Haiti's Economy Held Together By Polo Shirts And Blue Jeans

Haiti’s economy held together by polo shirts and blue jeans

(Financial Times) - Andres Schipani

©Swoan Parker/Reuters

Needlework: sewing garments at the Caracol Industrial Park complex

Mederique Derilus is busy packing white T-shirts for shipping 1,000km north to the US. The 45-year-old worker at the Codevi industrial park — a unionised garment operation located on the edges of the city of Ouanaminthe, in the northeast of the country on the border with the Dominican Republic — points at a label that reads “Made in Haiti”.

Every day, some 7,000 Haitians work at the Ouanaminthe plant, which belongs to Grupo M, a Dominican Republic-based garment manufacturer, which supplies US brands such as Levi’s and Polo. Last year, the Codevi complex shipped almost 7m trousers and 3m polo shirts to the US, through Dominican ports via a private border crossing.

“When we compete with Asia, our proximity to the US market is key,” says Cristian Capellán, the director of Grupo M’s operation at the border. Like most garment companies operating in the country, it focuses on high-volume, low-margin apparel almost exclusively for the US mass market.

“Textiles are a crucial component of Haiti’s economy and there have been some serious investments in that area,” says Jude Hervey Day, Haiti’s minister of industry and commerce. They represent Haiti’s largest manufacturing sector, accounting for 90 per cent of exports, and about 10 per cent of the country’s gross domestic product.

Aside from being close to North America, Haiti-based producers have competitive advantages that have enticed South Korean investors in recent years. Those include competitive labour costs, tax benefits and US legislation that expands duty-free access for textiles made in Haiti to include those made with fabrics sourced anywhere.

Trade agreements and acts, which have granted Haiti-based clothing manufacturers duty-free access to the US, have been extended until 2020. And there is now pressure to extend some of these until 2030. Analysts expect textile exports to surpass the $1bn mark for the first time this year.

However, a recent unpublished report by a leading aid organisation operating in the country says lack of investment in infrastructure, energy and water plants “severely” limits the textile industry’s ability to attract further investment. This marks a missed opportunity at a time when retailers are on the lookout for opportunities to source production as costs rise in Asia.

 

 

With Africa seen by many as the next significant region for manufacturing, the report says that Haiti should focus on companies that already have a manufacturing base in Africa where operating conditions are “similar”.

 

Like many of their African colleagues, Haitian workers, mostly former farmers, lack formal work experience.

Yet Richard Coles, a local textile businessman who employs 3,500 people in Port-au-Prince, says: “Once expectations are clear, training is done, proper equipment installed, and the working environment is good, Haitians are the best.”

Wages are another concern. “I wish they [would] pay us more,” grumbles 32-year-old Nadège, during a lunch break from quality control at a South Korean-run factory at the Caracol Industrial Park in the north of the country. The factory produces “Made in Haiti” for American labels, such as Target and Walmart. “But I cannot really complain as I have a job now.”

Approximate average real salaries in Haiti lie between $180-$200 a month, says the aid agency report. That is about five times more than some 45 per cent of Haitian workers earn a day, according to the UN Development Programme, and higher than in Ghana and Lesotho, where workers receive monthly salaries of $112 and roughly $140, respectively.

However, garment factories “can only be one small part of a development strategy”, says Mark Weisbrot of the Washington-based Centre for Economic and Policy Research.

“The biggest problem with the ‘sweatshop’ model in Haiti is that workers don’t have collective bargaining rights” — to help them secure a living wage.

José Agustín Aguerre, the Inter-American Development Bank’s country manager for Haiti, does not think that the country’s textile industry model “is sustainable, nor desirable in the long term”.

“But for a country with galloping unemployment rates, coming from crisis after crisis, it is a good way to find employment for the population, create working habits, and generate income. It is a first step.”
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Job creation: Industrial park promises much

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Support for Haiti: Hillary Clinton

 

When the Caracol Industrial Park in northern Haiti was inaugurated in 2012, it was packed with celebrities. Actors Sean Penn and Ben Stiller, Virgin’s Richard Branson and fashion designer Donna Karan mingled with then US secretary of state Hillary Clinton, accompanied by her husband, former president Bill Clinton, the UN special envoy to Haiti.

 

Today it is rather quieter. “We had learnt that supporting long-term prosperity in Haiti meant more than providing aid,” Mrs Clinton said then. “So we shifted our assistance to investment to address some of the biggest challenges facing this country: creating jobs and sustainable economic growth.”

The $300m complex, close to the northern coast, was billed as a way to reduce Haiti’s economic reliance on the capital. The joint project of the Haitian and US governments, and the Inter-American Development Bank, would create 65,000 “permanent jobs” once “fully developed”, said the US State Department.

But job creation in the fledgling industrial park has not progressed at the hoped for pace. Many queue outside Caracol’s front gate every day in the hope of a job.

Liszt Quitel, Caracol’s general manager at Sonapi, Haiti’s national governing body for industrial parks, says that the complex is working at about 10 per cent capacity.

Producers in Haiti have competitive advantages that have enticed Korean investors

 

Sae-A, the Korean garment manufacturer, has invested $78m. The company could become the biggest private sector employer in Haiti, promising to create 20,000 jobs. Currently, it employs almost 5,000 locals in three sewing factories. It has three other plants in the pipeline to be opened by next year.

 

Peintures Caraïbes, a Haitian franchise of Sherwin-Williams, the US paint company, and the Florida-based perfume maker UB Fragrances, are both in the park, although Mr Quitel says their operations are still relatively small. Local textile manufacturer Goal is opening factories to employ 5,000 workers in next five years.

Although there have been controversies around environmental issues, land and lack of support facilities, the 250ha-complex boasts power and water treatments plants and factory construction is under way.

The expansion of the nearby port in Cap Haitïen will, once operational, give it a boost, say experts.
Jobs grew from 1,200 in 2012 to some 5,300 last year, according to Sonapi’s latest report.

Norma Powell, general director of Haiti’s Center for Investment Facilitation, says Caracol’s development is “picking up”, but that it “was bound to take time”.