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.
After the demand for clothing fell in the world's main markets due to the health crisis, Salvadoran entrepreneurs are confident that in the coming months it is possible to recover part of the sales initially projected for this year.
The social distancing decreed due to the covid-19 outbreak caused consumer preferences to change in the main markets, as the demand for comfortable clothing to be at home has now rebounded.
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.
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.
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 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"... the sub-segment of the maquila 'is where the basic products are, such as T-shirts and underwear, but it is a segment that has to be taken care of because it is more vulnerable to costs and environmental shocks."
If the United States withdraws from the Transpacific Agreement, there will be less risk of competition from Asian countries for the Central American textile industry.
If the US does eventually abandon the Trans-Pacific Partnership Agreement (TPP), as promised by President-elect Donald Trump, the Central American textile industry could benefit from the elimination of the possibility that the US, its main market, will buy textiles from Vietnam at lower prices.Since the start of negotiations for the TPP, the Central American textile industry has tried to negotiate bilaterally with the US in order to minimize the negative effects that the TPP could have on the industry in the region.
A report by the Business Intelligence Unit at CentralAmericaData.com notes that in 2015 Central American countries imported $318 million worth of yarns, filaments and textiles, led by El Salvador with $157 million.
El Salvador was the main importer of synthetic filaments, strips and materials similar to synthetic textiles last year, according to data on the Textiles and Raw Materials Market compiled by the Business Intelligence Unit at CentralAmericaData.com.
Up until October maquila exports totaled $954 million, which represents 20.4% of total exports during that period.
According to the International Trade Report presented by the Ministry of Economy (Minec), Salvadoran exports are driven primarily by the maquila sector, specifically high value added garments as well as non-traditional products.
With a 4% increase in exports in 2012 compared to the previous year, the textile industry remains the main pillar of foreign trade in El Salvador.
Revenue from sales from the textile industry in El Salvador during 2012 totaled $2.1965 billion, $73.4 million more than in 2011.
Elmundo.com.sv reports that "In recent years, the textile and clothing sector has maintained an upward trend in foreign sales, to the point where exports account for 48% of the country’s total, stressed the Chamber of the Textile, Clothing and Free Zones of El Salvador (Camtex). "
Orders are increasing as the United States, main destination for Salvadoran textile exports, begins to recover.
Patricia Figueroa, executive director of CAMTEX (Textile and Free Zone Chamber of El Salvador), commented that an increase in U.S. orders has allowed company Fruit of the Loom to reactivate its Montecristo facility.
The survey conducted by the Textile Chamber (CAMTEX) among its members reflects the need for $25 million for the sector.
José Antonio Escobar, CAMTEX president, noted that the textile industry will seek a meeting with President-elect Mauricio Funes to inform him about the situation.
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