A new report prepared by ST&R’s Nicole Bivens Collinson for the Inter-American Development Bank finds that the COVID-19 pandemic has demonstrated that textile and apparel manufacturers in Mexico, El Salvador, Guatemala, Honduras, Haiti, and the Dominican Republic can be a viable source for the Canadian and U.S. markets. The ability of regional manufacturers and governments to recognize and act on the possibilities of a post-pandemic environment could dictate the condition of this industry for the next decade.
According to the report (click here to read the full text), the pandemic revealed a number of factors that could prove beneficial for textile and apparel manufacturers in these countries. For example, there are noticeable vulnerabilities in brands’ and retailers’ supply chains that are prompting them to consider changes such as hub and spoke sourcing models, vertical manufacturing in individual countries or regions, and nearshoring. Additionally, a transformational shift is occurring in consumer shopping behaviors, with ecommerce sales increasing exponentially.
At the same time, the U.S. and Canada are imposing trade-restrictive measures on major suppliers in China in response to concerns about forced labor practices in that country. Further, there are increasing civil and governmental pressures to bring manufacturing and its attendant jobs back to or nearer to the U.S. and Canadian markets.
The report asserts that the countries at issue can take advantage of this evolving situation and become a post-pandemic manufacturing destination if they engage in a collaborative public/private sector effort that includes continued steps to (1) demonstrate flexibility and quick response to market circumstances, (2) maintain versatility in production and supply chains for ecommerce and drop shipment supplies, (3) develop verticality in supply chains for yarns, fabrics, and apparel by working as a regional coordinated supplier, (4) capitalize on their proximity to, and free trade agreements with, the U.S. and Canada, and (5) provide complete visibility into their supply chains to demonstrate that no forced labor is used.
Other recommendations made by the report include accelerated trade lanes for trusted or known traders, cooperative agreements with the U.S. and Canada for pre-approved customs clearance for shipments, regional education and training initiatives, and integration of existing free trade agreement provisions.
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