The Inter-American Development Bank (IDB) has loaned Honduran textile and clothing manufacturer Grupo Elcatex $ 96 million to help it boost production and exports.
The institution’s IDB Invest arm provided the six-year loan facility to the company’s Elcatex and San Juan Textiles subsidiaries.
The funding will help the Central American sports and basic clothing manufacturer increase its cotton fabric production capacity, diversify its exports with a new synthetic fabric production line and create around 3,200 direct jobs.
The IDB provided $ 64 million directly and helped mobilize an additional $ 32 million from the China Cofinancing Fund for the Americas, the Washington-based multilateral company said in a statement.
The funding also calls on the company to promote small and medium-sized women-owned businesses in Honduras to supply products to its factories. Women Entrepreneurs Finance Initiative (We-Fi) will lead the initiative, the first of its kind at the regional level, to identify opportunities to train women to take on higher sourcing positions and become more involved in the supply chain of ‘Elcatex.
IDB Invest says the agreement with Elcatex and San Juan Textiles is part of its response to the crisis generated by Covid-19 in Latin America and the Caribbean, and supports the manufacturing sector in Central America.
Since the onset of the pandemic, Elcatex “has shown unprecedented flexibility by initially adjusting its biosecurity protocols to protect its associates and later adapting its production, design and clothing lines to produce protective equipment. individual like face masks and surgical gowns, ”he explains.
“Long-term financing enables the growth of customer operations, strengthens the country’s foreign trade and halt job losses in the context of this health and economic crisis.
Honduras is one of the main exporters of textiles and clothing from the Americas to the United States. In turn, industry is one of the main economic activities of the country, accounting for 84% of exports of manufactured products (maquila) in 2019, and directly and indirectly employing more than 150,000 workers.
Vote of confidence
Elcatex has led Honduran efforts to become a larger supplier of synthetic clothing to the United States, giving it an advantage over other Central American countries. However, these plans – also anchored in the Honduras 2020 development plan – have experienced delays in their realization.
Nonetheless, Elcatex continued to expand its business, becoming one of the region’s largest apparel suppliers and employing 9,400 workers in four divisions, including textiles and synthetic filaments, energy, industrial parks and technology. and innovation.
Mario Canahuati, president of the Honduran Association of Maquila AHM (Asociación Hondureña de Maquiladores), says the IDB investment is an endorsement of Elcatex as well as of the future of textiles in Honduras.
He concedes the industry has suffered from the virus, which has slowed down clothing factories for more than three months. However, the resumption of orders and the pivot of certain companies to manufacture personal protective equipment (PPE) made it possible to avoid huge losses. In addition to Elcatex, a new unnamed cotton fabric factory is expected to start soon, generating 1,500 jobs.
“This and Elcatex’s investment should help us recover jobs as long as we can maintain the orders,” Canahuati adds. He says that 50,000 jobs – about 50% of the workforce in the textile sector – were lost during the crisis.
Elcatex currently operates five sewing factories that produce more than 120 million pieces of clothing per year, including white t-shirts, sweatshirts, men’s underwear and sportswear.
Earlier this year, just-style was told that the coronavirus would likely cut Central America’s clothing exports in half. This appears to be corroborated by US apparel import data for April, which showed Central American suppliers Honduras and El Salvador were seeing the biggest drops in shipments at over 90% each.