MEXICO CITY — Honduras plans to invest $3.4 billion to more than double apparel exports, production and employment by 2020 as the impoverished nation seeks development opportunities, a top executive told WWD.
At present, the Central American country ships $3.2 billion of basic apparel such as T-shirts and underwear to North America and Europe. Faced with cutthroat Asian competition, the Trans-Pacific Partnership and neighbors Nicaragua and Guatemala’s rapid growth, the Honduran government hired McKinsey to find new growth opportunities. The result is the newly released “Honduras 2020” development plan.
The scheme aims to expand the textiles and apparel sector alongside other manufacturing, as well as the services and tourism sector.
In apparel, the goal is to bolster exports to $7.4 billion, making Honduras the U.S. number-five clothing supplier from number seven, said Jesus Canahuati, the private sector’s representative in the scheme.
The plan also calls for Honduras to double production to two billion units annually, mainly through investments to build a synthetic yarn and fabrics supply chain to account for 30 percent of exports from 5 percent. If successful, the scheme will generate 200,000 new jobs in five years.
“We are the number-one [U.S.] T-shirt and underwear supplier and the second in fleece but we want to grow in activewear to sell to the likes of Nike, Under Armour, Adidas and Puma,” Canahuati, who is also president of leading manufacturer Elcatex, said. The manufacturing chain will be modified to boost synthetic yarn production for performance textiles. “We will make everything from synthetic yarn to the finished garment,” Canahuati continued.
Gildan, New Holland Apparel, Accra and other unnamed backers will likely join Elcatex to finance 50 percent of the $3.4 billion undertaking, Canahuati claimed, with the government bankrolling the rest. The program will see $1.6 billion invested to modernize sewing machines and equipment and $700 million to install new industrial and manufacturing parks, Canahuati revealed.
Additional funds will go to worker-training programs, renewable energy facilities and new logistics infrastructure.
Elcatex has already committed $150 million to set up solar and biomass power facilities to feed the new factories with cheaper electricity. It will also spend $120 million on a new textiles mill, Canahuati said.
Sustainability is also a goal. The government has agreed to build 10,000 homes annually for textile operators and will incorporate water-reducing and cleaner manufacturing technologies to the supply chain.
Evangelina Argueta, who leads trade union CGT textiles’ arm, said the job goals are feasible as long as the government bolsters tax incentives and investment guarantees, improves the rule of law and tackles high crime rates.
On the labor front, she said a new Inspections Law adds penalties of up to $13,000 to firms blocking workers’ freedom of association rights or failing to pay fair wages.
“Our main competitor is Nicaragua and they are offering enormous tax exemptions,” Argueta noted. “If we want to grow, we need to be in the same level. We need to give more exemptions and lower energy prices because Nicaraguan wages are 50 percent lower than Honduras.”