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February 25, 2020

Grupo Kattan mulls $70m wovens facility in Honduras

Manufacturing giant Grupo Kattan is seeking a venture partner to help build a $70m woven fabric plant in Honduras, the company’s president and owner, Jacobo Kattan, has told just-style.

Manufacturing giant Grupo Kattan is seeking a venture partner to help build a $70m woven fabric plant in Honduras, the company’s president and owner, Jacobo Kattan, has told just-style.

His comments come as Grupo Kattan and peer Tegra Global begin construction of a new, roughly $75m clothing factory in San Pedro Sula on Honduras’ Caribbean coast, billed as the largest Nike supplier in Central America. 

Grupo Kattan will build and rent the buildings to house the 63,000 square-metre facility – expected to make “well over 1m garments monthly” for the US sportswear brand – to Tegra as part of the so-called Projecto Arena joint venture, according to Kattan.

“We are very interested in continuing to grow our exports and looking for interested parties that want to come and do an alliance with us,” the executive says, adding that he is already speaking to several unnamed potential investors. 

“There is a big scarcity of woven fabric in Central America. We are primarily seeking a US cotton or yarn producer or a big textile company with a lot of know-how and financing muscle. We would also need commitments from retailers and brands on the demand side.”

The future factory would cost $50m-$70m and initially churn out 3m to 4m yards monthly of woven fabric. It could measure 60,000 to 70,000 square metres and would most likely be built in industrial San Pedro Sula. 

“We could put in the buildings and the clothing factories to consume the fabric,” adds Kattan. “This could be a very important project for the region. Instead of the US sending cotton to China and it going back as finished apparel, they could send more to Central America, we could use more of it here, help lower emissions from so much transport waste, and generate a lot more jobs.”

Garment mix

Central America has gradually added cotton-knit manufacturing capacity. But as woven capacity comes on stream, a more integrated, mixed knit-and-wovens’ supply chain to make performance and higher-end apparel could spring to life, helping generate jobs and contain Honduran migration to the US. 

Kattan says his family-owned business – which  has diversified from clothing manufacturing into construction, real estate and communications – invested $55m in the real-estate complex that will house the Nike sourcing site, set to employ 7,000 when finished in 2021 and significantly boost garment exports from Honduras. 

He says Tegra will likely invest over $30m to kit out the complex with manufacturing equipment. “They have to fit that whole building. They are going to make high-performance fabric and garments for athletes” among other products he declined to reveal. 

Tegra, the Atlanta, US-based apparel manufacturing and supply chain provider, is also expanding its Latin America workforce with new jobs in El Salvador. Tegra’s Decotex plant was expanded to nearly 250,000 square feet in August to significantly increase both manufacturing and warehousing capabilities for leading global apparel brands such as Nike – which buys shirts from the facility for its US and Canada markets. Decotex also ships directly to Outerstuff and HanesBrands. 

Added value

Grupo Kattan’s proposed wovens factory, if ever built, could help lift the region’s output of products such as dress shirts that fetch higher retail prices.

Making 720,000 garments monthly, Kattan produces workwear for the likes of Dickies and apparel VF Corporation, as well as dress shirts for Van Heusen and Men’s Warehouse. It has the Central American distributor’s license for Van Heusen and employs 3,000 in its factories. 

Kattan forecast US demand for basic apparel from Honduras will increase this year, boosting exports by 10% to over $3bn. Consequently, Kattan’s apparel division will also grow by that much to around $40m in revenues. 

Latest data from the US Department of Commerce shows apparel imports into the US from Honduras rose 9.8% in 2019 to US$ 2,82bn, up from US$2.57bn a year earlier. 

The country is the seventh largest apparel supplier to the US by value and volume – and the apparel industry accounts for the bulk of the impoverished nation’s export revenue. 

An ambitious Honduras 2020 plan was launched to triple apparel exports to $7.4bn and generate 200,000 new textiles jobs to boost the count to 350,000 by 2020. However, with that target a long way off, a plan to replace Honduras 2020 is currently in the works to bolster future growth.

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