In recent years, the sector in Guatemala has lost nearly 30,000 jobs, because the high costs resulting from having one of the highest minimum wages in the region, makes it more profitable only to export raw materials, rather than making them in the country.
Vestex figures show that in recent years several jobs have been lost in the sector, given that between 2006 and 2018 the industry lost a considerable number of jobs, going from 82,109 to 53,636 places, equivalent to a 35% decrease.
Because there is still no regulation for part-time employment in Guatemala, textile businessmen estimate that the country loses between 40 and 70 thousand jobs.
For representatives of the Costume and Textile Commission (Vestex), the high operating and labor costs in Guatemala cause businessmen to send cut pieces to Honduras, El Salvador and Nicaragua to be assembled.
From May 14 to 16 in Guatemala, textile exporters from the region will meet with international buyers at Apparel Sourcing Show, to explore business opportunities.
The objective of the event is to allow all members of the Central American industry value chain to expose their capabilities to buyers and promote the integration of the supply chain.
The amendment relates to technical details regarding the rules of origin related to spandex or lycra fabrics, thread, and pajama pants.
A package containing technical changes to the rules of origin for textiles was ratified by the House of Representatives of the United States.
According to an article in Prensalibre.com Alejandro Ceballos, a member of the board of the Committee on Textiles and Clothing (Vestex) of Guatemala, said: "Spandex used in garments used to have to be native to the region, but this has now been relaxed and it can be obtained from other countries so as to make the article of clothing here."
Aggressive measures must be taken in marketing and attracting investment in order to exploit the possibilities opened by the DR-CAFTA and changes in the global market.
From Diario de Centro América:
The CAFTA-DR region has opportunities for growth
The clothing and textile sector of the country is ready to compete globally.
Opportunities in the region provided by the Free Trade Agreement between Central America, Dominican Republic and the U.S.
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%.
The lower labor costs offered by China are no longer such, due to the 22% increase in the minimum wage for workers.
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.
Guatemala's textile industry is changing from exporter of finished products to one that provides raw materials to manufacturers in other Central American countries.
The migration of maquila companies to Nicaragua, El Salvador and Honduras has generated an increased demand for industrial fabric and textile materials transforming the Guatemalan textile industry.
Textile and apparel production is threatened by the lack of threads, cotton and canvas.
Since the beginning of the year, the textile industry has experienced a shortage of raw materials. The situation worsened in the last month, causing delays for exporting and reduced supply for the domestic market.
Prensalibre.com published comments by several textile businessmen, who commented that prices are going up between 5% and 15% due to shortages in raw materials.
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. free trade agreement, as production costs are lower in Asian countries, because of lower social costs and cheaper energy.
Exports by the textile and manufacturing sector have been in the reporting in the red for the last four years in Guatemala.
Based on business reports from the sector, the main reasons is the incursion of China in the world market for these products since 2005, and the economic crisis that is affecting the United States.
Central Bank figures show that last year that had an increase in the external sale of clothing was 2004.