Five Free Trade Zone companies have applied for temporary suspensions and, with these five, it would be seventeen that have already been affected in the first quarter of the year.
Among the applicants are Arnecom S.A., Clypso Apparel S.A., Santa María, Atlantic and Yutex S.A.
Elnuevodiario.com.ni reported statements by Miguel Ruiz, General Secretary of the Central Workers’ Union, José Benito Escobar: "The committee, made up of representatives of trade unions, entrepreneurs and the Ministry of Labor, met to consider the above-mentioned requests and the closure cases. We are studying the issue of the crisis with at least five companies that are requesting temporary suspensions and personnel reductions, arguing that they do not have purchase orders, so there's no work. This is something that puts the Nicaraguan employment situation in a greater crisis."
A regional industry at risk: You can now add the reduction of US imports to the elimination of the Multi-fiber Agreement of a few years ago.
The apparel maquila is confronting a new challenge. The US recession has caused a contraction in clothing sales and hence a reduction in imports. Asian, Latin American, African and other regional producers are already embroiled in a fierce competition for the US market.
The closing of the Fusion S.A. maquila located in the Tipitapa zone is the third one in a month.
The company requested the Ministry of Labor for a temporary, 30-day closing. It originally operated with 400 employees and had already reduced its staff to 137.
Rafael Lara reported statements from Alberto Carlos Guadamuz, attorney for the Nicaraguan Center for Human Rights, CENIDH, to Elnuevodiario.com.ni: "The workers noted that they were earning a monthly salary of 4 thousand Cordobas in normal times. However, in recent months, they were only getting 2,150 Cordobas due to the drop in productivity, and it was not enough for family survival."
The financial crisis in the US, a vital market for Central American exports, has reduced the demand for textiles, causing a lot of companies to close.
In CA the industry is also facing strong competition from China since 2005 when the textiles quotas in accordance with the World Trade Organization came into effect.
The country that has been most affected is Nicaragua, where this year alone some 19000 jobs have been lost due to the close of at least 9 textile companies in the industrial parks belonging to the Free Zone Corporation.
Income from textile exports dropped in August 2008 compared to the same month in 2007, from %96.5 million to $74.5 million this year.
According to data from the National Free Zone Commission, the reduction in exports reveals that the crisis in the textile and manufacturing sector runs deep and is also affected by the financial shock and recession experienced by the US economy.