The Benefits of Apparel Production in Latin America

Latin America Sourcing - Textile Manufacturing

The COVID-19 Pandemic and the Rise of Latin American Textile Manufacturing

The COVID-19 pandemic has demonstrated that textile and apparel manufacturers in Central and South America are an incredibly viable source for the Canadian and US markets. The pandemic revealed several 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, 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 e-commerce sales increasing exponentially.

At the same time, the US 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 US and Canadian markets.

Latin America Displacing the Old Vanguard in the East

While China and Vietnam were once prominent partners for U.S. brands, wage inflation and changing trade agreements have left many clothing lines searching for new solutions for their manufacturing needs. With COVID-19 continuing to disrupt the garment industry, it’s more prudent than ever to diversify and shorten your supply chain—and, whenever possible, to lower your apparel manufacturing costs.

As these pressures coalesce on clothing and textile brands, the new USMCA trade agreement has made it more efficient and affordable than ever for U.S. companies to manufacture apparel in Latin America.

How Latin America Can Take Advantage of the Situation

Countries in Latin America 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:

• Demonstrate flexibility and quick response to market circumstances.
• Maintain versatility in production and supply chains for e-commerce and drop shipment supplies.
• Develop verticality in supply chains for yarns, fabrics, and apparel by working as a regional coordinated supplier.
• Capitalize on their proximity to, and free trade agreements with, the US and Canada.
• Provide complete visibility into their supply chains to demonstrate that no forced labor is used.

Mexico is Emerging as a Leading Destination Among LatAm Countries

Thanks to a skilled labor force, trade incentives, and several other factors, Mexico is now an ideal country for clothing and textile manufacturing.

Three Primary Reasons for the Growth of Apparel Manufacturing in Mexico

#### 1. Skilled, Cost-Effective Labor Force

Mexico’s evolving export industry has adapted, with cut-and-sew workers trained in the detail-oriented leather industry easily transitioning to specialty textiles and apparel.

• Less turnover – Hiring and training can result in significant administrative costs, as well as quality control issues. You’ll experience less turnover with a more skilled workforce.
• High-quality products – In Mexico, complex apparel and accessories are assembled in line with U.S. safety standards, making for top-notch products in suitable working environments.

#### 2. Low Lead Times Due to Proximity

One of the most significant factors behind Mexico’s rise as a textile manufacturing nation is the low lead times for product delivery.

With numerous maquiladora factories operating close to the U.S.-Mexico border since the 1990s, the logistics for shipping goods are well-established. Thanks to the country’s proximity to the U.S., goods are easily transported across land rather than by sea.

#### 3. Trade Incentives

The USMCA trade agreement, which updated NAFTA, took effect on July 1, 2020. It contains further provisions that can benefit the apparel industry, decreasing scrutiny and delays at customs and resulting in lower shipping times and costs.

Two USMCA Updates Beneficial for Apparel and Textile Companies

• Section 321: This provision eliminates duties on goods priced at less than $800, streamlining the overall release process at Customs and Border Control.
• Labor Protections: New protections under USMCA give workers collective bargaining power and ban the import of products created with forced labor.

Conclusion

Latin America Sourcing's connections in Mexico make it straightforward for U.S. businesses like yours to move all or part of their manufacturing process to Mexico.

From leading you through the aspects of the supplier selection process to offering business and sourcing services, our customized solutions are designed to streamline the process of nearshoring your clothing manufacturing needs. For advice on the RFP process, check out our article here.

Contact us to learn more about our services for apparel brands today.