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.
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.
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.
Following the spread of the virus globally and the suspension of some production in China, several garment companies in the region have reported increases in their orders.
The spread of the epidemic has stopped much of the economic activity of the Asian giant, which is the largest exporter of textiles in the world. This situation has forced buyers to look for alternatives.
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.
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.
In the first quarter of the year, companies in the country imported $5 million worth of yarns and textile supplies, 15% more than what was purchased in the same period in 2017.
Figures from the Information System on the Textile and Textile Supplies Market in Honduras, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with the graph"]
According to the textile industry union, half of the $2.6 billion exported in 2017 corresponded to pullover sweaters, cotton t-shirts, cotton briefs, synthetic fiber t-shirts and synthetic socks.
The Chamber of Textile, Clothing and Free Trade Zones of El Salvador (Camtex) reported that in 2017 the sector exported $2.617 million worth of clothes, $95 million more than was reported in 2016, which is equivalent to an interannual increase of 3.8%.
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 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'."
The union of maquila companies estimates that this year exports will grow 10% compared to 2016, reaching $4.5 billion, driven by increased demand in the United States.
According to the Honduran Maquiladora Association (AHM), in 2016 exports of textiles and clothing were worth close to $4.1 billion, and this year it is hoped the figure will go up to $4.5 billion.
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.
A meeting is being convened for the textile and clothing industry on March 16 in El Salvador, where the overall situation in the sector will be discussed.
From a statement issued by Proesa:
El Salvador is preparing for the third edition of the Forum of Textiles and Apparel (FOROTEX) 2016, a space where high-level international speakers present trends and strategies for competing in international markets.
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.