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Exclusive: Shock as Tegra to Shutter Nicaragua, Honduras Factories

Tegra Global angered garment workers in Nicaragua and Honduras over the weekend after revealing plans to shut two key activewear factories by May, axing 5,200 in the economically fragile region.

“They claim they are closing because of a financial and technical reorganization but what they want is to move production to El Salvador so they can save $5 million in social benefits,” top union boss Pedro Ortega told SJ shortly after Tegra’s labor relations director Julio Pineda informed workers of the decision.

Manufacturing giant Tegra announced its 1,200-strong New Holland Apparel factory in Managua, located in Nicaragua’s Astro industrial park in the city of Tipitapa, is set to begin unwinding. Meanwhile, the company’s other large factory in Honduras’ San Pedro Sulas, employing 4,000, will also be closed, according to Ortega. Both plants make sportswear for Under Armour, Nike, Adidas and other major brands.

“We are sending a letter to Under Armour, Nike and Adidas so that they don’t allow this, but if they do, that they compensate workers with at least six months of minimum wages,” Ortega continued.

In Nicaragua, that would mean roughly $2.4 million in severance pay compared with the $360,000 Tegra would theoretically have to pay, he said.

“We have 65 percent unemployment in Nicaragua. If these workers lose their jobs what do you think they are going to do? They will migrate to the U.S.,” Ortega theorized.

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Tegra claimed the move stems from a need to find more modern production facilities as the Managua site’s machines are more than 20 years old, requiring maintenance every four to five hours. But Ortega and other union leaders said that was an excuse to move production to El Salvador where wages are lower and there is no collective wage agreement forcing the firm to pay social benefits and meet stricter labor standards.

El Salvador has no collective wage agreement so they can save $1.5 million from Nicaragua and $5 million from Honduras,” noted Ortega, who heads Nicaragua’s top manufacturing union, Mesa Laboral de Sindicatos de la Maquila.

Pineda did not return messages seeking comment. Messages to other Tegra executives were also not immediately returned.

“[The Tipitapa] plant was working in the middle of the pandemic and had no problem meeting orders,” added Miguel Ruiz, who heads Central American union Coordinadora Regional de Sindicatos de Maquila and was first to reveal Tegra’s move to SJ. “Now that commerce is normalizing, they are telling us they can’t operate and that they need to do a technical adjustment and reengineering. This is a lie. It’s a way to punish the country and its workers because we have not allowed our rights to be violated.”

The unions plan to sue Tegra with Nicaraguan authorities while the Coordinadora and Ortega’s Mesa are joining forces with the AFL-CIO’s local mission and other international unions, notably IndustriAll, to pressure Tegra to abandon plans to close the sites.

Ruiz said Nicaragua’s clothing industry is also attracting new orders and investment, making Tegra an odd duck in a line of firms making new commitments.

“We are expecting around $300 million in new investments this year and exports should reach $700 million by July, up 8 percent from last year,” Ruiz noted.

He said 10,000 textile jobs should be added this year as Gildan is set to open a new, 4,000-strong plant in Chinandega in Western Nicaragua while Sae Technotech will also inaugurate two sites in Tipitapa, he said. Hansae is also set to debut a new production line in its Niquinohomo facility in the Masaya Department southeast of Managua.

Meanwhile, Ruiz said the Coordinadora, AFL-CIO, IndustriAll and a string of other syndicates continue to fight to set up a $20-million plus fund to help compensate workers who were laid off during the pandemic. Global brands that directly or indirectly dismissed sewers when orders plummeted due to Covid-19 are being pressured to contribute to the fund, which mirrors broader efforts by labor rights organizations such as Worker Rights Consortium to set up compensation mechanisms for vulnerable operators across global clothing supply chains.

Still, given efforts to establish the fund have been running for more than six months, and with global apparel orders resuming, the battle appears far from being won.