A proposal put forward by the textile sector seeks to generate trade between national and free zone companies, starting with the possibility that the latter provide raw materials to local companies.
The objective of the Nicaraguan Association of Textiles and Confection of Free Zones (ANITEX) is to generate greater links between the companies that operate under the regime and those in the national market.
The firm Hansae and a local partner will build new facilities for producing fabric in Niquinohomo, south of Managua, with capacity for 7,000 jobs.
A local company and the Korean textile firm, Hansae, will build on a total area of 70,000 m2 a new facility for a textile factory, which represents the extension of the Asian firm's investments in Nicaragua, said the president of Zona Franca SA Niquinohomo, Mario Zelaya.
Increases in electricity prices from 2007 to 2011, increased the production costs for manufacturing clothing under the regime of free zones.
"The Nicaraguan Association of Textile and Apparel (Anitec) noted that the increases in electricity rates, from 2007 to 2011, has increased the cost of each garment produced by 21 cents.
But those who have suffered the most from these increases are laundry and dyeing companies, who require the most energy for their operations, said Dean Garcia, executive director of Anitec.
The textile company, a subsidiary of International Textile Group, which invested $100 million in its plant in Nicaragua, now has three interested parties; meanwhile there are still plans to reopen its operations.
The U.S. textile company Core Denim, belonging to the International Textile Group (ITG), could resume operations in Nicaragua which were suspended in March 2009, informed the government, although there is still a chance that the company will be sold, which would imply a reassessment of these plans.
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.
During the course of the year, the U.S. textile company will restart operations in the country.
The start-up would initially create 700 new jobs.
"The secretary of the National Free Zone Commission (CNZF), Alvaro Baltodano, and executive director of the Nicaraguan Association of Textiles and Apparel (Anitec), Dean Garcia, confirmed to the press that the reopening of the company is underway and will become official in the coming weeks,” according to an article at Laprensa.com.ni.
Over the last three months the cost of fabrics has increased 30% in Nicaragua, due to increases in the international price of cotton.
Álvaro Baltodano, secretary of the Free Zones Commission (CNZF), explained that Nicaragua's textile mills are already paying higher prices for this raw material, a situation which complicates a sector already in problems due to the slow growth of the U.S.
The sector exported $552 million in the first seven months of the year, 14% more than same period of 2009.
Businessmen rated the recovery as "moderate", because they haven't reached 2008 levels, when the sector made $554 millions in the first seven months of the year.
This recovery was similar in the rest of Central America: El Salvador reported a 21.1% increase, Honduras 13.8%, and Guatemala 8.8%.
Despite the slowdown, the country's growth in textile sales abroad is still the second fastest in the Central American region.
According to information from the Nicaraguan Association of Textile Manufacturers (ANITEC in Spanish), in the first six months of 2010 exports generated foreign exchange income worth $461 million, while in the same period of 2009 the figure was $408.
In February, Nicaragua’s textile industry exported 1.3% more than the same period of 2009.
Data from Anitec, the Nicaraguan Textile Association, showw that in February 2010 the sector exported $130.4 million, a little more than February 2009, when it sold $128.7 million.
However, the rate of growth has slowed down. In January 2010, exports increased 7.1% when compared to the same month of 2009.
Salaries for workers in Nicaraguan Free Zones will increase 8% in 2011, 9% in 2012 and 10% 2013.
The agreement was negotiated between businesses, government and worker unions, and will be signed on the next Friday.
Roberto González, head of worker's union CST stated that "the agreement includes other 'social' components, to increase the real salary of workers, such as food packs sold at a lower price for workers and the construction of one thousand social housing units for them".
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