Nicaragua's textile companies have started exporting to Turkey and Finland, as an "exploration" before the agreement with the EU comes into force.
Since December, textile companies established in the free zones in Nicaragua have been exporting shirts and pants to Turkey and Finland, as a way to explore the regional market before the Central American Association Agreement with the EU is implemented, according to a director of the business association in the industry.
In 2011, Nicaragua increased its exports of textiles to over $1.35 billion, 33% more than in 2010.
The increase in export volume was 13%, going from 362.9 million square meters in the year 2010 to 410.1 square meters in 2011.
"According to a report published by Anitec, despite having surpassed the export target of $1.3 billion, during the fourth quarter a slowdown in the rate of monthly growth was registered, 'which was caused by the implementation of a strong policy of inventory management, the effect of conservative behavior of stores and brands, in response to the phenomenon of a potential crisis in the European Community '," reported Laprensa.com.ni
Businessmen say that clothing and textiles have regained the export levels of pre 2008-2009, when sales plummeted by 30%.
The president of the Garment and Textile Committee (Vestex), Carlos Arias, said that in 2008 and 2009 the industry saw sales drop by 30%. This meant that 15,000 people lost their jobs.
"There is a direct link between sales and jobs, and last year we recovered about 30% of the production affected by the crisis, so we believe that a similar recovery can be seen in terms of employment", said Arias to Siglo21. com.gt.
Although the 2011 figures showed an increase of 13.5%, the sector is losing productive capacity, producing only a third of what was manufactured in 2001.
Faced with the figures from the National Institute of Statistics and Census (INEC), industry representatives argue that the low production is mainly due to lack of personnel and training.
Augusto Corro Pinilla, president of the National Association of Clothes Making Industry, said: "...
The industry ranks as the number one generator of foreign exchange with $1,130 million exported in 2011, displacing coffee, according to official data.
Guatemalan clothing and textile exports reached $1,130 million between January and November 2011, which slightly exceeds the revenue generated by coffee, which amounted to $1,110 million in the same period, reported the Bank of Guatemala (Banguat).
The lower labor costs offered by China are no longer such, due to the 22% increase in the minimum wage for workers.
There are positive expectations for the maquila and textile sectors in Central America regarding the return of companies who had migrated to China because of the lower labor costs.
With the disappearance of this advantage, Central America is once again among the best options for multinationals, having as an advantage its proximity to the U.S., which reduces transportation costs and delivery times.
By September 2011, exports of Nicaraguan textiles and clothing had reached $1007 million, 37% more than in the same period in 2010.
The growth rate of exports from Nicaraguan free zones engaged in the textile industry is still by far the highest in Central America.
The lastest report from the Nicaraguan Association of the Textile and Apparel Industry (Anitec), indicated that while this sector had grown 37% in Nicaragua, the rate was 17.4% in Guatemala, 13.5% in Honduras and 9.9% in El Salvador, while Costa Rica registered a decrease of -2.7%.
Guatemala's textile industry is changing from exporter of finished products to one that provides raw materials to manufacturers in other Central American countries.
The migration of maquila companies to Nicaragua, El Salvador and Honduras has generated an increased demand for industrial fabric and textile materials transforming the Guatemalan textile industry.
Exports up to August totaled $870 million, 35% more than in the same period in 2010.
During the same period the increase in volume was 22%.
Projections for this year, according to the Nicaraguan Association of Textile and Apparel Companies (ANITEC in Spanish) are that it will close with an increase in exports of between 20% and 30% compared to 2010.
In the first eight months of the year maquila exports reported an increase in volume of 22.3% and 10.9% in value.
Data from the Central Reserve Bank shows that total exports reached $822.4 million up to August 2011.
"The executive director of the Chamber of the Textiles, Clothing and Free Zones (CAMTEX), Patricia Figueroa, said exports this year have already surpassed the levels recorded in 2008, which was considered to be an excellent year for the sector.
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.