Honduras has raised over $1bn or about one-third of the $3bn needed to transform its textiles industry as part of the Honduras 2020 development plan, a top executive has told just-style, admitting the initiative is facing heavy delays.
The committed sums include $120m for the Textiles San Juan plant, $120m for the fledgling San Juan Innovation Park, $93m for synthetic yarn mill Utexa, $50m for an unnamed yarn spinning site and another $30m for a similar facility, says Jesus Canahuati, owner of apparel supplier Elcatex, who is helping secure private funds for the initiative.
Additionally, the scheme includes a $20m site for Nike, $5m for a sewing facility by Suyapa Apparel and a $7m similar factory by Five Star Apparel. Another $5m will also go to two unnamed textile mills, according to a Honduras 2020 development slide provided to just-style.
Canahuati says the new United Textiles of Americas (Utexa), which will make 30m kilos annually of synthetic yarn, is on track to come on stream on 27 November, just in time for the Apparel Summit of the Americas, scheduled to take place in San Pedro Sula on 27-29 November. He adds Textiles San Juan is also making progress to come on stream in late 2019. When ready, it will churn out 10-12m yards monthly of open-width synthetic and stretch fabrics, he says.
Textiles, energy and ports
While not directly textiles related, the $1bn ballpark sum secured so far includes $450m for several power-generation projects, including Elcatex-owned Progressive Energy’s $63m liquefied natural gas (LNG) site to supply the future projects at a time when Honduran energy costs are skyrocketing.
Honduras’s under-developed Caribbean port facilities in Puerto Cortes also got a $250m boost this year, Canahuati reveals. $150m went to new container infrastructure while $100m was earmarked to expand the site’s bulk-shipping capabilities.
The Honduras 2020 plan aims to triple apparel exports to $7.4bn and generate 200,000 new textiles jobs to boost the count to 350,000 – all by 2020. Canahuati, however, concedes the charter has faced political and economic challenges and could now be delayed until 2022, depending on the results of the Apparel Summit where new investments will be sought.
As of mid-2017, the venture had lured $1.5bn for textiles and apparel undertakings, according to then 2020 Plan CEO Joe Cuervo. Cuervo’s estimates include a $500m-$700m plant that remains uncertain and is therefore not being counted, Canahuati explains.
Despite the setbacks, the executive is confident Honduras can meet its 2020 goals, which also call for the development other manufacturing sectors as well as tourism to halve extreme poverty and generate 600,000 jobs.
Job creation, challenges
The textile commitments so far will create 60,000 jobs, Canahuati claims – just as unions and economists slammed Honduras 2020 as “utopian,” saying it is failing to create enough jobs to contain rising Honduran migration, as symbolised in the headline-grabbing caravan trudging through Mexico.
“We are aligning to capture a very strong market which Asia is leaving because of the changes there including rising salaries,” says Canahuati, adding that Honduras aims to double its US market share to 6% compared to 35% for Asia and 15% for top rival Vietnam.
But he concedes that pursuing such an ambitious plan in the current economic environment is tougher than in Asia where governments have been quicker to support textiles development.
“When China puts a plan to work, the government puts all the elements for that to happen including in training, machinery etc, but here in Honduras it is not like that. The country does not have all the resources to do everything at once” or so quickly, Canahuati says.
The country’s lingering political instability, where new protests against President Juan Orlando Hernandez could flare up in coming months, is also not helping, observers say. Hernandez has been accused of winning last year’s presidential election in a highly contested vote hit by fraud claims.
Jesus Canahuati spoke with just-style in response to the following article: Honduras 2020 plan challenged as migrant caravan surges.