The impact that the crisis will have on companies related to the textile, leather and clothing sector in Central America is estimated to be explained, to a greater extent, by the expected drop in sales of carpets and curtains.
The "Information System for the Impact Analysis of Covid-19 on Business", developed by the Trade Intelligence Unit of CentralAmericaData, measures the degree of impact that the crisis will have on companies according to their sector or economic activity, during the coming months.
Of the exports from the sector of miscellaneous manufactures, those that grew the most in 2017 were paper and cardboard products, leather products and those made by the chemical industry.
Last year products from the miscellaneous manufactures sector had as their main destination the Central American market (57%), mainly Honduras and El Salvador.This was followed by the United States (12%), Mexico (4%) and the Dominican Republic (3%).
The union of sheep producers confirmed that the Chinese government has already approved the protocol and the respective certification for imports of sheep leather from Costa Rica.
From a statement issued by the Costa Rican Sheep Association:
San José, Costa Rica, November 30, 2017. The governments of China and Costa Rica have reached an agreement so that producers of Costa Rican sheep can export leather of these animals to the Asian nation.
In 2016 Central American countries imported $28 million worth of footwear and parts from Mexico, 7% more than in 2015.
Figures from the information system on the Central American Market for Footwear and its parts, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with the graph"]
In the first quarter of this year, exports of pineapple, manufactured leather and timber goods recorded increases of over 200% compared to the same period in 2016.
Pineapples, fresh oranges, leather goods, timber, cocoa, scrap metal, confectionery and pharmaceutical products are some of the export items which recorded significant increases compared to the first quarter of 2016.
In 2015 Panama led the importation of footwear and related materials in the region, with $234 million, followed by Costa Rica, which imported $155 million, and in third place Guatemala, with $154 million.
Data from the report Foreign Trade Office on Shoes, similar articles and related materials,prepared by Business Intelligence Unit at Centralamericadata.com shows that in 2015 the countries of the region imported $757 million, corresponding to a volume of 84,484 tons.
Coffee, textiles, clothing accessories and leather are some of the products that have opportunities for being sold in the European country.
In addition to traditional products such as coffee, textiles, leather and accessories, representatives of the Franco-Nicaraguan Chamber of Commerce identified opportunities in the French market for other non-traditional export products such as chia.In 2015 the country exported $32 million worth to the European country and imported goods worth $110 million, according to central bank figures.
Between January and March this year the sector generated $10.8 million from exporting footwear, mainly to the United States.
Although in a more timid manner, Salvadoran footwear exports have been growing in recent years, driven in part by an increase in the production of leather and footwear, which in 2015 grew by 10% compared to the previous year.
Elsalvador.com reports that "...Exports range from footwear made of leather or composition leather (the main export), shoes made of textile materials, with rubber or plastic soles, waterproof, and even spare parts. The United States is according to the balance of the Central Reserve Bank, the main destination for exports. It is followed by Central America. From 2010 to March 2016, the country exported $139.3 million to that destination, out of a total of $289.5 million sent to destinations around the world."
The footwear industry in 2015 manufactured a record 9 million pairs of shoes with revenues above $50 million.
The 1,300 leather workshops that operate in Nicaragua generated revenues of $50 million in 2015, reaching a production of 9 million pairs of shoes, according to figures from Alejandro Delgado, president of the Chamber of Leather and Footwear and Allied Businesses, published by Elnuevodiario.com.ni.
Reversing the trend of previous years, increased leather stocks have allowed the industry to project a 20% growth in annual production of shoes this year.
The growth in inventories comes in addition to an improvement in the quality of leather being received by shoe manufacturers, who say that this is mainly due to the fact that the leather they now mostly get comes from the processing plant belonging to the Mexican company SuKarne which started operating this year.
In 2014 imports of leather goods and saddlery amounted to $1,647 million, a growth rate averaging 7% a year.
From a statement issued by the Costa Rican Foreign Trade Promotion Office (PROCOMER):
Leather has resurfaced as one of the leading fashion styles, both on Canadian catwalks and in retail stores, being recognized for its softness, durability and luxuriousness.
Local producers denounce the practice of triangulation, smuggling, under-invoicing and reporting new footwear coming from China as used.
In 2012 footwear exports generated $35 million, though at the end of 2014 this figure recorded a reduction of $4.2 million. The opposite has occured with imports, which between 2012 and 2013 amounted to $143 million and in 2014 increased by $7 million, according to figures from the Bank of Guatemala (Banguat).
In the first nine months of the year $15.9 million worth of footwear was exported, which is 26% more than in 2013.
The sector's competitiveness in terms of labor costs, incentives to industry, preferential access to key markets and strategic location of the country, are the main factors attributed to the growth in exports of Nicaraguan footwear.
The Investment Promotion Agency of Nicaragua, told Elnuevodiario.com.ni that "...
As part of the controls to combat smuggling, between May and July 29 companies were suspended from the list of importers, which represents 60% of the total volume of pairs of shoes entering the country.
In order to detect and prevent irregularities in the import of footwear, the General Administration of Federal Tax Audit Tax Administration Service of Mexico carried out 31 audits "...
The sharp rise in the world price, generated by increased demand and shortage of tanning skins is turning traditional shoe leather into a luxury product.
The rise in price due to scarcity and increased demand has started to create the perception that leather is a commodity which is too expensive to use for mass shoe production and is more geared towards a higher segment.
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