Against the backdrop of an imbalance in trade and restrictions decreed in several markets around the world, Central American companies in the garment business are operating and generating export earnings at levels that merely allow them to subsist.
Data from the Office of Textiles and Apparel, of the U.S. International Trade Administration, say that between the first half of 2019 and the same period in 2020, Central American textile exports to the U.S. decreased by 34%, from $ 17,593 million to $ 11,553 million.
According to businessmen in the country's textile sector, as a result of the covid-19 pandemic, a reduction in work orders is expected during the second half of the year.
Representatives of the Nicaraguan Association of the Textile and Clothing Industry (Anitec), predict that with the closure of the stores of several of their clients, sales will be reduced considerably and inventory levels will increase.
The American Aalfs Uno, which operated in the municipality of Sébaco, in Matagalpa, closed its operations in the country due to a reduction in the number of contracts.
The closure of the company was made official by directors of the Nicaraguan Association of Textiles and Apparel Industry (Anitec), who say it is the first company in the U.S. capital sector to close in the country.
Despite global threats, such as the possibility of a global economic slowdown, businessmen in the sector are confident that their sales will continue to rise.
Companies operating under the free zone regime in the country, estimate that their sales abroad during 2019 amounted to about $ 1.7 billion, an amount that exceeds by 5% what was recorded in 2018.
The sector expects to close the year with a decline in the value of exports due to low international prices, but with an increase of about 10% in total production.
Textile entrepreneurs estimate that they may end the year withclose to the planned target of 500 million square meters of production, but below the $1.5 billion in export value.
Despite the challenges facing the Central American textile industry with the coming into force of the TPP and Asian competition, projections are that there will be growth of 8% in 2016.
The main reason is the decision of the US government to extend for ten years the tariff advantages enjoyed by Nicaraguan exports to the northern country, supporting them against the entry into force of the Trans-Pacific Economic Partnership Agreement (TPP).
Under new management and Honduran capital, the textile plant in Nicaragua will resume operations in the next few weeks.
The information was confirmed by Dean Garcia, executive director of the Nicaraguan Association of the Textile and Apparel Industry (Anitec). "We are in coordination with representatives who bought the company and we are looking to see if it is likely that operations will start before the end of this month", he said.
Millknit Industries will begin operations in early 2013, producing fabrics for clothing companies established in the free zones.
Following the closure of Core Denim in 2009, Nicaragua has had no cloth production, which is a disadvantage for the clothing sector, which has to import its raw materials.
Laprensa.com reports that "Millknit will operate in the industrial park Las Mercedes, Managua, it is funded with North American capital and the initial investment is for $25 million, according to the National Free Zone Commission (CNZF). The initial projections for jobs is 270 positions."
European investors are to acquire the Cone Denim Plant in Nicaragua, which has been closed for 3 years and could reopen in late 2012.
"It is a fact that this year the Cone Denim plant will be reopened. We're just waiting for the (purchase) negotiations to be completed," confirmed Dean Garcia, executive director of the Nicaraguan Association of Textile and Apparel Companies (Anitec), according to Laprensa.com.ni.
The country is planning two trade missions for next year to publicize its advantages as an investment destination.
The executive director of the Investment and Promotion Agency ProNicaragua, Javier Chamorro said that goal during the missions is to visit garment factories.
"The intention is to build on the brands and retailers who "are moving their production to Central America", due to increased production costs in China, which range from the question of salaries to the rising cost of transportation", explained an article in La Prensa.com.ni
During the course of the year, the U.S. textile company will restart operations in the country.
The start-up would initially create 700 new jobs.
"The secretary of the National Free Zone Commission (CNZF), Alvaro Baltodano, and executive director of the Nicaraguan Association of Textiles and Apparel (Anitec), Dean Garcia, confirmed to the press that the reopening of the company is underway and will become official in the coming weeks,” according to an article at Laprensa.com.ni.
The arrival of new textile plants, the expansion of three plants and the reopening of another were announced by the textile sector.
With an investment of $ 50 to $ 60 million, the National Commission of Free Zones (CNZF) is negotiating the installation of a new textile factory with a foreign capital group.
Dean García Foster, executive director of the Nicaraguan Association of Textiles and Apparel (Anitec), said three textile companies have confirmed their expansion plans, which involves an estimated investment of $ 20 million.