New Holland, a company engaged in the manufacture of clothing and which has been operating in the country for 15 years under the free trade zone regime, announced that it will close operations in the last days of May.
The company's decision to leave Nicaragua is due to the fact that the country does not have the adequate technological machinery to compete with the garments it manufactures for the Under Amour, Nike and Adidas brands.
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.
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.
The "Information System for the Impact Analysis of Covid-19 on Business", developed by the Trade Intelligence Unit of CentralAmericaData, measures the degree of impact that the crisis will have on companies according to their sector or economic activity, during the coming months.
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.
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.
Businessmen consider that 2018 will be a year with record sales for the country, as they projected exports of $1.724 million, a figure that would exceed 12% of what was reported in 2017.
Representatives of the Apparel and Textile Industry Association (Vestex) reported that they have recently reviewed the figures, and they estimate that this year the sector will have double-digit growth compared to 2017.
29% of the companies that are dedicated to the design and confection of clothes are less than five years old, 18% between five and 20 years, 24% are more than twenty years old.
A report by the Ministry of Industry, Commerce and SMEs analyzes the characteristics of the clothing design and clothing industry in the Dominican Republic, and lists the opportunities in the sector, among which are the frequency of clothing purchases made by Dominican consumers, the obligatory nature of the use of certain garments in institutions due to workplace regulations, the need for school uniforms, the existence of government procurement programs and the influx of tourists, who are potential customers of typical Dominican products, clothing and accessories.
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.
High potential for online shopping in China has brought up opportunities for segments such as bathing suits, where 60% are imported products.
From a statement issued by PROCOMER:
Japan is one of the main entry points to the Asian region and is also a fashion leader, an industry worth approximately $110,000 million. According to a report by ProColombia, Japan imports more than 60% of its swimsuits and it was also found that consumers pay higher prices for these products, making it an attractive market to service.
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).
The amendment to the Law on Tax Coalition sent by the Executive to the Assembly repeals the exemption from VAT on domestic production of clothing and footwear.
If the reform is approved, SMEs in these sectors will be the most affected "... as it states that they must pay Value Added Tax (VAT) and also orders that they withhold income tax, through an unclear mechanism within the fixed quota system. "
Textile entrepreneurs anticipate an increase in Canadian investment once the trade agreement with this country takes effect on October 1st, 2014.
Daniel Facussé, president of the Honduran Maquila Association reported that "... representatives of three Canadian companies visited the country and showed interest in investing in maquila and buying sportswear.
In March this year, the textile and manufacturing industries, including the manufacturers of wire harnesses and garments, grew by 3% compared to the same period in 2013.
A report by the Office of Textiles and Apparel (OTEXA), at the International Trade Administration of the United States, details the recent performance of the maquila industry in Honduras and locates the country as the fourth largest producer of fabrics in the world.