Businessmen from the textile sector of El Salvador foresee that the entry into force of the agreement will increase opportunities to attract new investment from the Asian country.
The textile workers believe that the opportunities will not only be to export to the Asian country, since it is also possible to attract investment for the sector, because Korean companies have a large amount of raw material.
In recent years, the sector in Guatemala has lost nearly 30,000 jobs, because the high costs resulting from having one of the highest minimum wages in the region, makes it more profitable only to export raw materials, rather than making them in the country.
Vestex figures show that in recent years several jobs have been lost in the sector, given that between 2006 and 2018 the industry lost a considerable number of jobs, going from 82,109 to 53,636 places, equivalent to a 35% decrease.
Because of the demands of the brands, companies producing synthetic yarns in El Salvador have been replacing virgin polyester by recycled plastic in the manufacture of their products.
Representatives of Unifi Central America, one of the companies producing synthetic yarns in the country, assure that 40% of recycled raw material and 60% of virgin plastic resin are currently used.
The growth in demand for sportswear, which has been a trend in several international markets, is forcing companies in El Salvador to modify their production processes.
Local manufacturers have identified that pants, leggings, biker shorts and other sportswear have become an urban fashion in different countries, which has led them to adapt their production processes to meet the growing demand.
The use of nanotechnology in production processes is one of the investments that companies in the textile industry will have to make to compete at a global level.
According to specialists in nanotechnology, an area focused on the design and manipulation of matter at the level of atoms or molecules for industrial purposes, in the production processes several advanced techniques exist that give industry the opportunity to innovate and access new markets.
During the first six months of the year, imports of yarns and textile supplies in Central America totaled $264 million, registering a 3% decrease over the same period in 2017.
Figures from the information system on the Central American Market for Yarns and Textiles materials, compiled by the Trade Intelligence Unit at CentralAmericaData: [GRAFICA caption="Click to interact with graphic"]
In the first quarter of the year, imports of yarns and textile supplies in Central America totaled $127 million, registering a 10% drop compared to the same period in 2017.
Figures from the Information System on the Textiles and Textile Supplies Market in Central America, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with graph"]
The sector's union says that the strategy focused on producing fabrics and yarns for export is already paying off, and they intend to continue in order to become the region's main supplier.
According to the Chamber of the Textile, Clothing and Free Trade Zone (Camtex), exports of raw materials from El Salvador have grown considerably in the last two years, as between 2016 and 2017 sales increased from $60,000 to $1.2 million.
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%.
Representatives from the company Hanesbrands have stated that the company will be investing $5 million in expansion of a plant located in San Juan Opico, department of La Libertad.
Currently the plant manufactures around 860 tons of fabric per week and the extension consists of the incorporation of new machinery and technology for the process of dyeing finished garments, with which they intend to venture into new markets.
Salvadoran textile companies state that the costs of labor, security and delivery times have made the sector's operations more expensive.
The recentincrease in the minimum wageis one of the factors that has had a direct impact on the cost structure of Salvadoran textile companies. Added to this are logistical difficulties in customs offices, which have caused companies from neighboring countries to obtain contracts that were originally planned for El Salvador.
In 2016, the value of imported yarns and textile raw materials in the region amounted to $328 million, equivalent to 89 thousand tons, 6% more than the volume purchased in 2015.
Figures from the information system on the Central American Market for Yarns and Textiles materials, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption="Clic para interactuar con la gráfica"]
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'."
A report by the Business Intelligence Unit at CentralAmericaData.com notes that in 2015 Central American countries imported $318 million worth of yarns, filaments and textiles, led by El Salvador with $157 million.
El Salvador was the main importer of synthetic filaments, strips and materials similar to synthetic textiles last year, according to data on the Textiles and Raw Materials Market compiled by the Business Intelligence Unit at CentralAmericaData.com.
To compensate for the loss of market which is expected once the Transpacific Agreement takes effect, the textile industry intends to resume FTA negotiations with the northern country.
A free trade agreement with Canada would allow the exporting textile companies to enter a market with high potential, since according to theexecutive director of Camtex, Patricia Figueroa, the country imports more than $14,000 million a year in textiles products and confection of synthetics such and towels, carpets, curtains and tablecloths. "