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June 13, 2022

The week in review: Gap Inc to ramp up Central America sourcing efforts

US specialty retailer Gap Inc is doubling down on its efforts to bolster supply chain resilience by nearshoring more production to the Western Hemisphere, having committed to increasing its sourcing in Central America by some US$50m per year.

By Beth Wright

The move was announced as part of the retailer’s commitment to Vice President Kamala Harris’ Call to Action to create economic opportunity in the northern Central American countries of Guatemala, Honduras, and El Salvador. It marks a total growth commitment of $150m by Gap Inc to the region by 2025.

While Gap Inc’s current production in Central America supports an estimated 8,200 manufacturing jobs in the region, primarily held by women, the increased purchases are expected to lead to about 5,000 more.

Expanding its sourcing capabilities in its own backyard will also help to drive increased flexibility and speed to market. 

The San Francisco-based company said earlier this year it will ramp up production in Latin America as it looks to recover from financial losses linked to supply chain disruption.

Speaking to analysts in the wake of the group’s fourth-quarter results, CEO Sonia Syngal said Gap Inc will grow its Mexico and Central America sourcing in 2022, adding over the longer term, the company is looking at “de-risking” its supply chain by “rebalancing sourcing to rely less on single countries of origin and building deeper relationships with near-shore vendors.”

Meanwhile, the latest figures to come out of the US Office of Textiles and Apparel (OTEXA), show both Honduras and Mexico were overtaken by Pakistan in the ranking of top ten apparel suppliers to the US as the South Asian sourcing hub continues to become an increasingly important partner to the country. 

Gap Inc to scale Central America sourcing as it backs VP Harris’ Call to Action
US clothing retailer Gap Inc is among the latest ten companies announcing new commitments to create economic opportunity in northern Central America as part of Vice President Kamala Harris’ Call to Action for the region.

US apparel imports in April indicate growing importance of Pakistan
The latest figures to come from the US Office of Textiles and Apparel (OTEXA) for April reveal Pakistan is becoming an increasingly important partner to the region, now overtaking Honduras and Mexico to become its seventh-largest supplier of apparel.

Bangladesh depot fire: Lack of transparency and cost for apparel supply chain
A depot fire in Bangladesh understood to have killed at least 49 people will have financial implications for the apparel sector and highlights the importance of traceability and transparency within the supply chain, an industry expert tells Just Style exclusively.

Exclusive comment: Cambodia workers strike at Adidas shoe factory
The Clean Clothes Campaign has revealed union leaders were arrested following a strike by Cambodian garment workers at an Adidas shoe factory last week allegedly due to poor working conditions.

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