Contact the Central American Group if you want to establish a textile manufacturing operation in one of our free trade zones in El Salvador.
The synthetic textile sector in El Salvador is vibrant and developed.
Textile, Apparel, and Free Trade Association of El Salvador
The Central American Group: Welcome to another episode of the Central American Group podcasts. We record these on topics related to economic issues in Costa Rica, El Salvador, and the rest of the Central American region as a whole. Today we’re fortunate to have Patricia Figueroa with us. She is the executive director of the Textile, Apparel, and Free Trade Zone Association of El Salvador. Among other things, we will discuss the synthetic textile cluster in El Salvador.
Good morning, Patricia. How are you?
Patricia Figueroa: Good morning, Steve. I’m doing fine. Thank you very much for hosting me.
The Central American Group: Well, it’s our pleasure. Maybe you could start by telling us a little about yourself and the organization you represent.
Patricia Figueroa: Yes, indeed. I have been heading this association for the past ten years. Our chamber is made up of about 100 members that represent the full segment of the Textile, Apparel, and Free Trade Zone Industry of El Salvador. Throughout my career, I have been engaged in economic development, mainly in government and the private sector, in different positions, but always focusing on promoting exports and investment in my country in various capacities.
The Central American Group: Well, thanks a lot for that synopsis. Let’s start with the questions. I want to ask first why companies should consider investing in Textile, Apparel, and Free Zones in El Salvador. What are the advantages of the synthetic textile cluster in El Salvador?
Patricia Figueroa: I would like to start by saying that our sector has a substantial weight and plays an essential role in our economy. It’s one of the pillars of the Salvadoran economy, and it has a great deal of importance in the economic arena.
Our sector has contributed, on average, to about 40% of the country’s total exports for the past ten years. So, we have been leading export development in El Salvador. Only last year, we exported a significant amount more than in 2021. So, the sector has maintained a steady weight in the economy, and we look forward to the opportunity to continue this growth. In addition to that, it translates into the direct employment generation of about 85,000 jobs, which is substantial.
Why invest in the sector, and why invest in El Salvador? I would like to say this is not only because of the weight and maturity of the industry but also because I would highlight the fact that our industry operates within the framework of the DR-CAFTA agreement. So that’s the framework that we use. In parallel, we have a very competitive and sound business environment.
Several pieces of legislation favor the attraction of foreign direct investment. These laws include the one that governs free trade zones. We also have a beneficial commercialization law, the International Services Law, and a variety of legislation in the area of the use of renewable energy.
So thus, I would say that there is a framework of legislation that favors and that is very attractive for supporting foreign direct investment. I think that beginning with the free trade agreement, the DR- CAFTA accord has really made us one of the most critical sectors in the region.
Another aspect that I would like to highlight is that because of the industry’s maturity, we comply with many regulations that are immersed in the DR-CAFTA agreement.
Our industry has one of the highest compliance standards in areas such as labor law, social responsibility, and sustainability. Additionally, now we are in the best position to be able to trace our products.
Product traceability is one of the elements that many overseas investors, particularly in the US, are looking at now. Because we work with industry, we aim tirelessly to comply with all the areas of the best environmental practices working hand in hand with our US customers and their local plants. So, there is a lot of compliance and a lot of innovation in this area.
To finalize this brief synopsis, I would say that the speed to market, the geographic location where we are really positioning our industry, and the region, the Central American region, and also particularly El Salvador, is a close-by, near option, and partner to do business with.
The Central American Group: Thank you for that information. I would like to know, and I’m sure our listeners would like to know, what is the textile industry in El Salvador composed of? Also, tell us about the synthetic textile cluster in El Salvador.
Patricia Figueroa: Yes, let me start by saying that our industry’s success is vertically integrated, the rule of origin yarn forward. It allows us to deliver full package options to our most demanding clients.
In the country, we basically have two very important clusters. One is the cotton cluster, and the other one is the synthetic textile cluster in El Salvador. The cotton cluster was the first cluster developed in El Salvador and, at the moment, is the one that generates the most employment in the sector. It focuses on producing intimate apparel, dresses, skirts, towels, sweaters, and socks, among other items. Our manufacturing bases can deliver label, package, pack, and package dormant, whatever our customers indicate they want. The second cluster was born out of a very targeted strategy.
After the DR-CAFTA was enacted, the US and Central American producers joined hands to build this integrated production platform. This was particularly true in the synthetic textile cluster in El Salvador. This has allowed us to remain very competitive. So, as I mentioned, we have two very different clusters. We are one of the most important providers of fabrics to the rest of Central America.
Not only do we maintain the 10th position in terms of supplying the US with fabric, but we are also one of the leading producers of apparel goods that are delivered to the United States.
We are also an essential and critical player in delivering yarn and fabrics to the rest of Central America. The companies in the synthetic textile cluster in El Salvador manufacture value-added products, particularly in athletics and high-performance workout wear. El Salvador also specializes in a lot of the short production in niche value-added areas, like high-end yoga attire. So, there is a variety of production. We believe there is an excellent opportunity to be part of the textile supply chain and diversify the existing production base in El Salvador.
The Central American Group: What are the advantages of the synthetic textile cluster in El Salvador?
Patricia Figueroa: One of the main factors is that it is vertically integrated from yarn forward. Because of this, you can get your production from the yarn to the apparel. The manufactured items can be delivered quickly with a lot of the technology and capacity that has been developed.
We have very important US. Companies in El Salvador, such as Unifi Central America, and regional players that are not necessarily from the US. This would include the Pettenati company. This firm is one of the leading high-performance fabric producers. The fact is that this synthetic textile cluster in El Salvador has also invested a lot in the design of fibers, high performance, and other innovative products.
I believe that we are also close to each other in great geographic proximity is also a positive factor. Most companies in the synthetic cluster are very close to each other. So this allows products to move from place to place quickly and within a very short distance. There is a lot of interaction among the players. As I said, when you look at the current situation and all the nearshoring and friendshoring, it is vital to trace your product and have production closer to consumers’ borders to strengthen the Western hemisphere supply chain.
I think El Salvador is in the best position to deliver those products.
The Central American Group: One of the biggest challenges that the textile industry in El Salvador faces today?
Patricia Figueroa: One of the biggest challenges we have is that we definitely need to be able to attract more foreign investment. I think this is an excellent opportunity to invite the companies we need to further diversify our production base.
We have a solid production base, focusing on a synthetic textile cluster in El Salvador. We also do high-performance and activewear. But there are other possibilities. There are other niche opportunities for companies looking at this country that can benefit from all the conditions in El Salvador. So I think maximizing this opportunity is of great importance.
The challenge definitely, I think, is how do we continue to grow. I believe this is an excellent opportunity to invite companies to look at El Salvador and the kind of companies we have here.
The Central American Group: Well, from the perspective of the Central American Group, we get a lot of inquiries for people looking to have textile products made. Hopefully, that’ll continue, and the clusters you mentioned here will continue to grow. What’s the outlook for the industry five years from now?
Patricia Figueroa: Let’s say we envision ourselves as a leader. Our vision is to consolidate this platform as a leader of high-value-added products with a more diversified base. We do see the industry growing. I mean, there has never been a better momentum.
After the DR-CAFTA’s signing with all its beneficial conditions, we have a great partnership with the US. Because of this, we are continuously strengthening the synthetics textile cluster in El Salvador. So, I believe that we will see steady growth in our industry. We see our industry as being able to grow in exports. We envision significant growth in the sector, particularly as we take advantage of this enormous opportunity.
We are constantly working towards this objective. Our partners in US organizations, the national council of textiles, the AFA, and others are really involved in this. As we continue to strengthen those partnerships and take advantage of the current momentum, I think we will see much growth in El Salvador in the next five years.
The Central American Group: Well, that’s great. As I mentioned, many people are making inquiries about the textile sector in El Salvador. And I’m sure some of those people will listen to this podcast. So if somebody wants to get in touch with you to find out more, how can they do that?
Patricia Figueroa: Most definitely, they can contact us through our email. It’s email@example.com. We will be glad to answer any inquiries or work with the people to help them understand the conditions in our El Salvador textile industry.
The Central American Group: And if it’s okay with you in the text that is below the podcast player, I’d like to put a link to your LinkedIn profile if you have one. Would that be okay?
Patricia Figueroa: I don’t have one updated. That’s terrible. I will update it, and I will definitely give it to you.
The Central American Group: Okay, thank you very much. That’ll facilitate people contacting you. Well, I want to thank you for joining us today. It’s very interesting, and we know that the future is going to be bright for the textile and apparel industry in El Salvador. Thank you very much for joining us.
Patricia Figueroa: You’re welcome, Steven. It’s my pleasure.
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