El Salvador: A Unique Option for Sourcing Quick to Market Athleisure

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Unifi facility in El Salvador

In El Salvador, one link in the synthetics supply chain is scarcely more than a 30-minute drive from the next—sometimes less. It’s a synthetic textile and apparel cluster, a supply chain city of sorts, and its helping athleisure make it to market faster than most other sources can manage.

From the yarn suppliers to the narrow elastics manufacturer, the fabric mill and the textile factories, it’s all nearby and the individual entities function, for the most part, as one virtually vertically integrated organization.

In an effort to differentiate the country and its capabilities, moving away from its previous maquila (solely sewing) operations, and to take advantage of the CAFTA-DR trade agreement, the Salvadorian government invested in the synthetic cluster, and now greater interest in nearshoring—and athleisure—has even more eyes on El Salvador.

“El Salvador is the only country in Central America that has been able to develop a full synthetic cluster,” said Carolina Vides de Palomo, investment promotion manager for PROESA, the Salvadorian government’s agency for investment promotion. “El Salvador is ideally suited for high tariff rate exports.”

And synthetic products face some of the highest tariff rates in trade. The yarn forward rule under CAFTA-DR allows for duty free access for qualifying textile and apparel products made using U.S. and/or Central America-DR yarns and fabrics, like nylon, polyester, micro fiber—products subject to a 32 percent tariff when imported from Asia to the U.S.

What’s also key, apart from saving on those duties, is that lead times can run as short as three weeks from order to shipping when materials are already on hand.

The synthetic cluster includes polyester and nylon yarn producers, a narrow elastics manufacturer, circular and warp knit stretch fabric suppliers and apparel manufacturers, specializing in athletic wear, sportswear, performance wear, and swimwear products.

Brands like Nike, Under Armour, Patagonia, The North Face and Lululemon are already tapping the market to make their goods.

“It’s a cluster, you have it all here,” Unifi general manager Jaime Campos said.

Unifi, the leading multi-filament polyester and nylon textured yarn producer, has been in El Salvador for six years supplying the cluster, and growth has been steady since.

“After CAFTA was ratified, the El Salvador government looked at strategic investment for growth because we wanted El Salvador to stop being looked at only as a cut and sew transformation country. Instead of just making underwear, we started making jackets—a higher grade garment driven by the synthetic cluster,” Campos explained. “The synthetic revolution started.”

In the last five years, El Salvador’s exports of synthetics have jumped 83 percent to $451 million, according to PROESA.

For CS Central America, which also supplies yarn to the cluster, the activewear trend has done a lot for business.

“If you look at the textile industry in El Salvador, it’s the only industry that has been growing for the past eight years,” Jorge Salazar, sales and administration director for CS Central America, said. “But if you look in more details at which sector of the textile industry has been growing more, what you’re going to find is that the synthetic sector has been growing every year for the past eight years.”

CS Central America produces continuous filament yarns, including yarns with moisture management, fire retardant yarns, cationic yarns, yarns that retain heat in the cold and release heat in warmer climes. And because the transformation into yarn is done in El Salvador, the resin to make it can be imported from anywhere and still meet the duty free requirements.

“You can find any type of yarn here that you would find in Japan,” Salazar said.

And high-quality, highly designed narrow elastics aren’t hard to find in El Salvador either.

George C. Moore, a 107-year-old company founded in Massachusetts, has been in El Salvador since 2006 making elastics for yoga and performance apparel, as well as for innerwear, swimwear and medical gear. As a weaving and knitting operation, the company can source yarn from anywhere in the world and still meet origin requirements for duty free benefits under CAFTA-DR.

Since CAFTA, George C. Moore general manager Carlo Melara explained, the business has been growing slowly, but steadily.

“The businesses that come, they don’t want to leave,” Melara said. “Under Armour has come back to the region for several years now. They’re very dedicated to trying to strengthen the capabilities of all their trim suppliers and fabric suppliers.”

The synthetic cluster’s key fabric supplier, Pettenati, is among the elite when it comes to fabric manufacturers. The vertically integrated company handles knitting, dyeing, stamping and finishing to guarantee quality control, agility and lower cost—three vital things for meeting the demands of the current market. What’s more, with three shifts running, there’s a three-day turnaround for the entire production process.

Since it landed in El Salvador seven years ago, growth has been in the double digits each year and the company is now the largest circular knitter for sports apparel and outdoor wear in the Americas.

For Francesco Pilenga, Pettenati’s director of operations, an out-of-order Trans-Pacific Partnership spells an advantage for Central America if the region can increase its capacity and bring more big players in.

“The entire region is getting more sophisticated,” Pilenga said. “At least there is a lot of attention here. After the [U.S. presidential] election, everybody is traveling down to this region. They are freaking out.”

Pettanati, which produces goods for companies like Nike, Under Armour, Lululemon and Adidas, has its sights set on 15 percent growth over the next three years and has investments underway to incorporate new finishing capabilities and technologies that are novel for the region.

TexOps, a high-quality, high-tech apparel manufacturer in the cluster, has been steadily successful, but more so of late as demand for quicker turn production picks up.

“What we feel—and it’s happening as we speak—is that at the C-suite level, with the pressure of the stock, Wall St. is not tolerating these inefficiencies in inventory,” TexOps director Juan Zighelboim said. “The pyramid is upside down because the CEO’s money is based on the stock price of the company. Now that it’s hitting them in the pocket where it hurts, they’re going to their sourcing guys and saying ‘I don’t care what you have to do, get it to me fast and quick.’”

TexOps, which counts Lululemon, Castelli, REI and Dick’s Sporting Goods among its customers, built its company based on speed.

“We have lead times as low as three days. It all depends on what the customer is comfortable managing,” Zighelboim said.


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