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Target, Columbia Sportswear Invest $500 Million in CAFTA Sourcing

On the same day Vice President Kamala Harris announced nearly $1 billion of additional business investment into sourcing and production into Central America, Intradeco Holdings, a manufacturer of casual clothing and thermal underwear, announced it had acquired competitor Indera Mills.

The purchase completes the merger of Indera Mills’ extensive business experience and Intradeco’s more than 40 years of manufacturing in Central America for customers in the U.S., Canada and Mexico.

Indera Mills was incorporated in Winston Salem, N.C. in 1914 by Francis Henry Fries. Indera Mills Courtesy Photo

John Willingham, owner of Indera Mills, which says it has 5,000 U.S. retail clients, will continue in his current role as president of Indera, Intradeco Holdings wrote in a press release.

“We at Indera Mills are excited to become part of Intradeco,” Willingham said. “For 109 years, our family-owned company has built a successful business based on integrity, commitment and hard work. These important values align with those of Intradeco. Together, we will build a thermal underwear business second to none in the world.”

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It’s a deal Luis Marquina, COO of Miami-based Intradeco, said he’d been eying for some time.

“They have been a base layer business for many years and we have been one of the largest producers of thermal underwear,” Marquina told Sourcing Journal. “John decided finally to join forces with us and we’re excited. He has been in the thermal and base layer business and knows the market really well. Between the two of us we’ll just get stronger.”

Growing interest in the CAFTA region comes after several pandemic-disrupted years of supply chain delays plaguing manufacturing in and shipments from Asia, where much of the world’s clothing and shoes is made.

Harris’ Call to Action for Northern Central America plan, designed to encourage near-shoring, and strengthen sourcing and manufacturing partnerships in the Americas—and alleviate some of the flow of illegal immigration at the U.S. border with Mexico—announced commitments from private businesses to invest $585 million of the $950 million total to the benefit of the apparel and textile industry. That brings the total investment since the program began in May of 2021 to $4.2 billion. Gap last year committed to grow its Central American sourcing to $150 million by 2025, one of several industry companies stepping up their investments in the region.

Textile and apparel trade organizations praised the announcement.

“This is fantastic news. It shows continued interest and growth in Central America,” Kim Glas, president and CEO of the National Council of Textile Organizations, told Sourcing Journal. “Over the last year and a half we’ve seen well over a billion dollars in investments and sourcing commitments and we expect this trend to continue in the years to come as brands look to diversify their sourcing.”

American Apparel and Footwear Association vice-president of trade and customs policy Beth Hughes was similarly supportive.

“AAFA is thrilled that members continue to foster private sector commitments to the region, and to see the White House recognize the importance of these efforts,” Hughes told Sourcing Journal. “As is a founding member of the Coalition for Economic Partnership in the Americas (CEPA), we have generated reports and data that prove this importance. We have a unique opportunity to increase jobs and investment in the textile and apparel industry while simultaneously helping to address the root causes of migration. Members of CEPA are pressing for improvements in regional infrastructure and customs operations, and smart policies that can benefit the entire western hemisphere.”

Target and Columbia Sportswear stand out as U.S. brands to make commitments Monday.

Target has committed to increase its spending by $300 million in El Salvador, Guatemala, and Honduras by the end of 2023. The retailer will deepen existing relationships with vendors and aims to expand vendor relationships who have a presence in all three countries in the region, the release says, and Columbia Sportswear Company has committed to purchase up to $200 million in products. This will create more than 6,900 jobs in the region over the next five years, the White House said, in an industry where these jobs are primarily held by women. 

Nextil, a Portugal-based garment producer with facilities in Portugal, Guatemala, and the U.S. has committed to invest $40 million in two new state-of-the art production facilities in Guatemala to produce garments and elastic fabrics for the shapewear and sportswear markets. The facilities are estimated to create over 1,300 direct jobs and 3,000 indirect jobs.

Coming directly from South America, Protela-Colombia, a Bogota-based retailer and manufacturer has committed to invest $45 million in the construction of a vertically integrated textile manufacturing facility in Guatemala to supply fabric for garment manufacturers in Central America, which is expected to directly employ 400 people. 

Marquina said Indera Mills will benefit from his company’s substantial logistics capabilities including factories in Honduras, Guatemala and El Salvador it has owned and operated since the first one opened in El Salvador 40 years ago.

“There’s a lot of investments going into the region and a big focus even by the U.S. government,” Marquina said. “All of the cotton we use comes from the U.S. and the same is true with our elastics. The industry and the U.S. government are trying to develop in the Northern Hemisphere to break dependence of overseas sources.”

Monday’s announcement comes in the wake of the administration’s saber-rattling over the Nicaraguan regime’s human rights abuses and continuing support for Russia.

Last fall, President Biden announced an executive order targeting Ortega-Murillo regime, sanctioning specific individuals and businesses from Nicaragua and warned, “This could potentially include restrictions on both imports into the United States from Nicaragua and exports from the United States to Nicaragua.”

Glas, whose organization is headquartered in Washington, D.C. and who lobbies on behalf of textile organizations, has cautioned the White House against acting too aggressively on Nicaragua.

She noted the production of yarn, component parts and fabrics is the largest employment segment in the country, especially for women.

“We have asked the administration to carefully review this,” Glas told Sourcing Journal “We want to make sure they realize there are repercussions not just for Nicaragua, but others, so we want to sound a strong word of caution.”

Marquina said that from his experience, Nicaragua is a more minor player in the region.

“We don’t make anything in Nicaragua; in the past a lot was done using TPP agreements where they were bringing fabrics from Asia and doing cut and sew in the country, but over the years there’s been very little investment there,” he said. “A lot of it has to do with what’s happened there. In recent years, a lot of companies are moving out of the country.”

Regardless of how the Nicaragua situation unfolds, Marquina sees a bright future for Central American textile and apparel production.

“Especially over the last 10 years the region has developed at a very drastic, high speed,” Marquina said. “The apparel business is a migratory business and sourcing people are looking for that next corner of the world. Fully vertical supply chains have developed in the region; more self-sufficient production without depending on materials from other countries.”

Marquina said nearshoring allows not only quicker delivery to North American markets, but more precise inventories.

“In the past there was a mentality of some buyers focused on the first-cost initial price and they didn’t pay attention to not having the right color or size the customer wants and lose those sales,” he said. “All of the volatility in supply chains and the changing pace of the consumer, that has flexibility and speed being a big thing for buyers.”

Also on Monday, Next Level Apparel (NLA), a designer, manufacturer and supplier of blank apparel of 20 years, announced a strategic partnership with GK Global to produce garments from cotton sourced entirely from the U.S. manufactured in Mexico and elsewhere in Central America. The move comes as companies seek to rid their supply chains of potential links to Xinjiang, the Chinese region where reports of forced labor of ethic and religious minorities abound.

GK Global’s textile operations began more than 30 years ago in Honduras. The company said in Monday’s press release that it invested more than $236 million last year to expand its operations.

“There are many benefits of this partnership with GK, including shorter lead times and reduced exposure to geopolitical risks,” said NLA CEO Randy Hales in a statement. “Bringing our fabric production closer to home allows us to have complete supply chain transparency, including upstream traceability to the cotton.”

The focus on Made in America, Glas says, might be better re-framed as “Made in Americas.”

“These are just a few of the key investments in the region, which illustrates how this co-production chain is continuing to make sustainable investments that strengthen supply chain resilience, create job opportunities and investment in the U.S. and the region, and ensure transparency in our supply chains, as momentum grows for on-shoring and near-shoring textile and apparel production,” Glas wrote in a press release, praising the CAFTA-DR free trade agreement that facilitates $15.1 billion per year in two-way traffic. “That is a win-win for our industry and the region.”