MEXICO CITY — The 7.1 earthquake that shook Mexico City last month did not substantially damage the country’s export maquila and local clothing manufacturing industry, save for a major textiles factory that collapsed near the capital’s downtown district, observers said.
“There were some small damages in our plants but we fixed them quickly,” said Eric Levy, who heads family-owned apparel and fashion retail group Industrias Cavalier, adding that the rest of the industry did not suffer major damage. “Some of our suppliers stopped for one or two days after the earthquake but that’s it.”
Local clothing sales are stalled, however, with major department store operators Liverpool, Sears and El Palacio de Hierro turning back orders as sales dropped 30 percent last month and could decline by a similar percentage in October, according to Levy.
That’s bad news for apparel makers already being hammered by a 6 percent drop in U.S. exports as of July. Lingering uncertainty over how talks to renegotiate the North American Free Trade Agreement (NAFTA) will benefit or hurt Mexican makers is spurring the decline, executives said.
Complicating matters, the dollar’s recent spurt to trade at over 18 pesos is making fabric imports more expensive, further squeezing clothing suppliers as they face inventory losses from retailers’ rejections.
“Right now we are all fighting with the department stores so that they receive what they ordered a long time ago,” Levy said, adding that falling sales to the U.S. and domestically could trigger a 10 percent to 15 percent production decline this year.
Levy said department stores are rushing to deepen markdowns. “We also have El Buen Fin [Black Friday] coming up and Christmas, when we hope sales will recover,” he noted.
Other analysts rejected Andreu, Levy and some leading fashion designers’ remarks to WWD late last month that clothing sales and fashion consumption were stalled.
Nevertheless, the disaster, which killed 337 people and downed 38 buildings, is expected to cost Latin America’s second economy over $2 billion, including an earlier, Sept. 9 quake that shook Oaxaca and Chiapas State, killing 100.
Meanwhile Arturo Vivanco, president of textiles lobby Canaive’s Guadalajara State chapter, said U.S. buyers are waiting to see how NAFTA’s talks play out before raising orders to Mexico which are down 6 percent this year.
While a low peso was boosting shipments early in the year, NAFTA jitters began rising in June, hurting orders which have remained sluggish since then.
“Everyone is undecided about what the rules are going to be,” Vivanco said. “We still don’t know if there are going to be sending [apparel] possibilities and under what terms, if Trump wants to renegotiate part of the treaty to his advantage or if he has something more extreme in mind.”
Meanwhile, Mexican labor activists are seeking answers as to why the downtown apparel factory collapsed, killing hundreds and reviving painful memories surrounding the deaths of 1,200 women when a much more powerful 1985 quake destroyed 800 sewing shops in a nearby area.
New Fashion and Seo Young International operated two sewing shops making women’s apparel and lingerie respectively at the site, an old, five-story building that was reportedly damaged in the quake 32 years ago.
In recent protests, activists have demanded authorities explain the reasons behind the collapse, an awkwardly rushed rescue effort and why authorities have yet to release a full list of the victims.
While officials have said 21 people died in the tragedy, activists put the count at 100 to 200 including Asian and Central American sewers. They have alleged the factory’s owners operated an illegal sweatshop in the basement as the reason behind a rushed, five-day cleanup, authorities’ lingering silence and an abnormally high police presence.
“This was very fast and dysfunctional and could only be explained by corruption from a very big power,” said Carlos de Buen, a Mexico-City based labor rights lawyer, when asked about the event. “I don’t know who is more to blame, the labor inspectorate or civil protection authorities but the government of Mexico has to give information about this.”
New Fashion and Seo Young could not be reached for comment.