While the textile sector accounts for over 90% of total exports to the USA under the FTA, lack of training and compliance with requirements is preventing other sectors from taking better advantage of the trade agreement.
Lack of training, compliance requirements and inability to make the necessary investment to produce on a large-scale are some of the challenges faced by the sectors who are failing to take advantage of the trade agreement with the United States faces.
80% of the volume exported by the Honduran maquila sector in the first half of 2014 corresponds to textiles, 15% to harnesses, and the remaining 5% to other goods.
A report by the Central Bank of Honduras (BCH) specifies that when comparing the figure for the first half of this year with the same period of 2013, "... A slight increase of $8.2 million is observed. "
Cartex Manufacturing, a subsidiary of Hanes Brands employing 1,250 people in the manufacture of boxer shorts, has announced the consolidation of its production in Vietnam.
The company announced that in order to "optimize" the flow of production, the operation will move to Vietnam, "... since the fabric suppliers are in China, which means a reduction in production costs."
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.
In the first half of the year sales to outside of the free zone regime were $1.138 billion, up 13% from the $1.007 billion generated in the same period in 2013.
The presence of new foreign firms operating under the regime and the rise in the volume produced, despite a reduction in some prices in the international market, explain the 13% increase in exports from the sector.
The possibility that the United States will not renew tariff preferences for Nicaraguan textiles at the end of the year is forcing the industry to prepare changes to their production schedule.
Although there is a possibility that the United States will grant an extension of the benefits of the Tariff Preference Level (TPL), if they are not renewed, starting January 1st, 2015 the Nicaraguan textile sector may no longer sell to United States products made from raw materials from countries that are not part of DR-CAFTA.
In twelve years exports to the island have quadrupled, with dairy products, medicines and textiles being the most sold.
From $7.8 million in 2002 to $31.4 million in 2013, Costa Rican products exported to Cuba have grown, answering a growing need by Cubans to purchase basic consumer goods made under local production, such as milk and its derivatives.
Hanes Brands is investing $2.2 million in a new plant for making garments in its facilities in the north of the country.
The operations manager Manuel Castillo, told Laprensa.hn that the investment is for "... a new plant called H2, which we started in January this year. It is an investment of $2.2 million including equipment for making clothes, sewing machines, molding garments and cutting."
The Korean company SAE-A-Spinning has indicated that the plant where cotton thread will be produced is already under construction in the province of Cartago.
From a press release by the Costa Rican Coalition for Development Initiatives (CINDE):
San José, Costa Rica June 17, 2014.
SAE-A SPINNING SRL, a subsidiary of SAE-A TRADING CO., LTD., and the Costa Rican Coalition for Development Initiatives (CINDE), today confirmed publicly that the company originating from South Korea, will open a new plant for manufacturing yarns in Cartago with an investment of over U.S. $50 million and which will generate 200 new direct jobs.
In Nicaragua a proposal has been made to create a training center to improve the labor performance in free zones and attract more foreign investment to the sector.
In order to improve employees skills and increase the productivity and competitiveness of enterprises, the National Commission of Free Zones (CNZF) is proposing the creation of a textile school, where ongoing training on production techniques would be provided for the sector.
A bill that is being analyzed by the U.S. Congress aims to reduce the level of tariff preference to only 6% of imports from Nicaraguan textile factories.
Although the possibility exists of an extension of the current Tariff Preference Level (TPL) until 2015, American congressmen have proposed that the benefit be granted only on cotton pants, which represent the lowest proportion of Nicaraguan textile exports to the United States.
The implementation of lean manufacturing systems reduces from two hours to five minutes the time it takes to make a garment.
This system, introduced in the textile fair Apparel Sourcing Show 2014, in Guatemala, unifies in a set sequence the "value" steps of the manufacturing process, completely eliminating "waste" steps resulting in higher productivity and resource optimization so that the number of operators needed to make a garment is only nine instead of fifty.
The 16% increase in sales of textiles abroad in the first two months of the year, compared to the same period in 2013, exceeded the business sector´s expectations.
With the huge rebound of 16% in the cumulative export of textiles in the first two months of the year, revenue totaled $300 million.
"I'm trying to inform companies about the reason for this unusual growth because our projections were that, yes, we were going to grow, but not as much as that... In recent months, new projects in the textile industry have come into operation, which could partly explain the dynamism in the sector," said the Executive Director of the Nicaraguan Association of Textiles and Apparel (ANITEC), Dean Garcia, to Laprensa.com.ni.
Gildan Activewear has confirmed an investment in a new manufacturing plant in the north of the country in order to take advantage of Costa Rican quotas for textile entering the U.S. market.
In the second quarter report to shareholders 2014, Gildan Activewear confirmed today in Montreal that it will make its next investment in Guanacaste, Costa Rica, installing a modern textile manufacturing plant.