Caribbean and African apparel manufacturers are building their businesses because of trade benefits, but will face increased competition in 2005.
This story first appeared in the September 24, 2002 issue of WWD. Subscribe Today.
NEW YORK— Next week will mark the second full year since the Caribbean Basin Trade Partnership Act and African Growth and Opportunity Act took effect, and textile and trade executives are still familiarizing themselves with the rules surrounding the initiatives and deciphering whether using the advantages is right for their business.
While the growth rate of imports from sub-Saharan African countries is significant — total apparel imports from the region are up 27 percent this year — the overall African trade is relatively small when compared to imports from Caribbean Basin countries, according to Mary O’Rourke, managing partner at the consulting firm Jassin-O’Rourke Group. Total exports from the AGOA region are 5 percent of what is brought out of the Caribbean, she said.
Overall, O’Rourke said she believes production in sub-Saharan Africa will decrease once quotas are lifted in 2005.
“It serves a good purpose now in that it’s another low-cost resource for opening price points on basic goods,” O’Rourke said. “But much of the advantage will disappear when major sourcing companies consolidate and source in Asia for certain products after 2005.”
She said inability to produce technical, fashionable and high-quality garments are drawbacks manufacturers face in AGOA-eligible countries.
Peter Craig, trade commissioner at the Mauritian Embassy, contended that the primary companies interested in working in the region are global players looking to make basic goods.
Lead times vary when manufacturing in Africa, with some as long as 30 days from Madagascar. From the West Coast of Africa, Craig said lead times are usually about eight to 10 days.
“This seems to be manageable for basics and standard apparel items,” Craig said. “But things where shorter lead times are necessary, it becomes difficult.”
While Congress this summer passed rules that garments from the Caribbean must be dyed and finished in the U.S., Julie Hughes, vice president of international trade and government relations for the U.S. Association of Importers of Textiles and Apparel, said those laws have not yet been implemented by the U.S. Customs Service.
“The rules are complex and that’s a dysfunction,” Hughes said. “Our understanding is that it will be weeks before Customs begins a first draft of the rules. Some companies say it’s too complicated and that they’ll just find someone that does full garment packaging.”
Full-package production has proven an attractive business extension for some textile companies. Glenoit Fabrics (HG) Corp., which was bought by Shanghai-based Haixin Co. in April, has begun offering full-package garments made at factories in the Dominican Republic during the past few months, according to Larry Levine, president and chief operating officer.
“We think it’s going to be extremely important for the growth of our business,” Levine said. “We think CBI is a major thing for the survival of the U.S. textile industry.”
Levine said his company conducted a study comparing the cost of importing garments from the Far East and making them in the Caribbean. He said he found that the two regions are often competitive on pricing, but the significantly shorter lead time gives the Caribbean an edge.
The U.S. is Guatemala’s top export destination. That Caribbean nation sends more than $1.5 billion worth of apparel here on a yearly basis, mostly women’s apparel, according to Roberto Rosenberg, the trade commissioner of the Guatemalan Trade Office in the U.S. Guatemala is currently the 15th-largest apparel exporter to the U.S.
“[Guatemala’s] niche is very strong in women’s wear and fashion-oriented items. Guatemala is different from some of the other countries in Central America that specialize in underwear and T-shirts,” Rosenberg said. “The textile manufacturers and yarn spinners are exporting more yarn to the region, so it’s really picking up.”
O’Rourke said the Caribbean’s niche is quick-response replenishment programs, with good value at a low cost.
For many apparel importers, large orders still go to China, according to Chris Flanagan, director of international sales at yarn texturizer and fiber maker Unifi Inc. Flanagan said he regards the Caribbean as a quick-replenishment resource since the shipping time is only a few days.
Flanagan said most companies want to spread their orders around in case they face problems overseas that interfere with deliveries. The recent political problems in Madagascar, where a dispute over who would be president resulted in civil outrage and months of interruption in shipping, illustrated that danger to some companies. The crisis ended in July.
“We were going to go look at the market in Madagascar,” Flanagan said. “But we decided not to with all the problems there.”