Caribbean Region: Review of Economic Growth and ... - USITC

Box 4.2 Apparel Industry in Haiti: International Business Connections and Reputation Help Weather Instability andAsian CompetitionEstablished in 1952, the Apaid Group, a 100 percent family-owned Haitian company that originally produced plasticmolding, moved into apparel production in the 1990s. A leading Haitian contract apparel manufacturer, the ApaidGroup employs 6,000–6,500 apparel workers (about one-third of Haiti’s apparel workers) in six facilities in Port-au-Prince’s industrial sector. The Apaid Group manages several companies: One World Apparel, Premium Apparel,Genesis, and Inter-American Woven, which recently opened a facility in the Sonapi Industrial Park.U.S. companies have been importing apparel from Haiti to diversify their sourcing and to take advantage of the1country’s proximity, ample supply of low cost labor, and preferential treatment granted by the CBTPA. For a numberof years, the Apaid Group has contracted with major U.S. apparel companies such as Hanesbrands and CanadianownedGildan, to produce knit garments, chiefly T-shirts. Most of these apparel exports entered duty-free under the23CBTPA. Since the implementation of the HOPE Act, the Apaid Group has expanded production of woven garmentsin response to provisions in the HOPE legislation that allow a certain number of woven garments made of thirdcountryfabrics to receive preferential treatment. Of the Apaid Group’s total number of apparel employees, an4estimated 1,000 to 1,200 now produce woven products such as pants. Apaid Apparel attributes its relative successin apparel production in Haiti to its longevity in business and good reputation. Its strong business relationships withNorth American apparel companies, such as Hanesbrands producers, have also likely contributed to its success. 5In the late 1980s, Haiti’s apparel industry consisted of more than 100 firms and over 100,000 employees, butprolonged political and economic instability contributed to a contraction in Haiti's economy and its apparel industry.6Today, Haiti’s apparel industry has fewer than 20 firms and about 15,000 to 18,000 employees. Nevertheless, Haiti’stextile and apparel industry currently represents most of the production in Haiti’s assembly sector, accounting for overone-half of the total number of companies in its assembly sector. Haiti was the only CBERA apparel supplier to theUnited States whose apparel exports grew steadily during 2002–07, rising to $452 million at the end of the period.This growth can likely be attributed to preferential treatment such as duty-free access for qualified textile and apparelgoods and more flexible rules of origin offered by the CBTPA to textile and apparel exports from Haiti.Sources: Andrea Schmidt and Anthony Fenton. “Andy Apaid and Us.” October 19, 2005, http://www.zmag.org;U.S. & Foreign Commercial Service and U.S. Department of State. “Haiti: Apparel & Textiles.” Industry SectorAnalysis. March 3, 2003.1According to an Apaid Apparel representative, Haiti’s minimum wage rates are about 70 Haitian gourdes for an 8-hour day(about $2.00); apparel workers who are paid on a piece rate to encourage increased productivity make about two to three timesthe minimum wage.2One industry source stated that Gildan supplies an estimated 40 percent of the T-shirts sold in the United States; Gildan’slabor costs in Haiti and Honduras are actually cheaper than those in China, and the bulk of T-shirts heading to the U.S. marketare from the Caribbean.”3Clifford Apaid (manager, Apaid Apparel), telephone interview by Commission staff, January 18, 2006.4Ibid.5Ibid.6Faubert (hearing transcript, 10-13) states that employment ceased during the embargo itself and later recovered toapproximately 22,000 employees and then declined to 18,000 employees in 2006. Also see U.S. Department of State, October,2006, 1.SourcesCIA. “The World Factbook: Haiti.” March 20, 2008, www.cia.gov.EIU. Country Report: Haiti. February 2008, www.eiu.com.———. Country Profile 2007: Haiti, www.eiu.com.IMF. Haiti: Poverty Reduction Strategy Paper. IMF Country Report No. 08/115. March 2008.Ugo Fasano, IMF Western Hemisphere Department. “Post-Conflict Stabilization: Haiti's Economic,Political Turnaround.” IMF Survey Magazine, September 17, 2007.http://www.imf.org/external/pubs/ft/survey/so/2007/CAR0917A.htm.4-75