The falling value of the peso against the dollar makes Mexican textile and apparel goods increasingly attractive to US and foreign buyers

The falling value of the peso against the dollar makes Mexican textile and apparel goods increasingly attractive to US and foreign buyers

Mexico's apparel industry is facing a textile raw material shortage as the soaring dollar prompts spinners to boost exports, leaving many clothing makers struggling to procure key fabrics to meet US orders, a top industry official says.

"There is no fabric to meet supply demands, especially for khaki and denim," explains Arturo Vivanco, president of the Jalisco State branch of apparel trade lobby Canaive, adding that importing such products has become increasingly expensive and cumbersome.

"The rising US dollar has meant 20-25% of textiles [manufacturing] capacity is going outside Mexico."

Vivanco's firm, Maquiladora Vivanco, which supplies C&A, is struggling to meet clothing orders as the plummeting peso means local fabric suppliers can now fetch 20% more by shipping their goods north of the border or increasingly to Colombia or Peru.

To fix the problem, Canaive is hammering out a plan to help clothiers buy fabrics four months in advance at slightly higher prices, instead of weeks or one month in advance as they have done traditionally.

"We are going to start ordering much more in advance and make sure orders are large and attractive enough for our manufacturers," Vivanco says.

Mexico's peso last week hit 17.50 against what is now locally called the 'super-dollar,' up sharply from roughly MXN11-12 per dollar a year ago, making Mexican textile and apparel goods increasingly attractive to US and foreign buyers.

This rising interest helped garment exports jump 6% to roughly $4bn last year and is expected to bolster them another 4% to 5% in 2016, Vivanco predicts. On the back of the weaker peso, clothing imports are set to fall, benefiting local manufacturers whose domestic sales are set to increase 6% to 7% this year from 4% in 2015, he adds.

A government textiles and apparel aid package launched last spring has helped tame a flood of sub-valued Asian imports, especially for apparel goods that came in at cents on the dollar.

The measures helped establish reference prices for Asian and other clothing and forced importers to register their operations, tightening state surveillance and stamping out organised crime rings.

But not everyone has benefited.

Main textiles trade lobby Canaintex said recently that sub-valued fabric imports are rising, hurting local spinners. While they fell to 10% from 19% soon after the package was introduced, they later crept back to as high as 16%, said president Alfonso Juan Ayub.

The textiles sector has also recently faced last-minute order cancellations from apparel manufacturers, further underscoring the view that illegal imports are increasing, a Canaintex spokeswoman confirmed Ayub as telling local press.

According to Ayub, temporary Chinese imports are arriving at Mexico's Manzanillo port, "turning half way" to go to the US and then re-entering as originating from North America.

He said Mexico City must tighten raids and step up fines against illegal importers, among other things, to ensure they meet the law.

While Mexico's textiles sector grew 2% last year (rebounding from a 3.1% contraction), 2016 growth could fall unless the government moves to ensure the package works for textile suppliers.