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Mexican Jeans Makers Boost Investments as Business Rebounds

COVID-19 recovery is on the horizon but the pandemic's impact on sustainability, retail, product development and consumer buying patterns means the denim industry must evolve. Join Rivet on April 20th at 11 am ET for the COVID, One Year Later roundtable.

MEXICO CITY – Mexican denim makers are increasing capital expenditures to enhance sustainable production and enter more diversified markets as they look to ramp up U.S. exports, executives based in the country said.

“We have made big investments in sustainable production and more efficient machinery to improve our fabric,” said Carlos Ojeda, who heads top textiles manufacturer Kaltex’s jeans business, which supplies the likes of Levi’s, Lee and Wrangler. “We have achieved a big reduction in water and electricity consumption.”

Ojeda declined to provide an exact figure but noted spending had been “significant,” with the company’s sewing complex in San Juan del Rio near Mexico City achieving an additional 15 percent reduction in water usage. Other initiatives have seen the firm, one of Mexico’s largest suppliers, incorporate ozone-based laundering techniques and increase its use of recycled materials.

Amid the pandemic last year, some U.S. labels shifted output to Mexico and Latin America, which was a boon to business, according to Ojeda. This, coupled with a “very strong marketing campaign” from Kontoor  brands, helped firm up demand for Kaltex’s products, he added.

While the industry’s exports fell to around $1 billion last year, Kaltex outperformed the market, particularly in key categories such as men’s pants.

Analysts have cautioned that denim firms must do more to deepen operating efficiencies as Mexico continues to battle for market share as a U.S. supplier, with exports seeing declines in the past decade.

Raul Garcia, a leading textiles consultant, told Sourcing Journal last month that the industry should strive to become more fashion-centric, making “small volumes of highly differentiated products with a very fast response,” to win more U.S. business.

Miguel Angel Andreu, another senior consultant, agreed, noting that firms should raise R&D spending to account for 15 percent of annual capital expenditures versus around 10 percent currently.

That’s not to say they have been sitting on their hands.

Andreu noted there has been progress on the innovation front, including firms such as Tavex purchasing new laser and ozone-treatment machines from Italy’s Tonello and Spain’s Jeanologia, respectively.

“Laundering [in an environmentally-friendly way] has become key because producers are under increasing pressure to protect the climate,” said Andreu, adding that firms have acquired machines that incorporate a mechanism to give jeans a stone-washed or distressed finish without using polluting techniques. “They have worked very strongly to replace chemicals with other techniques, such as using lasers, to avoid potassium permanganate for sandblasting,” he said.

Water consumption has also declined by about 35 percent of what was typically used some years ago, according to Andreu.

He noted firms such as Kaltex, Global Denim and Tavex have all hired more creative designers to provide a “greater variety of fabric finishes” including from recycled bamboo, Tencel, modal and even milk-derived fibers. “When I go to sourcing shows, production managers offer clients thousands of fabric models with different fiber components and structures,” Andreu said.

Firms are also delving into functional and smart fabrics such as smart stretch and even scented varieties, Andreu said.

Smaller manufacturers are also working to attract new, full-package clients North of the Border.

Alma Mesa, commercial director for Jeanswest in Guadalajara, says the firm is rushing to streamline its response times to suit U.S. clients looking for companies that can deliver product with a 45-day turnaround.

“We are in negotiations with a potential customer in the U.S. who has very clear mood board designs and wants a lead time of 40 to 45 days,” Mesa said.

Jeanswest is working on efficiencies to meet tighter delivery schedules and feels other firms would benefit from doing the same. “Right now, the industry is in a fight to avoid [factory] closures and preserve the employment we have,” Mesa noted, adding that strong management organization has never been more crucial.

“You need good planning to meet deadlines,” she said. “The world is very globalized so you can easily see trends online as they move from Europe to the U.S. and then to Mexico. You can prepare your product line and models ahead of time.”

And as U.S. retail shows signs of a rebound, Mexican makers should also fare better in 2021, at least according to Ojeda, who predicted export declines will narrow in the coming months.

“We hope to see a recovery with vaccines now available in the U.S. and the population more willing to spend,” he said, adding that merchants should see higher sales, boosting orders for Mexican fabric and apparel.

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