The export free zone manufacturing sector is evaluating initiatives to mitigate the effects of the global elimination of textile and clothing quotas in 2005 that began in January. Dominican production is closely tied to the US apparel industry. The elimination of protective quotas that had restricted international textile and clothing trade as of 1 January 2005 is eliminating many small US manufacturers who are now at the mercy of large buyers, and are turning to China and India for big volumes and low prices. As companies seek to compete, US manufacturers are taking urgent steps to minimize costs. Experts consider that the DR, a higher cost country, only has a chance to survive if it succeeds in offering excellent service, taking advantage of its geographic proximity, and differentiating itself from the lower cost competitor, as well as offering full package supply and organizing vertical production systems.
Hoy newspaper reports that Arturo Peguero said that so far this year, nine manufacturing plants have closed, most in the Santiago area. He said they have data that shows that some 7,000 jobs have been lost and other companies are in the process of closing or merging production lines, which means an eventual reduction in jobs.
The free zone leaders have met with Industry and Commerce, Labor ministers, Francisco Javier Garcia and Jose Ramon Fadul, respectively.
The spokesmen for the sector also met with governor of the Central Bank Hector Valdez Albizu. The overvalued peso has impeded the companies to compensate for high local production costs.
El Caribe newspaper reports that a mission from the National Council of Free Zones (CNZFE) will travel to Colombia to seek investors that may be interested in manufacturing fabrics or in setting up a joint-venture to this end with Dominican businesses. Luisa Fernandez, executive director of CNZFE explained that so far in the DR only Grupo M has a completely integrated vertical process. “What we seek is that companies manufacture materials here, that business installed in the country may be able to offer their clients a full package. This means from the fabrics, to the sewing, the labeling, and packaging,” she explained.
She also mentioned that a CNZFE mission would travel to China to encourage Chinese companies to begin manufacturing fabrics here.