COLOMBIA SHOWS ITS BEST SIDE: TEXTILES
Byline: Joanna Ramey
MEDELLIN, Colombia — Textile industry officials here are working hard to shed Medellin’s world reputation as a center of violent drug traffickers and become recognized instead as a center for quality fabrics.
It’s an image that’s not too hard to sell, according to potential buyers from the U.S. and Latin American apparel companies attending Colombiatex, the country’s annual textile trade show that ran here last week.
“Buying from Colombia is definitely a possibility,” said Jennie Zollicoffer, women’s merchandise manager, Ruff Hewn, High Point, N.C., one of a dozen U.S. apparel and related companies attending the four-day show as part of a Colombia-sponsored trade mission.
Zollicoffer said she is impressed by the quality of Colombia’s cotton twills, denim and knits. Moreover, many of the leading Colombian fabric makers either produce or arrange for the production of finished garments, a Ruff Hewn requirement.
But there are obstacles to textile trading with Colombia — principally price if a company is looking for low-cost goods. However, at the same time, Colombia’s reputation for quality fabrics, as well as garment production, can outweigh paying more.
Colombia’s year-long bout of 19 percent inflation, which the government says will ebb this year, has made textile prices less of a bargain for export when judged against fabrics from the Far East. Textile makers have also lost business to Mexico, whose duty-free status under the North American Free Trade Agreement has made apparel produced there with U.S. textiles more affordable. Sales of Colombian textiles overall in 1996 declined 10 percent against 1995’s roughly $1.5 billion, according to industry estimates.
During the first half of 1996, Colombia shipped to the U.S. $21.3 million worth of textiles and $140.4 million in apparel, down from $23.4 million in textiles and $159.5 million in apparel in the same period in 1995, according to the latest available Colombian industry figures. The U.S. is Colombia’s second-largest export market for textiles and the first in apparel. In first place in textiles is Venezuela, which received $33.5 million in textiles in Colombian shipments during the first half of last year.
But there were pockets of strength in the industry, such as wool apparel, much of it produced by the vertically integrated Confecciones Colombia SA. According to U.S. Commerce Department figures for the first 11 months of 1996, Colombia shipped to the U.S. $70.9 million in wool apparel, up 18 percent over a year earlier.
“We are doing both businesses at the same time, but CMT [cut, manufacturing and trimming] is not the business to have in the long run,” said Maria Luisa Mejia Arango, president of Confecciones Colombia SA, whose textile designers will be traveling to New York in the coming weeks to show the company’s collection of new high-twist woolen fabrics.
For export, the company, which operates under the EverfitIndulana name, sells tailored men’s clothing and some women’s, produced from a mix of U.S. textiles and fabric it spins and weaves in its Medellin factory. Last year the company exported 565,862 apparel units, mostly in wool, up from 480,371 in 1995. The company is also a large domestic producer of tailored men’s and women’s clothing.
Cotton represents the largest apparel export out of Colombia to the U.S., with $152 million shipped in the first 11 months of 1996. However, these shipments were down 4 percent from a year earlier.
Like Mexico and other Latin American countries, when Colombia opened its markets five years ago its textile industry took a hit from foreign competition. Also undermining sales are black-market imported textiles, much of which is thought to be smuggled in by drug dealers as a means of laundering their profits. Some industry officials estimate a 25 percent loss in domestic textile sales due to contraband.
The textile as well as apparel industry are also facing another potential setback in the form of U.S. policy against Colombia for what the U.S. says is its lagging drug interdiction efforts. The U.S. a year ago withdrew 50 percent of its aid to Colombia, arguing the country has been soft on drug traffickers. The White House, in its annual review of the situation March 1, is expected to continue sanctions. Colombian business officials fear President Clinton might take even tougher punishment, including trade restrictions. Any such moves, they argue, would harm legitimate businesses and thwart the war on drugs.
The combined Colombian textile and apparel industry, which accounts for 25 percent of the country’s gross domestic product and 18 percent of its exports, has worked to distance itself from the drug rhetoric. They promote their sectors, as well as Colombia’s other industries and public utilities, as examples that the 35 million-person country is a modern, functioning place to do business.
Industry officials say the random narcotics terrorism of the Eighties no longer exists, but instead is a hidden enterprise generally found in rural areas.
Medellin, once paralyzed by narco-traffickers, in the last several years has been experiencing relative calm with daily life largely unimpeded by fear of recurring violence. However, anti-government guerrillas, tied to the drug trade, periodically show their presence in the city, although locals say the violence doesn’t approach that experienced six years ago. As recently as Sunday, a car bomb exploded outside a furniture store. No one was injured, but another bombing two weeks ago targeting the offices of a private security agency killed five and injured 50. Such violence, coupled with kidnappings of local government officials and executives by guerrillas, keep the country on a constant security watch.
“Colombia is striving,” said Roque Ospino Duque, director of Inexmoda, the joint textile-apparel federation that promotes the industry and organized Colombiatex. “We have experience, we are reliable business partners.”
As for Colombia’s drug trade affecting a decision to buy textiles there, Ruff Hewn’s Zollicoffer, her first time in the country, said while the violence is a concern, it wouldn’t prevent her company from doing business here.
“Things happen all over the world,” she said. “Colombia is a beautiful country with educated people.”
Now employing about 200,000 workers, the country’s mills have largely restructured and are eager to recoup lost ground. The industry would like to replicate the export success of several of Colombia’s apparel factories, which have developed niches assembling mid- and higher-priced garments from U.S. textiles that pay duty only on the value added when shipped back to the U.S.
Oxford Industries, Liz Claiborne and VF Corp. are among the companies that have apparel assembled in Colombia.
Coltejer Textil is an example of an updated Colombian mill that also produces garments as one of the largest employers in the sector, with 7,500 workers. About 20 percent of its sales stem from exports, half of which are to the U.S. Coltejer counts production of Calvin Klein cotton twill pants, shirts and safari jackets as one of its biggest foreign accounts using the mill’s textiles and production services.
“By making garments, we are selling an additional service to our clients,” said Ana Lucia Jaramillo Toro, director of fashion at Coltejer, based in Medellin. About 30 percent of Coltejer’s exports go to Europe — a business Colombian mills say is largely untapped despite the absence of duties there. In England and Italy, Coltejer has found a market for corduroy fabric.
The idea of mills offering a textile-garment package — a trend in mills worldwide — is appealing, but for Leslie Fay Inc., which sent two executives to Colombiatex, the concept is too expensive.
“If we do anything with Colombia it will be to buy goods and make the garments in Central America,” said Dominick Felicetti, vice president for sourcing. “But their products are high quality and they do good work.”
For Denim Depot, a Miami-based private-label apparel producer, Colombia could become an ideal place to buy denim and have garments produced. “I think Colombia will be a very good source for us,” said Maritza Porkolab, sales director at Denim Depot. This would be in contrast, she noted, to its operation in Honduras and Guatemala, where the company has U.S.-made denim sewn into apparel.
Laurie Strauss, manager of piece goods sourcing for DKNY Jeans, Designer Holdings Inc., said she was impressed by Colombia’s twills, which she examined at the show. “They are of very nice quality and have different washes and sanding,” said Strauss, who’s having samples sent to New York.
Although Colombian mills are looking to the U.S. market, they aren’t betting their whole future there and are actively selling to their Latin American neighbors. In many respects Colombiatex represents a microcosm of changing trade patterns within the Americas and how the region isn’t waiting for a free trade agreement with the U.S. in order to expand exports.
In addition to the U.S. delegation, buyers came from Brazil, Ecuador, Chile, Puerto Rico, Mexico, Peru and Venezuela, Colombia’s largest trading partner for textiles and apparel outside of the U.S. Colombia has a free trade agreement jointly with Mexico and Venezuela. Separately it has a free trade pact with Chile. All of Colombia’s neighbors in the region sent large trade delegations to the show. The show attracted 590 foreign buyers, in addition to 5,500 domestic customers.
“In some cases they have cheaper prices,” said Stefanos Anastassiadis, sales and marketing director at Fe Modas, Sao Paulo, Brazil, and president of the country’s apparel association, who was shopping for light wool blends for his career women’s wear lines. Most of the fabrics his company uses are synthetics, bought in the Far East.
“We could buy Colombian textiles and have them sewn here and export to Brazil,” Anastassiadis said.
Alwin Bergman, managing director, Otto International do Brasil Ltda., part of the giant German-owned mail order concern, said some mix of Colombian textiles and apparel manufacturing might make sense for his company, both for the European and U.S. market, where it owns Eddie Bauer and Spiegel. Otto four years ago began exploring manufacturing outlets in South America, in anticipation of an eventual shift in trade to the Western Hemisphere as economies in China and other Asian countries become more developed. He calls South America “the forgotten continent.”
“We still have a huge preference in the Orient, but we are aware it is not the resource for the next 1,000 years,” he said. “Producing in Colombia all depends on pricing. The quality of garments here is superior to garments made in Brazil, and I was surprised by the range of fabrics here. But one thing I noticed was the price of denim made in Colombia is not competitive in the quality or pricing of Brazil or Ecuador.”
Carmer Robinson, director, international sales at Parkdale Mills, Gastonia, N.C., came to Colombiatex as part of the giant cotton spinner’s plan to expand in Latin America and the Caribbean. Sales at first will be directly targeted at the market.
“The Colombian yarn market is very strong, and it’s usually part of a vertical operation, but there is always a need for specialty yarns,” Robinson said.
The next stage in Parkdale’s South American plan will involve opening a vertically integrated factory in Mexico to supply finished fabric and apparel to Mexico’s free-trading partners in Colombia and Venezuela. The machinery in Parkdale’s Mexico factory will come from Parkdale’s almost-new castoffs.
“Having a platform in Mexico will give us a competitive edge,” Robinson said.
Levi Strauss, which produces 5.7 million pairs of jeans in Colombia from Brazilian denim, also produces jackets and shirts here for export to Mexico and Argentina using Colombian textiles such as corduroy and twills. When using non-Colombian fabrics, Levi’s takes advantage of a government duty-free program called Plan Vallejo, which allows foreign textiles to enter the country duty-free if they are to be reexported as finished goods.
Levi’s also plans to begin producing polo shirts for export to Mexico using Colombian knits.
“Colombia has quality fabrics and its needlework is excellent,” said Juan Carlos Penagos, Levi’s sourcing manager in Colombia. “You can find vertical operations here and a large market for buttons, zippers and other suppliers.”
Louis Garcia, export sales manager, Sykel Enterprises, Miami, one of four U.S. companies selling at Colombiatex, also sees a future for textile sales. Last year, Sykel sold $2.5 million worth of synthetics to the market and in 1997 Garcia expects sales of $4 million. The business gradually is building, as he taps into a small-medium manufacturer niche producing for Colombia’s mass market.
“It’s a good business, but you don’t see many American companies doing this,” he said.
Another U.S. fabric supplier attending Colombiatex, Cranston Fabrics, New York, is also targeting small and medium-sized Colombian apparel makers. Frank Lisboa, Latin America export sales manager, said he’s leaving Colombia with about 30 potential customers for Cranston’s cotton prints.