MEXICO CITY — Mexico’s textile and apparel industry expects revenues to grow 4 percent this year to roughly $26 billion, helped by a bounce-back in U.S. exports and buoyant domestic demand, according to industry observers.

“The dollar is favoring exports and local sales could increase 3 to 4 percent,” said Arturo Vivanco, president of the Jalisco State branch of main trade association Canaive.

His comments came as Hidalgo State recently revealed plans to ramp up U.S. exports above $500 million annually as it works to install Mexico’s first National Center for Innovation and Fashion in Pachuca by late 2015. But the project to help manufacturers move into fashion-centric niches is dogged with delays.

Vivanco predicted exports will jump 10 percent to $4.5 billion this year, driven by a sharp increase in the first half and recovering from a 10 percent to 15 percent contraction last year due to sagging U.S. demand. Domestic apparel consumption should also increase 3 percent to 4 percent to about $21.5 billion, up from a 2 percent drop last year, fueled by stable economic growth.

China and Asia’s growing production woes remain a boon for Mexico and Latin America, with many U.S. brands eyeing fresh, near-sourcing contracts. Also, the strengthening dollar, recently hitting 17 pesos, “means American buyers can now obtain steep merchandise discounts,” added Vivanco, whose firm Confecciones Vivanco makes trousers for C&A.

A government rescue package has also clobbered sub-valued merchandise imports that had been hurting the industry. That, coupled with rising employment from an expanding economy, is boosting local apparel demand from the lower-class segment earning $200 to $400 a month.

“We are seeing sectors like construction, automotive, energy and petrochemicals grow a lot and creating employment for the working classes,” said Lucio Nieto, owner and general manager of executive clothing-maker D’nieto. “This is driving more basic apparel sales like jeans.”

A credit expansion is also fueling gains but could lead to a bubble in the next 12 to 16 months, Vivanco warned.

“There is a store-credit card and marketing boom for low-income consumers so the consumption we are having is somewhat artificial,” he noted.

Observers said the industry must work harder to fight “malinchismo” — a term describing Mexicans’ obsession with things foreign including fashion — by promoting Made in Mexico brands’ benefits and reliability.

To that end, Vivanco said Canaive Jalisco is leading efforts to deploy a marketing campaign called Prefiere lo Nuestro (or “Favor What’s Ours”) to demystify views that local garments are badly stitched or dull, with the initiative set to be ready in one to two months.

The group is also working to force international fashion chains such as Zara, H&M, Forever 21 and C&A to make 20 percent of their Mexico-sold apparel locally to boost jobs.

“If they don’t generate jobs in Mexico, people won’t have a peso to buy their clothes,” Vivanco said, adding that the provision should be ready by December.

While sub-valued merchandise imports are falling, rising used-clothing sales are becoming a headache, becoming increasingly ubiquitous in flea markets, and expected to see 20 percent to 30 percent volume increases this year.

“We are seeing all kinds of clothes, from men’s underwear to women’s bras and panties,” he said. “How can the Health Ministry allow these clothes to sell?”

Canaive is also pressuring Mexico City to toughen raids against organized crime rings smuggling counterfeit and pirate clothes though the sector has lost a battle to trim such sales to four-of-10 garments from six-of-10 currently, Vivanco conceded.

“You are seeing big cargo containers coming through our ports, not ants,” he said. “It’s not like inspectors don’t see them. They just look the other way.”

Better strategies are also needed to help Mexico fulfill its goal to boost fashion apparel production.

“We make value-added fabrics like denim, khakis and cotton-polyester blends, but we still lack technical and diverse fabric production,” Vivanco said.

Reyna Diaz, who owns a 50-million peso, or approximately $3 million at current exchange, women’s wear brand of the same name, said the state must raise designer support and simplify small brands’ export access.

Taxes are also too high and difficult to recover. “We pay 21 percent of export taxes, but there is a lot of heavy paper to recover them” with reimbursement often delayed, Diaz said.

Integration is also pivotal.

“Canaive needs a more ambitious national strategy to integrate the chain from thread to store,” Nieto said. “Some segments have linked up but others don’t want to.”

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