JEANS IN DOMINICAN REPUBLIC

Dominican Republic is a country of around 9 million people. Per capita income is around 5000 USD per year. Following economic turmoil in the late 1980s and 1990, during which the gross domestic product (GDP) fell by up to 5% and consumer price inflation reached an unprecedented 100%, the Dominican Republic entered a period of growth and declining inflation until 2002, after which the economy entered a recession. La Trinitaria in Santiago de Los Caballeros is an area of increasing development. Production os jeans in the Dominican Republic was very strong during the 1990´s.

Today there is a limited production capacity compared to what it used to be. The companies have been historically located in free trade zones areas in Santiago and Santo Domingo. Companies live Levi´s, Gap had production units in the country.Producing companies such as Overseas Jeans, Freshtex, etc. The country is importing most of its denim fabric from USA and export ready made jeans. The challenges for the country are related also to its nehighbour Haiti where some manufacturing units have been placed around the border areas. Geographically speaking Dominican is well located for exporting to USA.Government must make strong efforts to keep the currency at least stable and inflation under control. Almost 5% today´s rate.

Currency appreciation or depreciation has not added significantly to balance inflation as currency rate to the USD has been around 40 pesos for several years.



Labor costs have increased signifcantly over the years and productivity has not increased proportionally in the jeans business. This could be one of the reasons that some industrial factories in free zones areas had to shut down around 2002 and Asian competition threatened long term survival.




As displayed in the graph above, for basic jeans programs, partnerships with Haiti or moving production units to the border, this could be a solution. I am aware that some companies have done so already.

 Another challenge for the country is to produce jeans faster and value added for expensive brands.