Gildan shuttered three factories in Nicaragua, temporarily laying off 12,000 workers, as sites in Honduras were damaged by Hurricanes Eta and Iota, undermining raw material exports needed to make apparel across the country, trades union officials told Sourcing Journal.
“They declared force majeure because the storms flooded two textile factories in San Pedro Sula [Honduras] so the Nicaraguan factories can’t get cotton and other fabrics to make T-shirts and underwear,” said Pedro Ortega of the Mesa Laboral de Sindicatos de la Maquila, a leading trade union representing multi-sector, for-export manufacturers in Nicaragua.
Ortega said the Canadian apparel maker was forced to close three of four Nicaraguan sites, located in Ribas, San Marcos and Masatepec from Dec. 6 until Dec. 30, as the sites can’t function without the Honduran feedstocks.
Miguel Ruiz, who heads Central American trade union Union Coordinadora Regional de Sindicatos de Maquila, said Gildan’s 12,000 Nicaraguan workers agreed to receive early holiday pay as compensation during the closures. Workers in the Honduran sites also received similar compensation, Ruiz said, though he could not immediately share how many workers were affected in San Pedro Sula.
“I can’t tell you how much production will be affected, but these are large sites employing 4,000 workers each and making thousands of items daily,” Ruiz said of the Nicaraguan factories.
When reached, a Gildan spokesperson said, “Both tropical storms brought heavy rains in Honduras which caused significant flooding in the country, including water accumulation around our Rio Nance textile manufacturing complex. While this required us to temporarily halt production at this complex in Honduras, which supplies our sewing facilities in both Honduras and Nicaragua, we have since started the ramp back up of production at facilities in this complex. Our supply chain has not been impacted from a transportation standpoint and we have good levels of inventory, as well as production capacity elsewhere in our manufacturing system, which is allowing us to service our customers while we manage this process.”
The spokesperson all added: “It is important to mention that where most needed, our local teams have deployed a humanitarian aid plan to support our employees and the communities directly impacted by the hurricanes with clothing, food boxes and hygiene products. Our local human resources team have and will continue to work hard to make sure our employees are safe and have access to the basic necessities they need.”
Category 4 storms Eta and Iota devastated Honduras more than other countries in Central America, mainly because its “textiles industry is based alongside the Caribbean Sea and around the industrial port city of San Pedro Sula, which the storms hit.
Honduras’ main Puerto Cortes port, from which most U.S.-bound apparel is shipped, was spared but roads leading to it were damaged, according to Honduran trade executives.
Union officials estimate Central America will lose roughly $200 million in garment exports because of the hurricanes, mainly stemming from Honduras where thousands of people were displaced by the tragedy.
Industry executives said Honduras and Central America will need billions to rebuild and refinance new infrastructure projects to make the region more resilient to adverse weather events stemming from climate change.