After the impact caused by the covid-19 outbreak, Nicaraguan businessmen in the sector estimate that in the first seven months of the year the maquila industry have stopped exporting close to $300 million and have had to lay off some 6 thousand employees.
The drop in demand in the United States, which is one of the main destination markets for exports of clothing made in Nicaragua, explains part of the drop in income for companies operating in the country.
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.
Before the process of reopening the economy, the garment and textile export sector operated with 15 thousand workers, but with the elimination of some restrictions, the activity of the companies increased and now employs 45 thousand people.
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.
For the next few months, it is estimated that in the Guatemalan market, sales of men's pants will decrease by about 5% from the levels reported prior to the change in the business scenario.
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 impact that the crisis will have on companies related to the textile, leather and clothing sector in Central America is estimated to be explained, to a greater extent, by the expected drop in sales of carpets and curtains.
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.
Grupo Elcatex inaugurated the first phase of the San Juan Innovation Park in Choloma, which has 107 thousand square meters of construction and required an initial investment of $240 million.
In its first stage of development the industrial complex has a cotton spinning and blending plant, a textile plant and an electricity generating plant with a capacity of 57 MW.
Between 2010 and 2019 exports of textile companies in Guatemala reported an average annual growth of 2%, a rise that is attributed to demand from companies in the United States.
According to figures from the Bank of Guatemala (Banguat), the manufacture of clothing items was the sector that generated more foreign exchange during the past year, as revenues amounted to $ 1,397 million.
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.
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.
During the first two months of the year, exports of the Guatemalan textile sector registered a 4% year-on-year increase, which is explained by demand from U.S. companies.
According to the most recent figures from the Bank of Guatemala, between the first two months of 2018 and the same period in 2019, overall exports fell from $1.808 million to $1.751 million.
In the first nine months, sales of transformation goods totaled $3.220 million, of which $2.637 million came from the textile industry.
The result of the commercial balance of goods for transformation (Maquila), accumulated to the third quarter of 2018, showed a surplus of US$1,024.1 million; behavior derived from the year-on-year increase of 4.0% in exportations, which totaled US$3,219.7 million in the mentioned period, partly counteracted by imports of raw materials of US$2,195.5 million, informed the Central Bank of Honduras.
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