Bright outlook for Haiti's apparel industry in 2016
Haitian apparel exports to the US reached U$896m in 2015
The prospects look bright for Haiti's apparel industry in 2016 after a number of important milestones were reached last year, says Mark D'Sa, senior advisor for industrial development in Haiti at the US Department of State.
Important milestones were achieved in 2015. In June, President Obama signed the Trade Preferences Extension Act which extended the duty-free provisions of the HELP Act to 2025. This opened a ten year line of sight which allows investors to establish operations in Haiti with greater confidence.
Earlier, in March, a trade delegation organised by IDB (the Inter-American Development Bank) visited several companies in South Korea with positive results. Following up on the visit, Hansae Corporation of Seoul visited multiple locations in Port Au Prince and eventually signed an MOU with SONAPI (the government administrator of industrial parks), to invest in Parc Industriel Metropolitain. This investment of U$30m is expected to yield anywhere between 5,000 to 7,000 jobs. Haitian apparel exports to the US for the year ending November 2015 reached U$896m and 334m SMEs (square metre equivalents).
During the year the number of apparel jobs reached a high of 41,200 – the highest since the HOPE and HELP Acts were signed in 2006. Not surprisingly 60% of the growth in jobs in 2015 was in the northern region led by the Caracol Industrial Park and CODEVI. With the establishment of the Caracol Industrial Park the industry has decentralised and by end November, 36% of the apparel jobs (15,212 of 41,536) are now in the northern corridor.
It is also important to note that between the two industrial parks under it's management, SONAPI is now home to 49% of the total jobs in the apparel industry and scheduled to go over 50% in 2016. During the year a total of 7,226 jobs were created and 3,542 workers were laid off due to shutdowns and temporary closures. The net job increase at the end of November was 3,684. The Caracol Industrial Park contributed 2,998 apparel jobs in 2015.
The country's growth in apparel exports has been steady and with a CAGR of 12.19% over the period 2010 to 2015. The job growth is mainly driven by investments from Dominican Republic, Korea and USA.
During the year a number of companies from South Korea, Bangladesh, Sri Lanka and Taiwan visited Haiti to conduct their due diligence prior to establishing operations in Haiti. Prominent US retailers in the children's sector and athletic performance wear also visited and made commitments to increase imports from Haiti.
Jobs in the apparel industry continued to grow despite a month long transportation strike on the DR-Haiti border which caused severe disruption in logistics. There were also a few days lost due to election related protests, but these were isolated and did not have a major impact on output.
The first quarter of 2015 saw the industry get off to a good start with jobs and exports growing steadily. The renewal of the AGOA agreement and the TPP generated a lot of discussion, but did not impact the volume of exports from Haiti. Towards the end of the year there was some disruption leading to the loss of 3,500 jobs in the Port Au Prince area; however the year finished on a positive note with an increase of 3,684 jobs. According to the numbers published by ADIH (Association of Industries of Haiti), the companies that contributed to the maximum number of job increases in 2015 were S&H Global (2,800), Val d'Or (1,259), Premium Apparel (756), Island Apparel (521) and H&H Textiles (513).
Prospects for apparel exports from Haiti continue to look bright with the extension of the HELP Act and the availability of motivated labour at competitive costs. Despite minimum wage increases, the country continues to be competitive as the local currency depreciated 22.38% and according to all indications, is likely to weaken further against the US dollar.
The current minimum wage is HTG240 (US$4.15) per eight hour day plus another 22% for health insurance, pension plan, two weeks vacation and one month bonus. As yet Haiti has not been affected by the AGOA and TPP agreements because of its proximity to the US and the generous tariff preference levels (TPLs) available under the HELP and CBTPA (Caribbean Basin Trade Partnership Act) agreements. Leading retailers and brands continue to be bullish about the potential Haiti has to offer.
Several Haitian producers like S&H Global, Willbes Manufacturing, H&H Textiles and Val d'Or are in an expansion mode. Major Korean manufacturer Hansae signed a lease agreement which could generate 5,000 jobs over the next three to four years.
Logistics continue to improve with private sector port investments in the Lafito and Terminal Varreux projects on the outskirts of Port Au Prince. In the north, the World Bank's IFC and USAID are upgrading the port of Cap Haitian. At the current time there are two weekly sailings from Cap Haitian and four from Port Au Prince with 3.5 days transit to Florida.
The prospects look bright for Haiti's apparel industry in 2016. The workwear producers are increasing output, knitwear exporters are in strong expansion mode and, based on the reactions of several investors, Haiti should continue to see an influx of foreign companies that will add at least 6,000 jobs and a very good chance to cross the billion dollar export mark in 2016.
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