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Women line up to add their names to a job list at the Corail-Cesselesse camp for displaced people on the outskirts of Port-au-Prince, Haiti. (Alexandre Meneghini / Associated Press / July 8, 2010)
Copyright © 2010, Los Angeles Times
By: just-style.com | 12 August 2010
Moves to rebuild Haiti's textile and apparel industry following the devastating earthquake that hit the country earlier this year have taken another step forward with the opening of its first job training centre for garment workers.
New offshore opportunities are growing from more than just baseballs, apparel and textile manufacturing which has served as the number one job source for Haitians pre-earthquake.
Source: Industrial Week
By Andy English, Director of Sourcing, Blackthorn International
March 8, 2010
When the earthquake ravaged this beautiful Caribbean country it gave it back a relevancy it hasn't seen in decades. The Haiti relief efforts by individuals and neighboring countries are so enormous that direct assist with their economy is a natural second act. New offshore opportunities are growing from more than just baseballs, apparel and textile manufacturing which has served as the number one job source for Haitians pre-earthquake.
Local Advantage
One of the most proven successful ways to step into capacity contracting in Haiti or, setting up one's own brick-and-mortar there, is to cash in on current success and not re-invent the wheel. No one knows the paths to follow more than the local shop owner in Haiti. Why blaze a new trail when the old ones are so well traveled. The primary Haiti skill set is the eagerness and ability to learn.
HOPE for Duty Free Exports
HOPE II has the most generous market access provisions, and the longest duration (10 years), of all the U.S. trade preference programs. The rules of HOPE II are simple, flexible and generous for manufacturers and importers. The program includes a variety of different preference options for apparel, including a capped value-added content rule, capped trade preference levels (TPL)s, and an uncapped single-transformation list of products.
HOPE II also includes a world-class labor standards compliance provision. The program provided for in HOPE II is built upon the Cambodian Better Factories program, which helped Cambodia establish a widely-accepted labor compliance framework for its apparel industry despite the challenge of inadequate governmental capacity.
For men's or boy's dress (CVS fabric) pants, that's nearly 30%. For some products, the duty savings alone can be equal to the cut/make costs of making in a neighboring country. Or, perhaps even though a finishing operation isn't available in Haiti, the garments can be shipped to the Dominican Republic, finished there, and then export back to the U.S. as a duty-free product.
This levels and may tilt the playing field in favor of Haiti exports and production, even when compared to Asian producers. For with all other factors being equal, none have duty free, and are in such proximity to the U.S. for 3 day transit time to Miami by ship.
Haiti's apparel manufacturing past has been filled with customers who focused on products that were generally considered low-dollar, high-volume, and low-skill. The cost formula for these clients was usually one that looked for labor prices that were comparable to the component costs of their commodity products. While famous for t-shirts, Haitian apparel manufacturing has grown in areas that include tailored jackets and tuxedoes, wool top coats, women's coats, men's outlet pants, or fashionable men's and ladies' camp shirt duos.
Medical uniform production has increased since the passage of HOPE, but so has men's and boys' casual pant capacity, with wrinkle-free finishing capacity also available at some facilities. This evolution will continue toward higher-end products, as those customers who are positioning in Haiti, begin to prosper and re-invest time, energy and efforts.
And now there is another reason to position in Haiti. As another humanitarian and supportive gesture, there is now the proposal to U.S. retailers to source as much as 1% of their products in Haiti called Plus One For Haiti. The ramifications of this are tremendous in terms of short-term and long-term efforts to increase employment and the manufacturing capability base of the industry in all of Haiti. Currently 25,000 employees in the industry in Haiti support only about 12 direct customers producing there. By reaching out and increasing that customer number by 3 or 4 times, the industry has a real chance of a true revival and long-term security intended to take the recovery to the next generation and beyond.
Of course, the hope is that Plus One For Haiti will serve as a catalyst for growth by attracting peripheral service businesses such as shipping services, suppliers of trim, machines and parts, banking services to support full-package products, which in turn will support the growth of current operations or new ventures. This is exactly how the Dominican Republic's apparel industry grew in bounds during the late 80's and 90's. Getting in early ensures one positioning of the short and long-term growth of these burgeoning enterprises as well as providing PR cover for the consumers who are determined to do their part by spending on goods that have helped the country.
Sourcing vs. Manufacturing
But how does one go about finding a contractor in Haiti? You must seek contractors who have full capacity and are creative with the terms of venture. It may mean developing a partnership with a Haitian contractor on a new operation by bringing in equipment or management advisors. It may mean allowing their managers to visit your factory to see how to set up a line, or study methods and operations. Or it may include introducing them to your already-established manufacturing partner from another country whose business is at risk due to the pressures of Asia, Haiti or elsewhere, and giving them both an opportunity to create a partnership for you. They might see that having a piece of the pie is better than not having any pie at all. It also provides a higher level of confidence in the developing operation for customers than having to take that ethereal leap of faith with every variable being absolutely new.
There is no substitute for knowing your own business, including knowing your own sewing and cutting methods. Being able to pass those methods onto your Haitian contractor will demonstrate and promote a higher level of trust and long term commitment between contractor and customer than just bringing product and waiting for the fruit to fall. One example of this, might be to find that it's possible to break into pieces, either the garment or the process to manufacture the garment, concentrating the efforts in Haiti on sewing, while sourcing the cutting, wash or other finishing process in the DR or elsewhere regionally. Haiti doesn't possess all of the facilities for every type of garment, but after 30+ years of apparel manufacturing history, their neighbor to the east most likely does. If one can learn to use the entire island's resources, as some already have learned -- the Haiti is a winning formula.
Andy English is Director of Sourcing for Blackthorn International. He has been sourcing production in the western hemisphere, including Haiti, since 1996. His past employers include Levi Strauss, VF, the Bayer Group, Kalikow Brothers, and Fishman & Tobin. He is a second generation apparel manufacturing engineer, manager and sourcing advisor.
Trade deserves some credit for the small but significant improvements to Haiti's economy before the earthquake. U.S. efforts to help Haitians recover from the disaster should include further improvements in our trade preferences program to promote job growth and better working conditions in Haiti.
The day before the devastating earthquake hit Haiti, PBS's Newshour reported on growing hopes that the country might be turning a corner in terms of political stability and economic growth, in part because of the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, which allows duty-free imports of Haitian apparel products. And, in the days since the quake, various scholars and pundits have noted the need to start planning now for how to shift from humanitarian relief to recovery and reconstruction, with a focus on rapid job creation--something that HOPE could help deliver.
As one of his six important lessons for disaster relief, CGD visiting fellow John Simon noted that, "[e]ven as the relief operation is gearing up, work should commence in parallel ... to plan long-term recovery." Paul Collier called for a Marshall Plan for Haiti, including using U.S. and other trade preference programs to stimulate the quick revival of the garment sector. Similarly, citing an earlier Collier analysis on how to promote economic security in Haiti, Nicolas Kristof called for revival of the garment sector, noting that even so-called "sweatshop" jobs are better than nothing.
So, is the HOPE Act adequate? Or could it be improved to help spur exports, jobs, and recovery? And must the jobs created be sweatshop jobs?
In 2006, Congress passed what came to be known as HOPE I to expand duty-free access for Haitian exports, especially of apparel. But investors did not respond for a number of reasons, including the program's short timeframe (just three years) and rules of origin for determining product eligibility that were complicated and restricted efficient sourcing of inputs (though they were far more flexible than under most other U.S. trade preference programs for developing countries). As shown in the table, despite HOPE I, total Haitian apparel exports to the U.S. stagnated in 2007 and then dropped in 2008.
Haitian Apparel Exports to the United States (million dollars)
Haitian Apparel Exports to the United States (million dollars)
2006 2007 2008 2009*
Total 450 453 412 512
Under CBTPA 392 394 297 342
Under HOPE I, II Not applicable 13 75 125
Share of total U.S. imports 0.6% 0.6% 0.6% 0.8%
* Extrapolated from January-November data.Sources: U.S. Department of Commerce, Office of Textiles and Apparel; U.S. International Trade Commission.
HOPE II, passed less than two years later, extended the program for a decade and further loosened the rules of origin to provide more flexibility to source materials globally. Congress also added requirements for Haiti to beef up monitoring and enforcement of labor standards, with technical and financial assistance from the U.S. and the International Labor Organization (ILO). With these changes, Haitian exports to the U.S. rebounded last year to 13 percent above the 2007 level. While the positive impact of the HOPE II changes is evident in the table, the rules of origin, even now, are restrictive and complex, spanning four and a half pages of single-spaced small print.
In addition, HOPE II excludes t-shirts and sweatshirts, three-quarters of Haiti's exports, with the result that most Haitian apparel exports still come into the U.S. under other preference programs. Those products receive duty-free status under the regional Caribbean Trade partnership Act, but under that program, they must incorporate American yarn, as well as fabric that is either American or locally-produced, a stipulation that raises costs and decreases Haiti's competiveness.
Those rules also create problems for Haitian exporters trying to penetrate the Canadian market. Canada's trade preference program for least-developed countries has generous rules of origin, allowing beneficiaries to source fabric and other inputs from any other developing country. But, because of the American rules that force Haiti to use U.S. inputs, many Haitian apparel exports are not granted duty-free treatment in Canada, even though the yarn or fabric would receive such treatment if exported directly from the U.S. to Canada under the North American Free Trade Agreement (NAFTA). That combination of rules makes little sense for the United States, Canada, or Haiti.
Finally, what about the quality of the jobs created under the HOPE Act? While apparel assembly pays relatively low wages wherever it is done in the world, these jobs do not have to endanger workers' health or be abusive or force workers to choose between a wage and their fundamental rights, conditions often associated with sweatshops. To ensure Haiti's compliance with HOPE II's requirements, the ILO, with the International Finance Corporation and U.S. financial support, launched a Better Work program in the country last fall. In an earlier post I discussed the Better Work program and a CGD event where preliminary research was presented on the results from a similar program operating in Cambodia. This research suggests that monitoring and focused attention on improving human resource practices in factories leads to both better working conditions and more competitive firms. Effective implementation of this program in Haiti would mean that HOPE II contributes to both more and better jobs for Haitians trying to survive in the wake of this terrible tragedy.
Preliminary reports from the Better Work program manager in Haiti suggest that, while some factories collapsed, others suffered only minor damage or none at all. This sector and program, then, present an ideal opportunity for the public and private sectors to cooperate and to start work on Haiti's longer-term recovery. To maximize the impact, the United States and Canada should also fix the rules in their preference programs to allow the broadest possible sourcing of fabric and other inputs, which would facilitate Haiti's apparel exports and create the jobs that are so desperately needed.
