CUTTERS PONDER FUTURE
Byline: Georgia Lee
ATLANTA — The ongoing failure in Washington to give the Caribbean apparel makers parity with Mexico under the North American Free Trade Agreement is causing some Miami cutters to rethink their business.
Reports vary widely on how rough the 3 1/2-year-old NAFTA has been on these Miami cutters with their established network of operations in the Caribbean, fostered by the U.S.’s 807 programs. Under these programs, fabrics cut in the U.S. are assembled in the Caribbean and shipped into the U.S., with duties reflecting only the value added.
But there is no doubt that the increased trade benefits given to Mexico hang like a cloud over the Caribbean-related operations in Miami.
“The last three years have been a nightmare,” said Mano Howard, president, Bend ‘N Stretch, a Miami cutter and contractor specializing in 807 programs. “The Caribbean has lost business to Mexico, and I’d say 80 to 90 percent of it can be blamed on NAFTA. Mexico can produce a five-pocket jean for 80 cents less than the Dominican Republic, and that’s a big difference.”
In the past 2 1/2 years Howard has closed seven plants in the Dominican Republic and downsized from 5,600 employees in 1995 to 1,500 today. The company, which produces 60,000 pairs of pants a week in the Caribbean, has had to work on tighter margins, which, said Howard, is “like writing your own death warrant.” Passage of Caribbean parity, or a similar bill, was essential to growth, he said.
“There’s no level playing field now,” he said. “We’re not ready to throw in the towel in the Caribbean, but if the bill continues to have no support, we will be forced to look at Mexico ourselves.” He added, though, he expected Caribbean parity would eventually pass.
Robert Alexander, president, Gallery International, a Miami cutter and full-package provider, said that business had slowed somewhat, specifically in areas such as denim.
“Depending on the category, Mexico has taken a bite out of business,” he said. “Knits, woven shirts with imported piece goods that don’t fall under NAFTA are still good for us. We’re also doing more full-package programs and more high-value-added categories, such as suits and blazers.”
Although he feels that Caribbean parity is important, Alexander doesn’t see it as a panacea. “Prices [in the Caribbean and Central America] are artificially low right now to compete with Mexico. If parity passes, prices will go up. Everybody’s feeling their way through, looking for a formula, and there’s no easy solution.”
Alexander said that despite uncertainty, Gallery International is expanding, with a new warehouse facility and more investment in technology.