WASHINGTON — Apparel companies are closely watching Honduras this week and stand poised to shift production to other parts of the region in the wake of a military coup that deposed President Manuel Zelaya on Sunday.
This story first appeared in the June 30, 2009 issue of WWD. Subscribe Today.
The impact on apparel production was minimal on Monday, sources said, but they are concerned about the potential for disruption of infrastructure if instability spreads.
“All of the U.S. apparel companies and importers of products from Honduras are hoping it’s business as usual,” said Jeff Streader, senior vice president of global sourcing at Guess Inc.
Honduras is the fourth largest apparel supplier to the U.S. According to the most recent data from the Commerce Department’s Office of Textiles and Apparel, $603 million worth of apparel, the equivalent of 298 million square meter equivalents, was shipped to the U.S. from Honduras in the first four months of the year. Most of the production in the country is basic apparel such as undergarments, T-shirts and socks.
“Everyone is watching the situation closely,” said Julia Hughes, senior vice president of international trade with the U.S. Association of Importers of Textile & Apparel.
A military coup forced Zelaya onto a plane early Sunday bound for Costa Rica. U.S. officials had been monitoring mounting tension in the country following a proposal by Zelaya that would extend the maximum number of terms a president can hold office from one to two. On Sunday, the Honduran National Congress approved the congressional president, Roberto Micheletti, to replace Zelaya for the remainder of his term in office.
The coup occurred in the Honduran capital of Tegucigalpa. Most of the apparel production in Honduras is located in San Pedro Sula, the country’s second largest city and its major industrial center.
“Whenever you see a sudden change in government people get a little nervous,” said Stephen Lamar, executive vice president of the American Apparel & Footwear Association.
Calls to the Honduran embassy in Washington seeking comment were not returned.
“We’re concerned, but as of today, our production is going forward without any impact,” said Mark Jaeger, senior vice president and general counsel at Jockey International.
The company has a general contingency plan that allows for production to shift to other facilities and countries, he said. Guess’ Streader said the company would divert production to its other regional factories in Guatemala, El Salvador or Nicaragua if needed.
John Strasburger, vice president of Americas sourcing for VF Corp., said there was no immediate impact on production and the situation in Honduras seemed to be stable, but the company was keeping in touch with its sourcing partners and its own factories to monitor the situation.
“We’re staying in contact every day and if we see that things were to move in the other direction, we would move into contingency mode,” Strasburger said.
Gildan Activewear said its facilities in Honduras were operating normally. Reports from Honduras on Monday indicated the airport and seaports were open and business was returning to normal in most sectors, Strasburger said.