Layoffs in the textile industry have been announced after projections of a 10% decline in its exports.
The industry is feeling the impact of the economic recession with a decline in orders from its main market, the U.S., said the president of the Honduran Maquila Association, Daniel Facussé.
An article in Proceso.hn reports that, "according to Facussé, several assembly plants have been forced to make redundancies and others are calling for discontinuations.
The public-private trade mission to a trade fair entitled ‘Magic 2011’ has succeeded in getting U.S. interest in importing textiles and clothing from Nicaragua.
Over a hundred contacts with potential buyers were made in the meeting which will be exploited with a "marketing effort," said Javier Chamorro, Executive Director of ProNicaragua.
The private sector, together with the government, is developing a marketing strategy in order to promote the Nicaraguan textile industry abroad.
In an effort to attract private capital, Nicaragua will participate in the international exhibition ‘Magic’ in Las Vegas.
This will be the first time Nicaragua takes part the fair, in which individual Nicaraguan companies have attended in previous years, but independently.
This time the country has the support of the investment promotion agency ProNicaragua, which aims to incorporate this type of promotional activity into the country’s export promotion strategy.
The high cost of labor and other input materials has forced some companies to close operations.
Contrary to the performance of other countries in the region, the Panamanian textile industry has shown a significant decline in recent years compared to the positive performance of the eighties.
At that time it exported more than $80 million worth in textiles every year, but now barely manages one million dollars worth.
The National Association of Clothes Makers has proposes the creation of an exhibition fair for the textile industry in the country.
Augusto Corro, president of the Association, explained that an event of this type, where trade is allowed, it is important for the sector, given that exports of this segment have been declining.
The employer noted that the country has lost its position as leading exporter of textile products from Central America to the United States, a position it held during the 90's.
The relative merits of Nicaragua in safety, productivity and the low cost of labor are posing a serious threat to the textile industry in Honduras.
As noted in an article in Laprensa.hn, the Association of Textile Producers of Honduras, said that "an average of 16 textile factories have migrated from the country and have settled in Nicaragua and El Salvador."
Nicaragua is benefitting from a cost advantage in most product categories, both regionally and globally.
A study entitled "Comparison of Competitiveness of the Garment Industry of Nicaragua", has been prepared by O'Rourke Group Partners, and supported by the Enterprise and Employment Programme of the United States Agency for International Development (USAID) in conjunction with ProNicaragua, the official investment promoter.
The Chamber of the Textiles, Clothing and Free Zones has presented a new proposal for the sector.
In 2010 the chamber had proposed a change in working hours from the 3.5 x 3.5 scheme, which means that employees work three and a half days and then rest for the same period of time, to change to working eight to twelve hours daily. This proposal has not been approved by the Ministry of Labour.
Despite the gloomy global economic situation that it has had to deal with, Nicaragua's textile sector continues to prosper.
During last year, sales by Nicaragua's textile industry exceeded expectations and even exceeded sales achieved in 2007, the sector's best year.
Despite the high price of raw materials such as cotton and synthetic fibers, derived from oil, which have increased costs and slightly reduced demand, export sales of Nicaraguan textiles have continued to grow, though slowly.
In 2010 the sector reported revenues of $ 1.793 million compared to $ 1.422 million in 2009.
Patricia Figueroa, director of the Chamber of Textile Apparel (CAMTEX), said they hope to continue growing in 2011 despite the increase in prices in raw materials, including cotton.
"Recently, CAMTEX noted that the increase in the price of key raw materials and inputs for production could not be completely absorbed by the companies.
Textile businessmen does not dare to raise expectations for next year.
If there is an increase it would be minimal, said Edwin Zamora, president of the Chamber of the Textile, Clothing and Free Zones of El Salvador (CAMTEX).
The executive added that it all depends on the evolution of the U.S. economy.
"He even mentioned that the costs of raw materials, especially cotton, are of secondary concern," reported Laprensagrafica.com.
In September, clothing and textile sales to the U.S. grew 18% over the same period in 2009.
According to the Central Bank of Guatemala, total exports amounted to $1.07 billion in clothing and fabrics, or $168.2 million more than last year.
"According to Garment and Textile Committee, Guatemala has specialized in sales of knit shirts and synthetic clothing for ladies and gentlemen as well as canvas pants," writes Prensalibre.com.
Up to September, exports reported an increase of 10.8% over the same period in 2009.
According to the Nicaraguan Association of Textiles and Apparel (Anitec), foreign sales until September 2010 totaled $ 733.74 million.
"Although this sector only surfaced, considering the cumulative growth of 2008, the performance in September was slower than compared to last August, which increased 14.6 percent," published Laprensa.com.ni.
The record price achieved for cotton would increase operating costs for enterprises in 2011.
The contract for December delivery closed at $ 1.2463 a pound on Friday, versus $ 1.1971 the previous week, according to Dean Garcia, director of the Nicaraguan Association of Textile Industry. In the last three months the price has increased by 56%.
"For Nicaragua's textile sector it could mean 'stagnation' of sales, so we should be analyzing strategies to confront the situation," Laprensa.com.ni reported.