California Apparel News

The 11th annual run of the CBI Apparel Sourcing Show in Guatemala City, held May 15–17, drew the show’s highest attendance ever, with a turnout of some 4,130 visitors, a 26 percent increase over last year’s total, according to Carla Caballeros, show organizer and member of Comision-Vestex, the apparel division of the Association of Exporters of Non-Traditional Products (AGEXPRONT).

Show organizers said the number of attendees has grown steadily since the implementation two years ago of the Caribbean Basin Initiative (CBI) and, more recently, the Caribbean Basin Trade and Partnership-Development Act (CBTPA), an agreement between the U.S. apparel industry (mainly manufacturers and textile mills) and some Central American manufacturers that eliminates duties on goods imported from Caribbean-region countries as long as they are made from U.S. yarn and fabrics.

The agreement has resulted in greater competition between U.S. factories and their counterparts in Asia, since the 1,200 apparel factories in the CBI region can provide quicker turnaround—roughly five days for product to reach the United States, as opposed to 20 days from Asia.

Fifty-six percent of this year’s attendees came from outside Guatemala, according to the show’s organizers. Among them were trade members from the United States, Mexico, Canada, Korea, Taiwan, Hong Kong, Costa Rica, Dominican Republic, Honduras, Colombia and Nicaragua.Guatemala’s apparel production currently generates about $1.5 billion in total apparel exports to the United States and accounts for 100,000 jobs. There are 223 apparel companies (including denim giant Koramsa, which employs 10,500 sewers and operators) in Guatemala’s apparel textile industry, including 33 textile mills, said Ing Marcio Cuevas, president of AGEXPRONT.

“It’s a sector that has encountered stumbling blocks but has also found solutions for all of our clients looking for solutions. Now we’d like to send a message that we have a solution for you,” said Cuevas in his speech to the show’s attendees prior to the opening ceremony.

Indeed, the United States is turning to Guatemala for solutions. In recent months there has been a strong demand in apparel production as the consumer demand rebounds after 9/11. Between December 2000 and the end of 2001, U.S. imports from Guatemala increased 17 percent, according to Natalie Hanson, director of trade policy at Washington, D.C.-based International Development Systems. However, there was a 2.2 percent decline in U.S. imports from CBI regions during that same time period. Hanson attributed that to a sharp downturn in the U.S. economy after 9/11, as well as the uncertainty around the implementation of CBTPA last year.

Still, the CBI region remains one of the largest regional sources of apparel production for the United States, supplying a little less than one-quarter of all U.S. apparel imports (CBI’s 22.24 percent is slightly higher than the aggregate figure for Hong Kong, China, Korea and Taiwan, which supply 19.67 percent of imports, followed by NAFTA’s 15.7 percent, according to Hanson).

Vestex, the 257-member association that oversees 150 factories in the country, hosted the show, which featured a mix of manufacturers, textile mills, trimmings suppliers, apparel technology, customs brokers and financial services occupying about 190 booths in a 32,000-square-foot space.

U.S. exhibitors included Chicago-based QST Industries; New York-based Ge-Ray Fabrics; Largo, Fla.-based Global Impressions Inc.; and Spartanburg, S.C.-based Milliken and Co. California-based exhibitors included Glendale-based production management solutions company ISI International Systems and Long Beach-based textile mill Texollini.

Attendees included representatives from Los Angeles-based Face to Face and Rampage; Little Rock, Ark.-based Dillard’s; Plano, Texas-based JCPenney; Fort Myers, Fla.-based Chico’s; Birmingham, Ala.-based Saks; and Hong Kong-based Li & Fong.

Carlos Sanchez, a 10-year veteran of the show who serves as director of production for City of Industry-based junior apparel maker My Michelle, a division of Kellwood Co. (which currently produces at two factories in Guatemala City), came to this year’s show mainly for novelty embellishments.

Dillard’s sourcing director Brett Gun said he came to the show looking for potential vendors for his company’s private-label collections: womenswear labels Bechamel, Preston & York and West Bound; junior label Copper Key and menswear labels Murano and Roundtree & York. The company currently produces apparel in Mexico, Peru and Canada, Gun said. “The CBI show is a good opportunity to feel out the Caribbean region,” he added.

Sam Hiatt, vice president of Fab Industries, a vertical warp knitting and circular mill in Lincolnton, N.C., said his company came to the show after facing a strenuous year with intentions of generating more CBI business. “With the world’s economy picking up, we hope there will be less distress selling,” he said.

The show is also good for making contacts with other aspects of the apparel industry, said jobber Ralph Maya, president of S. Maya & Sons, who has attended the show for the past seven years. Maya purchases leftover goods from various Guatemalan factories, ships them to the United States, then sells them to such discount department stores as Ross and Marshalls.

The highlight of the show was the matchmaking sessions arranged by the show’s organizers for buyers, private-label manufacturers, sourcing agencies and retailers looking to subcontract CBTPA (807A+, 809+, regional knit cap), CMT (cut, make and trim) and full-package programs in the region. Some 370 meetings were held during the two-day matchmaking sessions, said the show’s organizers. “It’s kind of a ’peace through trade’ concept,” said German A. Cerezo, a Los Angeles-based representative of the Guatemala Pacit trade commission.

U.S. cotton and synthetic producers Cotton Inc., DuPont and Unifi added their contributions to the show’s networking scheme by referring some of their appointments to CBI sources. “We’re here to help create the linkage between CBI manufacturers and U.S. fabric mills that make our product, and this is a good venue for that,” said Dean B. Turner, vice president of global production for Cotton Inc., which occupied a booth alongside 12 of its U.S. clients—including N.C.-based companies Ameritex Yarn LLC, Four Leaf Textiles and Ramtex Inc.—who came to the show despite a tough year that resulted in the shuttering of several East Coast textile mills.

More than 50 percent of U.S.-made cotton fabric is exported to foreign countries each year, Turner said. In Guatemala, where apparel production specializes in womenswear, menswear, childrenswear and denim, cotton fabrics (which pay about 12 percent less in duties than synthetic fabrics, according to one source) are key to the industry.

Some attendees said they came to the show mainly to see the latest developments in technological services. QST Industries, which provides component products for Levi’s, Gap and Polo and has facilities in Guatemala, Mexico and Hong Kong, showcased a machine that eliminates exposed frays from denim belt loops. ISI International Systems, which recently provided its services to the Kellwood Co., presented a new line of computer modules that help monitor the flow of apparel production.

Other attendees came to the show to find out how to better utilize the benefits of producing in the CBI region. This year’s workshops spanned a number of topics, from preparing shades for screen printing and trouble-shooting for stencil makers to environmental and social policies in the negotiation process of free trade agreements, U.S. export logistics and financial alternatives for full-package suppliers.

Several exhibitors from Central America and the United States said there was a greater demand for full-package programs.

Summit Sportswear, a Fountain Valley, Calif.-based T-shirt manufacturer that produces sports apparel for O’Neill, Billabong and Hurley, was one of the companies participating in the show’s events. “We think we can increase our business by 50 percent if we can provide services and a variety of products to our manufacturers,” said owner Jerry Salem, a newcomer to the show.

Salem said he heard about the show from other manufacturers who produce in CBI countries and was hoping to visit a few local factories during his stay in Guatemala. “So far, we’re seeing package deals that offer good quality at reasonable costs,” he said.

While full-package programs in Guatemala have increased to 47 percent, about 29 percent of Guatemala’s apparel is produced under 807 (or 807A) and 24 percent is produced under CBTPA.

While some attendees expressed a need to consolidate their operations, others said they would continue to rely on assembly-only 807 programs (which allow vendors to pick and choose more than one location for the production of their goods). Arthur Eckman, president of New York-based children’s and tween sportswear manufacturer A.L.T. Sportswear Inc., said his company prefers to pay less for fabrics in China, have them cut in the United States and then assembled in Guatemala under the 807 program.

Of the 257 factories in Vestex’s membership, about 155, or 60 percent, are Korean-owned, accounting for about 65 percent of the country’s exports, according to Vestex board member Jennifer Han. Many of those factories were hard-hit after Sept. 11 as manufacturers and retailers worldwide became more cautious as consumers cut back on spending. However, many Korean business owners are showing strong interest in the CBI region again now that the economy is on the road to recovery, said Han.

Tommy Hong, executive marketing director of Hawthorne, Calif.-based Textile Unlimited Corp., a division of E&J Textile Group, came to the show to scout new clients for his company’s factory in Nicaragua, according to Han. Hong is privy to the advantages of producing in the CBI region. His company—which counts Nike, Quiksilver, JCPenney and Target among its customers—knits, dyes and finishes U.S.-made textiles at its Los Angeles factory before shipping them to Nicaragua for production.

CBI manufacturers are making greater strides in the U.S. apparel market because they have positioned themselves to be better competitors by monitoring cost efficiency and performance, said Dawn Perconi, vice president of receivables capital management international for Sun Trust Bank.

Right now, the CBI region is flourishing on low-margin, high-volume business, Perconi said. “Things are going well, too well, to the point where many of them need financing,” she added.

Other industry sources have noticed CBI’s success, saying it has already made an impact on the U.S. market.

“Overall, [CBI] is helping to elevate the textile base in the U.S. significantly,” said Qaizar N. Hassonjee, DuPont’s director of global sourcing. “It’s a low-cost producing region that benefits U.S. mills and garment manufacturers’ capability. If the U.S. retailers continue to build on that then CBI can really grow.”