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Mexico’s Denim Mills Plan June 1 Reopening, Pin Hopes on Nearshoring

Though the denim industry faces unprecedented challenges, executives from leading Mexico-based mills are planning for a brighter future.

As denim mills in the country prepare to reopen on June 1, Tricia Carey, Lenzing’s director of global business development for denim, gathered players from Cone Denim, Global Denim, Kaltex and Tavex for a virtual roundtable discussion about how they are ensuring safety at their facilities, how investments are building up their capacity and why Mexico’s proximity to the U.S. may be more important than ever for sourcing.

Safety first

While Cone Denim’s New York team continues to work from home, president Steve Maggard said its facilities in Mexico have pivoted to manufacturing essentials, like fabrics. Cone is working in cooperation with Burlington, a division of its parent company Elevate Textiles, which is strong in medical and protective fabrics.

“We have been running both facilities in Mexico on a limited basis for the last couple of weeks, focusing on the medical-type fabrics,” he said.

They’ve been able to do this, he added, by checking the temperature of everyone coming into the factory, as well as taking on additional cleaning and requiring distancing inside the plant.

Tavex’s garment facilities are producing non-medical face masks and gowns, while the denim side of the business has remained closed since April 1. The company managed to ship to customers who’ve required shipments and provided samples on a limited basis, but with a reopening date around the corner, Tavex sales manager Mike Daniel said the company’s top priority is preparing worker safety and well-being.

“We’ve gone through sanitation measures getting the factory ready to start again,” Daniel said. “And we put in place some new training and occupational safety protocols from our medical officers and human resources and we will be applying new actions in our work activities.”

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Global Denim began putting new safety measures in place before the lockdown. “Now we have a very strict program in place when we reopen. It’s going to be all governmental approved,” said Anatt Finkler, the mill’s creative director, adding that a doctor will be on site to assist with workers who may feel unwell or have questions. “We’re going to try to do our best to protect our people and to [create] a sense of safety around our work.”

Kaltex’s denim business is shut down like many others, but Rich Tobin, vice president of sales and marketing for Kaltex America, said the company was able to “play an essential provider role” and get approved to keep its some of its facilities open to manufacture fabrics and finished PPE masks and gowns. “We had scalable, sizable opportunity relative to what we can produce and support,” he said. “The PPE participation is one that has helped us navigate through these difficult times.”

Time for nearshoring

Though there’s been a 6.4 percent decline in denim imports to the U.S. from Mexico over the past two years, Carey questioned whether the current climate will move brands to take a closer look at nearshoring, particularly as the United States-Mexico-Canada Agreement (USMCA) is scheduled to take effect on July 1. Analysts, she added, expect this will increase exports by between 5 percent to 10 percent.

In the long term, Finkler said the agreement will increase textile exports, driving up the demand for innovation, investment, capacity and, ultimately, more jobs. “[USMCA] will position Mexico, once again, as the key player for growth and recovery to all of the brands that are looking to start sourcing and diversifying their supply chain,” she said.

The trade agreement is an opportunity to calm down the calamity brought on by the cancellation of NAFTA, compounded by the uncertainty of the coronavirus, Daniel said.

“Now more than ever, we need to have a strong supply chain in the Western hemisphere,” he said. “I think the USMCA is important because it allows us to continue to build a reliable and consistent textile supply chain for this hemisphere. It will solidify some trade rules and provide greater certainty for North American businesses that are operating and sourcing in Mexico.”

With the USMCA, Mexico will have a stronger investment framework and more transparency and protections for businesses that would like to operate within the U.S., which Daniel said may bring more stability in the upcoming year.

“Investments are usually tied to stability and so what our hope is, is that by passing the USMCA it will initiate more investment in Mexico and provide this hemisphere with production capabilities that can compete with Asia,” he said.

Positive effects, Maggard said, will likely be felt across the supply chain, from cotton farmers and fiber producers to machinery companies. And it may open up some additional opportunities for mills like Cone to begin to produce pocketing material that would have previously been imported. The cost to manufacture in Mexico, however, may rise slightly, he warns.

“I’m very hopeful that that does not drive some of the more price sensitive garment-makings out of the country,” Maggard said.

As industries begin their road to recovery post pandemic, Tobin said the supply chain has an opportunity to break free from restrictive “price and cost neutral mentality” that has plagued the industry. Nearshoring, he added, can take on a “more collaborative tone” between mills, brands and the retailers that still exist.

“In order to mitigate risks, you need to have proximity and logistical access to your supply chains,” he said. “That gives you more transparency and more control.”

Investment opportunities

Mills are now preparing for the future with forward-thinking investments in sustainability.

Cone is in the process of installing a reverse osmosis water treatment plant. Once it becomes active early next year, Maggard said it will get the facilities “very close—if not all the way—to zero liquid discharge.”

Kaltex has 260 new looms being delivered to its facilities, which Tobin said will greatly improve the production of product relevant to the women’s market, which he sees as the most sizable opportunity.

“When we come out of this situation, imagine if 1 or 2 percent of production on women’s jeans in the fashion segment are repatriated to Mexico,” he said.

In the past two years, Tavex has invested deeply in spinning, Daniel said, particularly for blends with manmade fibers like Tencel. The mill’s efforts for the next three to five years, he said, will focus on increasing its ring spun capacity, introducing more water-saving technology and exploring new alternatives for color, like reactive dyes and pigment dyes.

The pandemic has been an important time for Global Denim to home in on its sustainability investments, as well as investments in its employees. The company offers ongoing training programs so every employee has the chance to become skillful in various areas, better positioning them for growth opportunities at the mill.

Global Denim also opens up its facilities to local universities to teach them about sustainability in the denim supply chain. “We know that these will be the [professionals that] are going to demand the change that is going to drive innovation at the end,” Finkler said.