Guatemala has population of around 12 million. Per capita income is today 5000 USD per year.
The Guatemalan Civil War ended in 1996 with a peace accord between the guerrillas and the government.
This developing country still faces many social problems and is one of the poorest countries in Latin America. The distribution of income remains highly unequal with more than half of the population below the national poverty line and just over 400,000 (3.2%) unemployed.
Jeans fashion industry has been an important source of income for Guatemala, specially during 1990´s. Big maquilas were also developed in Guatema. Guatemala is bordering with Mexico so garments can easily be shipped to USA by truck in just 2-3 days of transit time or through vessel in two ocean coastal ports.
There are about eight local mills producing yarns, woven fabrics, and knits. On the needle side, there are about 169 apparel factories, most of them Korean-owned. The two main categories right now are cotton and synthetic knit tops and cotton woven and knit cotton trousers, pants, and shorts. Ninety percent of what it is produced is exported to the United States.
Guatemala's apparel and textile industry is still facing the impact from the move of many specially woven orders to Asian countries, which has represented a challenge for our companies to reduce and readapt product lines. Companies are focusing on better serving more fashion goods that would find our close proximity to the market as a competitive advantage. CAFTA has helped the industry to face this challenge, by giving the opportunity to use yarn and fabrics made in the region, which has enabled the mills to expand their actual capabilities and capacities.
The textile industry employed aprox. 18,500 workers in spinning mills, 31 knitting mills, 23 weaving mills, and 38 dyeing facilities .
A company named DENIMATRIX is an important player in the jeans industry. DENIMATRIX is part of the Textile and Apparel Division of Plains Cotton Cooperative Association (PCCA), a farmer-owned cooperative headquartered in Lubbock, Texas. PCCA’s vertical integration ensures quality control from the cotton fields to the final garment. The following brands and some others are produced in such big factory:
LACOSTE, ABERCROMBIE,AMERICAN EAGLE, JCP, MOTHERHOOD, REPLAY, QUICKSILVER, URBAN OUTFITERS, ANTHROPOLIGIE.
Guatemala has encouraged the establishment of maquiladoras, manufacturing plants that primarily assemble garments for export. Most of the workers in these plants are women. Industrial activity is heavily concentrated in the environs of Guatemala City.
The challenge for Guatemala is to keep developing value added jeans for top fashion brands. Its geographical proximity is definetely a good asset for export business to USA. Political stability and security issues are of concern at this moment. Manufacturers qre well equipped with the latest technological advances and investment from Korean community and American firms is available for viable export business. Development of government free trading and manufacturing areas are of great importance for the economy as a whole. Labor policies that incentivate competition for this jeans market niche must specially protected and improved.
An scenerario of "cooperative" factory developments could also be a production factor to consider as most of companies are privately owned.Moreover, improvement of the textile education sector as a whole is required in order to develop value added products and efficiency in production lines. Guatemala workforce is not as abundant as its competitors in Asia or Mexico. Therefore, good education in the textile area is required for future generations.
Guatemalan apparel is not yet in the brand business; mostly our production is focused to deliver the market with their own brands. Over the past 10 years, They have moved from many diverse styles and product categories, providing the quality and needle know-how to produce women's career apparel, to woven shirts a few years ago, to athletic performance apparel and knit goods.
To compete in the market, the companies have focused on developing more value added for their products by giving the garment fashion-finishes such as high-end screen-printing techniques and washes. Apparel makers also are focusing toward creating strategic alliances with local mills in order to develop more fashion fabrics and yarns
There is a big opportunity for U.S.-Central America partnerships in fibers, yarns, and fabrics. By creating this partnership, the country will together make the industry more efficient, and it will generate the need for raw material capacity locally. Guatemala needs to work together not only to succeed with quick response, but also to compete with other regions.
Today, Guatemala’s apparel and textile industry consists of a total of around 476 companies providing jobs for more than 100,000 Guatemalans, generating over $500 million in foreign and local capital investments.
Local currency, the quetzal has been supportive of the export business these last years with moderate depreciations vs the USD. Please see below:
Inflationatory pressures have been reduced to an average of 4,3% for last years , reaching its lowest in September 2012 to 2,71%. These two fundamentals seems to support jeans export maquila business as export business is done mostly in USD currency. We must notice that credit availability is tied to company starters, therefre relying mostly on foreign investment.
Honduras is a country of great potential in the jeans industry. Geographical location is also very good as it has diffrerent ways to export their goods. Production areas are located near San Pedro Sula and Cortes and some in the capital city Tegucigalpa. The population of Honduras is around 8 million and with a capital income of 4345 USD. After years of decline against the U.S. dollar, lempira recently stabilized at around 19 lempiras per dollar. In June 2008, the exchange rate between U.S. dollar and lempira was approximately 1 to 18.85.
In 2005, Honduras signed the CAFTA, the free trade agreement with the United States.
Growth in maquila can be attributed to a number of factors, including favorable tax provisions, a solid manufacturing infrastructure, and low wage costs. A series of laws passed between 1975 and 1999 granted national and foreign companies tax and duty exemptions in specified areas called free zones. This made the maquila industry more lucrative for domestic companies and established Honduras as a particularly attractive base of operations for foreign firms.
Some garment manufacturers shut down late 1990´s after the Asian market opening but these last years the industry has developed again in the apparel sector.
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