, said during a forum at the latest Apparel Sourcing Show 2012, that JC Penney have indicated that their purchases from the isthmus will rise by 30%.

Asian Textiles Tariff-Free in U.S.

July 2009

A group of Democratic senators proposed a law to eliminate tariffs on textile products from 14 Asian countries.

Textile imports from those countries currently pay up to 28% when entering the United States.

Should the proposal be approved, a very likely scenario, the Central American countries would lose the trade advantage obtained with the U.S.