In order to reduce costs and take advantage of the country's geographical location, executives of the clothing manufacturing company confirmed that they will move two plants currently located in the US and Spain to Guatemala.
The announcement of the transfer of the factories' operations was made by Manuel Martos, representative of Nextil Group, in the context of the forum "Strengthening Regional Value Chains for Economic and Social Reactivation", organized by the Inter-American Development Bank (IDB) and the Government of Guatemala.
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.
In the first four months of the year, Dominican exports of ready-made fabrics to the United States totaled nearly $240 million, 9% more than the same period in 2018.
This economic growth in the textile sector was influenced by exports of cotton T-shirts for men and boys, with a 29.7% increase, coats for women with 115% and synthetic fiber pants with 22.05%, reported the National Council of Export Processing Zones (CNZFE).
The use of nanotechnology in production processes is one of the investments that companies in the textile industry will have to make to compete at a global level.
According to specialists in nanotechnology, an area focused on the design and manipulation of matter at the level of atoms or molecules for industrial purposes, in the production processes several advanced techniques exist that give industry the opportunity to innovate and access new markets.
During the first six months of the year, imports of yarns and textile supplies in Central America totaled $264 million, registering a 3% decrease over the same period in 2017.
Figures from the information system on the Central American Market for Yarns and Textiles materials, compiled by the Trade Intelligence Unit at CentralAmericaData: [GRAFICA caption="Click to interact with graphic"]
In the first quarter of the year, imports of yarns and textile supplies in Central America totaled $127 million, registering a 10% drop compared to the same period in 2017.
Figures from the Information System on the Textiles and Textile Supplies Market in Central America, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with graph"]
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.
Within the framework of the Apparel Sourcing Show, a delegation of Chinese textile entrepreneurs will be visiting the country in May, to explore business opportunities in the sector.
The Apparel Sourcing Show event will be held from May 23 to 25 at the Grand Tikal Futura Hotel, and will bring together textile companies from the Central American region and from other countries.
The new free zone, which started operating in Palín, houses the Korean textile company Alcatex and the plastics manufacturer Plastifar, from the Dominican Republic.
In addition to Alcatex, the company Plastifar has also started operating in the free zone known as Michatoya, created from a partnership between the municipality of Palin, Escuintla, and the city of Incheon, the main logistics port of South Korea.
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. "
Textile exports in the year exceeded $2.5 billion, an increase of 6% compared to 2014.
From a report by the Chamber of Textile Industry, Clothing and Free Zones of El Salvador:
The growth of exports in the sector in 2015 amounted to $149 million more exports compared to 2014 ($2,403,000), positioning itself as the most important sector in exports with $2,552 exported, accounting for 46% of the country's total exports.
Efforts are growing to minimize the impact of the possible signing of the Trans-Pacific Partnership Agreement, and a tariff reduction program with long deadlines for sensitive products has been proposed.
As negotiations proceed to sign the Trans-Pacific Partnership Agreement (TPP), the textile industry in El Salvador is stepping up its efforts to maintain the conditions of the CAFTA treaty and minimize the impact that the TPP will have on the sector in the long term. One of the main risks is that "... Vietnam could introduce products from China and then export them tariff-free to the United States, which would give them a huge competitive advantage. "
At the end of 2014 320 assembly plants were in operation, of which 42% were American, 36% founded on Honduran capital and 22% from other countries.
From the summary of a report by the Central Bank of Honduras "Goods for processing and related activities 2014 and perspectives for 2015/2016"
Operating under the Free Zones regime companies that carry out processing activities, commonly known as maquila, showed a significant increase in 2014 (11.8% in the Gross Value Added, VAB1) because of a stable international environment influenced by strengthening demand mainly outside of the US market which showed economic growth of 2.4%, resulting in an increased demand for goods for domestic production (approximately 76.0% of the exports of the maquila from Honduras went to that country).
The manufacturer of synthetic fabrics Pettenati plans to invest $13 million to increase its production capacity by 25%.
The textile company Pettenati has announced that it is completing the process of purchasing new equipment in order to increase its production capacity this year and meet growing demand which has been reported in recent years. This investment complements the recent expansion of its industrial plant located on the highway between San Salvador and Santa Ana.