MEXICO CITY — A Mexican trade lobby group is proposing that global fast-fashion retailers expanding in Mexico should also source apparel from the country to help boost production and employment in its clothing industry.
“We have requested that 40 percent of the clothing they [foreign apparel brands] sell in Mexico is made here,” said Rosario Mendoza, president of top trade lobby Canaive’s Jalisco State branch. “We don’t have all the textiles they need for their collections but we have quality manufacturers and labor.
“They have not asked us for samples.”
Canaive made the petition during its 38th annual congress last week in Guadalajara.
The Economy Ministry has pledged to consider the request as it moves to launch a new textiles and apparel industry aid package by November.
Mendoza said Canaive will be happy if foreign labels end up making at least 20 percent of their garments locally.
“If we could get 20 percent, that would really help reactivate the domestic market,” she said. “Other Mexican industries such as automotive have asked for this and have gotten it. Why can’t we?”
During the event, Canaive’s president, Sergio Lopez de la Cerda, said a string of international apparel brands have recently stepped up expansion, hurting the market because they don’t sell clothes made in Mexico. While they don’t yet have a significant presence, “we are worried about their very aggressive expansion plans,” he said.
Lopez de la Cerda singled out H&M, Forever 21 and American Eagle Outfitters as three notable foreign firms expanding rapidly in Mexico. However, sources said Canaive’s demand is also aimed at other international groups and specialized retailers such as Zara-owner Inditex or U.S. apparel firm Gap Inc., which are also deepening their presence in Latin America’s second-largest economy.
De la Cerda said the firms are forcing Mexican department stores and other retailers to compete under unequal conditions as they import much of their garments from lower-cost manufacturing countries in Asia, including China.
As a weakening economy (set to grow 2.7 percent this year from an earlier 3.9 percent forecast) saps consumption, Canaive said retailers saw same-store sales drop 1.7 percent in September. Meanwhile, Wal-Mart Mexico reported a 2.7 percent drop in same-store sales, the fifth decrease so far this year.
Forever 21 did not return calls seeking comment. Miguel Flores, vice president and country manager at AEO in Mexico, acknowledged the firm is growing at a rapid pace but said it has sourced in Mexico for years and currently has third-party manufacturing contracts to make an unspecified volume of knits and denims. “We have a long history of sourcing in Mexico over different categories so to say we are ‘malinchistas’ is incorrect,” he said.
Flores was referring to the popular Mexican term for a favoritism toward foreign things or culture, which is used by local media to describe the international firms’ lack of sourcing operations in Mexico as suggesting a lack of appreciation for the country.
Flores would not say whether AEO, set to operate 18 Mexican stores after arriving two years ago, will increase sourcing in the country as a result of a potential government order to do so. However, he said “we are not closing the door” on the possibility. “We follow a global sourcing approach,” he said.
H&M spokeswoman Bea de la Borbolla said the retail giant, which has made the country its Latin American expansion pad, could also eventually produce in Mexico. “We are mainly focused on our expansion right now but this is something we are not ruling out in the future,” she said.
Mendoza added the foreign fashion houses “sell a lot of merchandise but have a very minor impact on employment” as they only hire non-manufacturing personnel. Mexico’s apparel industry directly employs 331,000 people in 8,400 companies, she said.
According to Mendoza, Canaive’s request is especially crucial for shoring up the apparel trade in Jalisco, home to Mexico’s third-largest city Guadalajara and the country’s fashion capital.
“We have the most diversified apparel manufacturing industry in Mexico, making anything from baby clothes to wedding gowns to denim pants to men’s suits,” Mendoza said, adding that the sector has lost 60 apparel producers in recent years, to number around 987.
Mexico’s apparel industry will grow 4 to 4.5 percent in 2014, down from 5 percent last year, as stable exports offset a 5 percent decline in domestic consumption, Mendoza predicted.
She said some companies that have moved into value-added and more fashionable segments will do better, while those specializing in basic garments will fare much worse. Many will likely fold their business.
Roughly 97 percent of Mexico’s clothing manufacturers are small and midsize companies, which Mendoza said have been clobbered by soaring subvalued clothing imports from China, Bangladesh, Vietnam and other Asian countries. Mendoza said undervalued garment imports will continue to surge in 2014 after tripling to 44 million items in the first half of the year.
While the industry was hopeful last year that the pace of Chinese and other Asian imports would decrease, Mendoza added organized crime rings “have found new ways” to funnel cheap apparel.
To help shore up the sector, Mendoza is hoping the government’s aid package will be in line with an eight-prong footwear industry package launched in August. That scheme introduced duties of 25 percent to 30 percent for shoe imports, stepped up audits and increased financing for the sector.
Meanwhile, an industry plan to boost innovation and make more fashionable garments remains on track.
Mendoza said a new textiles innovation laboratory called Innlab opened in August to help make garments from “intelligent textiles” and nanofibers. She added the laboratory should help manufacturers prepare for a possible increase in fast-fashion sourcing.
A Textile Innovation Center in Pachuca, northeast of Mexico City (currently under expansion) will also fuel that process, said Arturo Rodriguez, Latin American manager at industry technology consultant TC2.