With retailers increasingly interested in sourcing closer to home, Intradeco Holdings is making a major investment in a new spinning mill in Honduras and a new manufacturing plant and expanded solar energy facility in El Salvador.
The investment adds 1,000 employees to the company’s 9,200 already working in Central America. “I think the timing is right,” said Felix Siman, chairman at Intradeco, which has produced garments for big-name retailers including Walmart, Kohl’s, JCPenney, Target, Kmart, Sears, and Belk, according to the company’s LinkedIn profile. “Covid showed that retailers who were diversified in their sourcing were better off.”
Most of Intradeco’s operations have been concentrated in El Salvador, but it just opened the new state-of-the-art Central American Spinning Works mill in Honduras. It makes yarn from cotton and blends, adding 1 million pounds of yarn a week, which complements the company’s spinning mill in El Salvador. “We sell all our production to U.S. customers,” Siman said.
The second investment is in a manufacturing plant in El Salvador that uses 100 percent recycled yarns—both cotton and synthetics—to make textiles that will enhance the company’s supply chain circularity.
And the third investment is expanding a solar-energy facility in San Salvador, the capital of El Salvador. That project will triple the amount of energy generated to 30 megawatts of power by the third quarter of this year.
Intradeco Holdings uses most of that energy and sells anything left over to the local electrical transmission grid.
Outside of its mills and plants, Intradeco Holdings has cut-and-sew operations in Honduras, El Salvador and Guatemala where it makes fashion basics such as T-shirts, casual clothing and thermal underwear for major North American retailers.
Intradeco believes an investment in this region just makes sense. “There is a lot of interest [by U.S. companies] in moving a certain percentage of their sourcing from Asia to Central America,” Siman said.
Manufacturers and retailers may pay a little bit more to make their goods in Central America, but it shaves at least 90 days off the delivery time and is more reliable. “The cost of shipping has gone up dramatically, and there are big delays at the ports,” Siman said, outlining the advantage of Central American production.
The Intradeco chairman predicts apparel and textile exports from Central America to the United States will jump 15 to 20 percent in the next few years. For the one-year period ending in January, U.S. textile and apparel imports from Central America were up 31 percent, according to the Office of Textiles and Apparel data.
Intradeco’s investment also falls nicely in line with the Biden administration’s push to invest more in the region to curb immigration from Central America to the United States and reduce crime.
In May, Vice President Kamala Harris made a “Call to Action” for businesses and social enterprises to invest in the region. At that time, Parkdale Mills, based in Gastonia, N.C., announced it would make a $150 million investment in a new yarn-spinning mill in Honduras with the idea of producing 1 million pounds of yarn a week. The investment by one of the largest manufacturers of spun yarn and cotton consumer products in the world will also support existing operations in Hillsville, Va.
Even before Biden’s call to invest in Central America, Intradeco was a member the HUGE Business Council, a nonprofit whose goal is to increase business investments and employment in Honduras, the United States, Guatemala and El Salvador. In the next three to five years, the council wants to create 1 million jobs in the region and build or improve roads, airports and ports to bring U.S. natural gas to the area.
Building a better economic bridge is only enhanced by the Dominican Republic-Central American Free Trade Agreement signed in 2004 to allow duty-free movement of goods between the United States and Central America. Apparel must be made from regional yarn to qualify for the duty-free benefit.