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Nicaragua’s Political Turmoil Could Impact Apparel Sourcing

Turmoil in Nicaragua has been plaguing the country and apparel sourcing could take a hit.

Political and civil unrest has brewed in Nicaragua as paramilitaries, who appear to be working in close coordination with government security forces, have fought street battles with protesters since an uprising against President Daniel Ortega’s government began three months ago. On Monday, the White House said in a statement that “President Ortega and Vice President Murillo are ultimately responsible for the pro-government parapolice that have brutalized their own people.”

Citing information from the Chamber of Industries of Nicaragua, Centralamericadata.com, reported that 30 percent of small and medium size textile and clothing companies producing there are operating at 25 percent capacity. This has led to the temporary suspension of as much as 80 percent of workers in the sector.

The Nicaraguan chamber said between the first quarter of 2017 and the same period in 2018, import volume of yarns and textile supplies fell 8 percent to 32,000 tons. Import value in the same period declined 10 percent to $127 million.

On a conference call with analysts on Thursday, Glenn Chamandy, CEO of Gildan Activewear, which operates a factory in the country, said while there hasn’t been any disruption in production, the company has had to reroute some shipments.

Nicaragua has been considered a shining star among the Central American counties that are part of the Central American Free Trade Agreement. For the year to date through May, imports of textiles and apparel from Nicaragua to the U.S. were up 9 percent in value to $647.93 million. On a volume basis, industry imports rose 9 percent to 239.64 square meter equivalents.

In late June, the American Apparel & Footwear Association and several of its members wrote to President Ortega to express concern about the political and social crisis in Nicaragua, saying it “threatens not only the rights, livelihoods, and physical safety of workers and others, but also the capacity of Nicaragua’s industries that export around the world.”

The organizations said the situation in Nicaragua over the previous two months had directly impacted workers and sourcing operations, and urged Ortega to “take immediate steps to ensure respect for the rule of law, to end the excessive use of force by the security forces of the state, and to protect freedom of assembly and freedom of expression.”