Annex 1. LEVE Apparel and Textiles Value Chain Assessment

Transcription

Value Chain Assessment
Annex 1. Apparel and Textiles Sector
Assessment
Local Enterprise and Value Chain Enhancement (LEVE) Project
APRIL 2014
This publication was produced for review by the United States Agency for
International Development. It was prepared by RTI International
ICI Project Gender Strategy |1
TABLE OF CONTENTS
1
Introduction – Value Chains within the Apparel Sector ................................................1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
2
Value Chains assessed ....................................................................................... 1
Introduction to this dual industry ....................................................................... 2
Mass industrial subsector – external demand overview .................................... 4
Mass Industrial Value Chain Map – VCs 1, 2 and 3 ......................................... 9
The Contract sewers VC1a .............................................................................. 12
The contract stitchers with multi-product, multi-clients (VC 1b).................... 14
The vendor that buys its own, the offshore vendor and the border
model (VC2 a, b and c) .................................................................................... 15
1.8
The smaller scale stitchers and designers Value Chains .................................. 17
1.9
The designers (VC4 a, b and c) ........................................................................ 19
1.10 The accessories makers (VC5 a and b) ............................................................ 20
1.11 The small stitchers ........................................................................................... 21
1.12 The printers (and embroiderers)....................................................................... 22
1.13 The high-end tailors ......................................................................................... 22
1.14 Potential value chains ...................................................................................... 23
1.15 The E- Tailors (VC new 1) .............................................................................. 23
1.16 Jeans ................................................................................................................. 25
1.17 T-shirt printers and polo embroiderers ............................................................ 26
Causal Models ..............................................................................................................26
3
Market opportunity ......................................................................................................36
4
3.1
New Markets .................................................................................................... 37
Competitiveness Potential ............................................................................................41
5
What are Haiti’s competitive and comparative strengths? .............................. 41
What are Haiti’s competitive and comparative weaknesses? .......................... 43
What is the Quality of the Enabling Environment, and how does the
Enabling Environment Impact the Value Chain’s Competitiveness? .............. 46
4.4
Workforce and workforce development .......................................................... 50
4.5
SWOT Analysis of the Haitian Apparel Industry ............................................ 53
4.6
Key success criteria.......................................................................................... 55
Vision and Upgrading Strategy....................................................................................57
6
5.1
Vision of what could be achieved .................................................................... 57
5.2
Upgrading Strategy: A five-pronged approach (and possibly one more) ........ 57
5.3
Additional actions towards the Upgrading Strategy ........................................ 58
5.4
Exit Strategy for LEVE .................................................................................... 60
5.5
Anticipated impact on women and youth ........................................................ 61
5.6
Risks and Mitigation ........................................................................................ 61
Annexes........................................................................................................................63
4.1
4.2
4.3
6.1
6.2
Annex 1: Summary of Meetings ...................................................................... 63
Annex 2: Bibliography..................................................................................... 65
Apparel and Textiles Sector Assessment |i
FIGURES
Figure 1:
Figure 2:
Figure 3:
Figure 4:
Figure 5:
Figure 6:
Figure 7:
Figure 8:
Figure 9:
Figure 10:
Figure 11:
Figure 12:
Figure 13:
Figure 14:
Figure 15:
Figure 16:
Figure 17:
Figure 18:
Figure 19:
Figure 20:
Figure 21:
Figure 22:
Figure 23:
Figure 24:
Value Chain summary ............................................................................................ 1
How Haiti fits into the picture for the U.S. market (millions USD) ...................... 4
Companies operating in the Mass Industrial value chains ..................................... 5
Disappointing figures – some growth (millions USD) ....................................... 6
Breakdown of Haiti’s export by fiber type ............................................................. 7
Breakdown of Haiti’s production by garment type, 2013 ...................................... 7
Men’s and boy’s knit tops value against volume category 338 ...................... 8
Exports to Canada of textile items (Can $) ............................................................ 8
The Mass Industry Apparel Value Chain ............................................................... 9
Processes in the mass industrial value chains....................................................... 11
Potential movement along the value chain ........................................................... 12
Average tee costs .................................................................................................. 13
Typical on-water time for fabric and garment (excludes manufacturing
time and includes custom clearance and procedures)........................................... 16
What happens when fabric or yarn is stockpiled in the Dominican
Republic................................................................................................................ 16
The smaller garment industry ............................................................................... 18
What could be – Possible new value chains ......................................................... 23
Who to sell to? ...................................................................................................... 37
Tee shirt exports to the EU (Euro ‘000s).............................................................. 39
Garment manufacturing labor costs (US$/hour) by Countries ............................. 43
Job functions and related training......................................................................... 50
Existing training centers ....................................................................................... 52
SWOT analysis for the Haitian apparel industry .................................................. 53
Assessment of factors used in a typical garment destination SWOT ................... 54
Key success criteria .............................................................................................. 56
A p p a r e l a n d T e x t i l e s S e c t o r A s s e s s m e n t | ii
ACRONYMS
ADIH
AGOA
APEC
ASEAN
CFI
Association of Haitian Industry
African Growth and Opportunity Act
Asia-Pacific Economic Cooperation (organization)
Association of South East Asian Nations
Completely customized - i.e. for a suit - perfect fit to one person's
body
Haitian subsidiary of the ILO (International Labor Organization)
Free trade area of the (mainly) English speaking Caribbean
Garment category used under textile restraint system
Haitian Chambers of Commerce - Chambre du Commerce et
d'industrie d'Haiti
Haitian Investment promotion agency
CHAPE
Le Centre Haïtien d’Appui et de Promotion d’Entreprise
CHAPE
Clinton Bush
CMT (CMP)
CNF
Le Centre Haïtien d’Appui et de Promotion d’Entreprise
Clinton Bush Haiti Fund
Cut Make Trim - make up of garment from cutting
Cost and Freight (import price of goods at dock of destination)
Allows regional fabric to count as local fabric for the purposes of
garment origin
Dominican Republic
Electronic tailor - processes orders electronically
Everything but Arms
European Common Area
European Union
Non EU countries bordering or close to the EU
Statistical office of the European Union
Haiti Economic Lift Program (HELP) Act of 2010
Free on board (export price of goods at dock of origin)
Customs term allowing goods to be imported duty free as long as
they are used within an export orientated factory
Bespoke
Better Work (Haiti)
CARICOM
Category
CCIH
Cumulation
DR
E- Tailor
EBA
ECA
EU
Euro-Med
Eurostat
FEU (40’)
FOB
Franchise
FTA/ FTZ
Free Trade Area/ Free Trade Zone
Full package
Offer of garment based on supplying all components CMT+ fabric
that goes into it (also known as FOB)
Ginning
Greige
GSD
GSM
GSP
GSP+
HAND
Cleaning of cotton after picking
Grey fabric or yarn that has not been dyed or bleached
Garment Sewing Data
Grams per square meter for knit fabric - weight
General System of Preferences
Similar to GSP but gives preference to non-LDC
Haitian Network of Designers
A p p a r e l a n d T e x t i l e s S e c t o r A s s e s s m e n t | iii
Haute Couture
HELP
HOPE
HS
IDB
INDEPCO
KWH
L/C
LDC
LDP
Lint
MFA
MFN
Mill
ModAyiti
MSME
NFE
OTEXA
PEPE
PIC PIRN
Piece goods
PIERS
Runway Haiti
Screen printer
SME
Staple
StatCan
Stateside
Strike off
Sweatshop
SWOT
TEU (20’)
TPL
Transformation
Triangular trade
Trims
VC
WTO
High fashion especially for ladies
Haiti Economic Lift Program (HELP) Act of 2010
Haitian Hemispheric Opportunity through Partnership
Encouragement Act of 2006 (HOPE I) of 2008 (Hope II)
Harmonized System
Intra American Development Bank
Institut National pour la Développement et Promotion de la Couture
Kilowatt Hour
Letter of Credit
Least Developed Country
Landed Duty Paid
Raw cotton
Multi Fiber Agreement
Most Favored Nation
Factory making fabric
Haitian Fashion brand or association
Micro Small and Medium sized enterprises
No Financial Exchange - fabric supplied without payment for make
up
Office of Textiles and Apparel, US Dept. of Commerce
Second hand clothing market
Different names for the northern Industrial park at Caracol
Fabric and trims in loose form to make-up the garment
Port Import Export Reporting System
Annual Haitian fashion show
Prints using a screen
Square meter equivalent (unit) – a measure of garment volume that
averages the size of different garments and allows proper
comparison by volume
Length of fiber in yarn
Statistics Canada
Arrived USA dock
Mockup of print for buyer’s approval
(pejorative) Garment make up factory often small
Strengths Weaknesses Opportunities Threats
Twenty foot equivalent (measure of volume for cargo)
Tariff Preference Level
Change of HS code number in a product making process e.g. from
lint to yarn with spinning
Fabric in one country, sewing in another and buyer in a third
Garment accessories e.g. thread, button, lining, poly bag
Value Chain
World Trade Organization
A p p a r e l a n d T e x t i l e s S e c t o r A s s e s s m e n t | iv
1
Introduction – Value Chains within the Apparel Sector
1.1
Value Chains assessed
The Local Enterprise and Value Chain Enhancement (LEVE) team investigated and assessed
the value chains described in Figure 1 below. Value chains VC1- 8 exist now in Haiti. The
team also considered three potential value chains that do not currently exist in the country,
labelled VC new 1, 2 and 3.
Value Chains 1, 2 and 3 are the large industrial players that employ hundreds or thousands of
workers. Value chains 4, 5, 6, 7 and 8 are led by the smaller scale firms, which may employ
up to 20 or so employees. The potential new value chains, VC new 1, 2 and 3 are those that
the team foresees as having potential, and that may be added to the industry; some elements
of these value chains may already be present in Haiti.
Figure 1:
Coding
VC1a
Value Chain summary
Group
Type
Recommended for
LEVE support
Contract sewer - without cutting
YES
VC1b
Contract sewer with cutting
YES
VC2a
Vendor - buys own fabric
YES
Offshore vendor makes own fabric
YES
Border model
YES
Leather
NO
Designer w/o own sewing
NO
Designer with own sewing
YES
Ethno-centric/ Carnival wear
YES
Accessories - fabric based
NO
VC5b
Accessories - leather and other fibre
NO
VC6a
Small stitcher - (dispersed order) INDEPCO
VC2b
Sub contract sewer
Full CMT vendor
VC2c
VC3
Leather
VC4a
VC4b
Designers
1
VC4c
VC5a
Accessories
VC6b
Small stitchers
VC6c
Trainer and stitcher (NOT INDEPCO)
VC7a
Printers
VC7b
1
Small stitcher (independent)
VC8
High-end tailoring
VC new 1
E tailors
Printer – (artistic/ tourist) artisan
Possibly
NO
Possibly
NO
Printer - mass/ corporate
May overlap with new
High end tailoring; tailors making suits
customized to individuals
May overlap with new
E Tailor
Recommended
Would include accessories
Apparel and Textiles Sector Assessment |1
Coding
Group
VC new 2
Jeans
VC new 3
Corporate printers
1.2
Type
Recommended for
LEVE support
Recommended
Printer/ embroiderer for corporate/ event wear
Recommended
Jeans
Introduction to this dual industry
The apparel sector in Haiti has a dual nature: big and small: mass industrial and small scale
stitchers and designers.
The mass industrial subsector is one of Haiti’s largest economic activities and now employs
around 30,000+ people and is growing. While the industry is sometimes said to be a shadow
of its former self, in terms of apparel, it is actually much larger than ever before by some
measures. In 1989 Haiti exported 106 million SMEs of apparel (square meters equivalents of
apparel)2; it now exports (in 2013) 309 million SME3. While it is certainly true that the light
assembly industry, e.g. baseballs, has left Haiti (so the total employment in light assembly is
much less than before), there is a real feeling of optimism that this could be the moment for
the mass industry apparel subsector.
On the other side of the sector, there are quite a few small sewers/ designers making goods
for the school (and other) uniform markets, upmarket haute couture (for export and local
boutiques) and tourist wear/ ethnic-wear (carnival), and at least one or two upmarket tailors.
The smaller-scale subsector is often only semi-commercial and sells product by attaching
ethical or sympathy (charity labels) to its goods. The mass industrial subsector is at the
forefront of a “sweatshop” industry.
A lot of negativity has often been associated
with this industry, with pejorative words like The mass industry and small scale stitchers currently
“sweatshop”, and how it treats its workers. have little in common, even in terms of the kinds of
trainees that they hire. Indeed there is a huge
However a wind of change is sweeping both disconnect, even at training level.
ends of the industry: at the micro level
The mass industry has tended to train operators indesigners are coalescing to pool resources and house. For more skilled or advanced personnel, the
are being recognised outside Haiti perhaps subsector has tended to import many of its
more than ever before. On the macro level, requirements from abroad.
Haiti is becoming well known as offering one The small scale stitchers and designers tend to be
of the best investment packages available in trai ed i a al ost artisa al or ottage setti g,
this industry to the World’s two largest using human powered machines. They graduate
who rarely enter the mass industry a d do ’t
markets – the EU and the USA. Indeed, Haiti trainees
have the resources (generally) to buy in expertise
could be in the unique position of being able to from abroad.
offer duty free merchandise to the EU with
just the sewing – something nowhere else in
Latin America can currently offer. While the HOPE/HELP legislation is generous to the point
that nowhere else has a better offer except Israel.
2
SME are a measure of apparel origin based on normal fabric consumption per average unit and allow
comparison of the total volume moving while looking at units would be distorted if some were very small items
like underwear and some jackets.
3
Otexa
The mass industrial sector has the ability to create a lot of jobs quickly with large investments
that can (with available sheds) start, employ and train workers in 6-9 months. Without
available sheds (i.e. if they have to build their own) investments would require 9-12 months.
Typically each investment of this type would generate at least 1,000+ jobs apiece.
Other countries have demonstrated that the textile/apparel sector can be a first stepping stone
on the road to more sophisticated industrial development. However it can also be quite a
footloose industry (typically following fiscal preference), and can be vulnerable to external
shocks.
While the second subsector is currently small and dispersed, it has the ability to build longer
term depth and (as discussed below in Section 3, on market development) value: to
amend/upgrade the image of Haiti. The smaller scale subsector has the potential to present
Haiti as a destination, known not only for basic mass commercial stitching making tee-shirts
now (or as it was 30 years ago when it mainly made sportswear and sports goods and
accessories), but also as a frontrunner in the global garment industry.
Much of the smaller scale is foot powered and very slow and the quality variable, while the bigger factories mass
produce the same garments to tight quality standards
The two subsectors are currently quite distinct and have very limited contact or involvement
with each other even in terms of the people they hire. Their employees also tend to come
from two distinct training pools. The mass industry typically imports all its skilled elements
from overseas, such as pattern making, merchandising or management; and to train lowerskilled operator labor in-house. The smaller-scale subsector industry may have tailors trained
at village level centers (e.g. INDEPCO) or with no
formalised training at all.
Sometimes this difference is also seen as a question of
demand – local or external. This analysis is slightly
skewed by the fact that while Haiti exports upwards of
$800 million worth of the garments, much of the
apparel worn by Haitians is imported as second hand
goods from Western countries: the so-called Pepe
market. Indeed much of the current tailoring at village
Source: Wikipedia
level actually relates to alterations of such clothes for the local market.
Mass industrial subsector – external demand overview
1.3
The mass industrial subsector exists in four hubs: Port-au-Prince (mainly Sonapi and
Shodecosa zone), Carrefour, the new park at Caracol and also close to the border at
Ouanaminthe. It is generally highly concentrated around ports. It consists of survivors from
the time when the stitching industry had a catastrophic collapse in 1994 (and these are
generally run by Haitians) and newer arrivals, typically Dominican, Asian and American. The
subsector is preference-induced and it is difficult to see how it would still exist (after the end
of the Multi-Fiber Agreement in 2006) if it wasn’t for the preferential trade packages given
by the USA. So not surprisingly – the sector is mainly focused on the U.Ss market, with some
add-on for global clients who also ship to Canada and Europe. The volumes of non-U.S.
cargo remain small.
In terms of global trade, Haiti has now overtaken the Dominican Republic in terms of the
value of its exports to the USA and has survived the end of the MFA in 2005.
Figure 2:
How Haiti fits into the picture for the U.S. market (millions USD)
Rank
Percentage
Share
of US
market
29,783
1
37%
7,101
8,126
2
10%
5,052
4,935
4,975
5
6%
2,372
4,510
4,470
4,948
7
6%
8,413
6,078
3,804
3,696
3,682
8
5%
1,786
2,976
3,316
3,041
3,212
10
4%
Cambodia
808
1,713
2,592
2,534
2,555
11
3%
Honduras
2,323
2,622
2,615
2,559
2,498
13
3%
El Salvador
1,583
1,619
1,738
1,841
1,859
14
2%
Sri Lanka
1,472
1,650
1,400
1,477
1,649
17
2%
Pakistan
920
1,259
1,655
1,472
1,476
18
2%
Nicaragua
336
716
1,357
1,348
1,429
19
2%
Guatemala
1,487
1,816
1,321
1,240
1,314
20
2%
Italy
1,400
1,354
1,101
1,137
1,225
21
2%
Philippines
1,895
1,830
1,180
1,149
1,128
22
1%
Thailand
1,820
1,808
1,187
1,073
1,047
23
1%
Jordan
43
1,083
896
981
1,043
24
1%
Egypt
406
444
903
871
804
25
1%
Haiti
Dominican
Republic
251
406
701
730
803
28
1%
2,425
1,849
654
649
673
29
1%
Country
2000
2005
2011
2012
2013
World
57,232
68,713
77,659
76,811
79,798
China
4,499
15,143
29,392
29,060
47
2,725
6,644
Indonesia
2,055
2,875
Bangladesh
2,116
Mexico
India
Vietnam
Peru
Canada
Malaysia
Source: OTEXA
383
800
714
611
616
30
1%
1,747
1,273
506
515
533
31
1%
781
678
505
464
500
32
1%
The mass industry consists currently of 29 distinct operational facilities, plus one for leather 4.
Some of these are part of the same commercial groups. They can be listed as follows (Figure
3):
Figure 3:
Companies operating in the Mass Industrial value chains
Coding
Type
Product
Firm
Number
of firms
Nationality
VC1a
Contract sewer without cutting
Underwear TShirt
PALM APPAREL , GENESIS,
MULTIWEAR, CISSA, PREMIUM,
GMC, PACIFIC SPORTS*
7
Haitian ,6
Korean,1
VC1b
Contract sewer
with cutting
All types
INTERAMERICAN, ONE WORLD,
ISLAND APPAREL, LUCOTEX,
QUALITY SEWING, HORIZON,
MODAS GLORIA, DKDR
CONTRACTOR, FAIRWAY
APPAREL, PACIFIC SPORTS*
(duplicates both)
9
Haitian, 4
Taiwanese 1
USA 1
Korea 3
VC2a
Vendor - buys own
fabric
Sportswear,
uniforms,
pants, shirts,
polo shirts
JOHAN, GLADATOR, INDIGO
MOUNTAIN, MODAS GLORIA,
H&H TEXTLES
5
Korean ,2
USA , 2
Haitian,1
VC2b
Offshore vendor
makes own fabric
Sportwear
SAE-A (S&H), Willbes
2
Korean
VC2c
Border model
Gruppo M (Vanity Fair + LEVIS)
1
DR, ( USA)
VC3
Leather
Hawtan
1
USA
1
USA
Unsure
Jeans, ladies
underwear
Gloves and
leather
Knit gloves
FOX RIVER
( not in production for a while)
* Pacific Sports does both
All of the above serve the U.S. market. A few are also doing business with Canada and
Europe; these tend to be add-on to orders that are placed together with orders for the U.S. for
global shipment, since many brands produce labelling that are multi-market. There doesn’t
appear to be much or any direct placement of orders, at least for Europe alone.
Many of the bigger actors are highly vulnerable to external threats since they are often monoclient, mono-product (tee-shirts or under-shirts) and mono-target market, and often receive
their fabric (which generally accounts for 70 % of garment cost on an NFE (no financial
exchange) basis from their clients.
4
Better Work Better Work Haiti: Garment Industry 7th Biannual Synthesis Report Under the HOPE II
Legislation, produced on 16 October 2013, and other sources
It should not be presumed that a preference-induced industry, that only uses Haitian labor and
practically no other add-ons, can survive or prosper in the context of growing cost pressures
on the main Haitian input – labor. Haiti must find new ways to develop its apparel sector
competitiveness in the medium term, while maximizing the comparative advantage of its low
labor costs in the short term.
Figure 4:
Disappointing figures – some growth (millions USD)
The big picture - Apparel in Haiti since the end of quota
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
2005
2006
2007
All
2008
2009
Tee shirts
2010
2011
2012
2013
Underwear
Source OTEXA extrapolated
While Haiti’s apparel and textiles industry is growing, it is growing rather slowly and
remains overly concentrated in tee shirts, with direct competition based on preferences with
the lowest labor cost in the Caribbean Basin – a factor that risks being eroded by proposed
changes to the minimum labor law. Some recent proposals to raise the minimum wage and
the incentivised level in the industry (what workers should be allowed to earn on a fully
productive piece rate) would make the cost of labor (according to some sources)5 equivalent
to what many workers earn in the Dominican Republic.
Preferences are also subject to a country cap (or TPL tariff preference level) of 70,000
million SME (square meter equivalents) under HOPE for knits and 12 million dozen SME tee
shirts under CBTPA. These were 58.3 % and 57.76 % full at the end of the last preferential
treatment period, i.e. September 30, 2013.6 Of course, Haiti can still ship above the cap but
that would be without the duty free saving,
So Haiti has to find either new markets or new products that add value and use its TPL
effectively. It cannot go on growing in cotton tee shirts, especially as the overall trend of
American buyers is to let the garment vendor source its own fabric, which Asian vendors are
typically very apt at doing. And once Haiti does reach the cap, preference will cease on the
volume over the TPL level.
5
6
Source withheld since this is a sensitive subject -can be given on request
Source Otexa - http://otexa.ita.doc.gov/agoa-cbtpa/agoa-cbtpa_2013.htm
While there has been some growth in other kinds of garments (figures 5 and 6), this is still
very small in absolute terms.
Figure 5:
Breakdown of Haiti’s export by fiber type
Earthquake
Millions USD
HOPE
HELP
2006
2010
2012
2013
All
$450
$518
$730
$803
Cotton apparel
$320
$415
$566
$606
$0
$15
$30
$30
$129
$87
$134
$166
$0
$1
$1
$2
Wool apparel
Man-made fiber apparel
Silk
While most of the growth in the last few years has been in cotton, there is also a strong
growth in synthetics that generally incur a higher import duty than cottons.
Figure 6:
Breakdown of Haiti’s production by garment type, 2013
Source: OTEXA
Men’s and boy’s knit tops value against volume (category 3387)
Figure 7:
Value
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Country
$ million
Units
Million
pieces
2013
Country
2013
World
$6,206
World
China
Honduras
Vietnam
India
Pakistan
Indonesia
Haiti
El Salvador
Mexico
Bangladesh
Nicaragua
$1,156
$580
$512
$472
$427
$391
$363
$342
$282
$275
$264
313
249
244
181
163
157
147
145
145
117
107
$220
$128
Honduras
China
Haiti
El Salvador
Mexico
Nicaragua
Pakistan
India
Vietnam
Bangladesh
Indonesia
Dominican
Republic
Guatemala
Cambodia
$105
Peru
30
$59
$51
Thailand
Malaysia
15
13
Peru
$251
Guatemala
Cambodia
Dominican
15
Republic
Thailand
16
Malaysia
17
Source: OTEXA extrapolated
2,273
76
Averaged
Avg. value
per piece
$2.73
$1.85
$4.65
$1.49
$1.89
$1.73
$1.68
$2.90
$3.25
$3.52
$2.35
$3.67
$1.38
$3.01
$3.17
73
40
$8.46
$3.95
$3.81
The above data shows that, while Haiti is number three by volume of knit-shirts shipped,
those shipments do not represent significant value-added. In fact they are mainly blanks (no
print or other embellishment), and mainly tee shirts whereas other countries are more likely
to be shipping predominately printed tee shirts and value added knit tops like polos.
Exports to Canada
For reference, Haiti’s exports of apparel to its next North American biggest market are small,
but growing
Figure 8:
Exports to Canada of textile items (Can $)
HS Chapters
61. Knit apparel
62. Woven apparel
63. Other textile
2000
4,087,766
296,731
2,627,296
2007
15,267,055
360,721
17
2013
19,588,427
3,761,090
2,744
Source : StatCan
7
Cat 338 = Men’s boys knit tops of cotton
1.4
Mass Industrial Value Chain Map – VCs 1, 2 and 3
A simplified global value chain, from fiber to dispatch, is shown in Figure 9, below.
Excluding leather, Haiti is currently only involved at the sewing stage. In the existing
preference legislation Origin is conferred with just the sewing; it can also be conferred by
some of the other transformations (change of HS code) with spinning and fabric formation.
The mass industrial chain typically follows the sequences depicted in the map, with
occasional offshoots for special processes and finishes.
Figure 9:
The Mass Industry Apparel Value Chain
The apparel Value Chain - Yarn forward
Main route
Occasional route
(simplified)
Fabric
Finishing *
Yarn Dyeing
Done in Haiti for Made in Haiti label
Sometimes done in Haiti
Could be done in Haiti
Garment
Finishing *
Knitting *
Lint
(raw cotton)
Ginning
Spinning
Dyeing
Bleaching
Mercerising
Synthetics - staple
(pellet)
Cutting
Sewing
Packing
Weaving *
Melt
Spinning
Body sizes *
Stentorising
Opening
Setting
Crimping
Synthetics / silk
- continuous filament
*Sandblast
* Garment wash
*Dye cut
* no side seam
* Sueding
* can also blend
*Other
*Painting
*Peaching
* Whispering
cotton with
* All over printing
* Embroidery
synthetic
*Special washes
* Printing
Excludes blending / doubling
Excludes special yarn treatment
Excludes PFD (Prepared to dye) and bonded fabrics
E.g. whicking / gassing
Excludes worsted
While Haiti did at one time produce some staple cotton, it is far from recent, and considering
the water needs and pesticide implications of cotton production (cotton accounts for 30% of
world pesticide use8), it may not be a crop that should be encouraged to be brought back.
Another factor is the degree of subsidy given to cotton growing in the USA.
With regard to lint (raw cotton), its processing (ginning) is normally based close to the
growing area. From lint to yarn – the next stage – we need spinning. Considering the
substantial costs involved with setting up a spinning mill, it is unlikely, at this stage, 8 years
after the end of textile restraint to Western Markets (the Multi-Fiber Agreement), that
spinning could be restarted.9 It is simply too late to induce heavy industry with trade
preference when there is no longer any quantitative restriction on volume like the MFA quota
system.
8
Better Cotton Initiative
The MFA began in the 1960s and artificially held back output from most Asian origins to the EU and USA
until 2006 when, especially after China’s accession to the WTO, it was abolished. Many garment companies
were established in places that should never have had a garment industry, like Saipan, Guam and Kuwait,
because they were not locations with any of the inputs needed for garment making. With the end of the MFA
much of these “unnatural” origins disappeared. Also, with its end, it is unlikely that more investment will be
seen in ginning or spinning except at the closest possible locations to fiber origin/ growing. Currently that
doesn’t include Haiti. While it is true that the Lomé conventions for the ACP did manage to induce knitting
capacity into Sri Lanka, Mauritius and Bangladesh where none existed hitherto, the attempt by AGOA to do the
same in Africa (with its constant but only temporary renewals of the third country rule for fabric) have been a
failure.
9
From spinning, there is fabric formation, and the Haitian garment industry does not make any
(except leather which is not a staple fabric). So the main operation conferring origin on
Haitian garments is the sewing. This alone enables Haiti to obtain duty free preference under
the HOPE/HELP legislation, and the sewing along is also adequate to get duty free to Europe
with the European Union’s Economic Cooperation Agreement with CARICOM.
So in terms of the Haitian industry and LEVE’s possible interventions, this assessment
commences with a fabric forward analysis. At present there are two plans to bring fabric
formation to Haiti – i.e. SAE-A and Multitex within the Caracol Park (and this has important
implications for the pollution that it may generate and water it may use).
Garment make-up (from cutting onwards in the above value chain map), often doesn’t
actually include the cutting of the fabric, nor the finishing and packing (after makeup) which
is often done in the Dominican Republic. This, as well as the final dispatch, is allowed under
current US preference legislation. However from most garment origins, US Customs would
“red flag” any shipment not proceeding in a sealed container straight from origin to
destination because of the risk of fraud or what is known as transhipment – i.e. use of one
country’s origin documents while shipping from another (typically China). That said, there is
no evidence of transhipment at present – but, if the packing and dispatch is done externally,
there is a risk that Haiti’s origin rules could be abused with this kind of activity.
The existing mass industrial sector in apparel can be divided into three, based on the vendors’
level of control or not of their own materials (fabric or piece goods), even if that control is
frequently not in Haiti. Firstly, there are those who receive the fabric from their buyers,
secondly, there are those that buy their own fabric and thirdly, there are those that make their
own fabric, but not in Haiti.
The last one is generally foreign and often part of large offshore vendors (VC2 and 3 value
chains) who make and/or source their own piece goods (fabric and trims). While the Haitian
companies generally act as contract sewers or indenters (VC1 value chains), with fabric and
trims not owned or sourced by them. As such, while the foreign factories tend to have their
own product development and merchandising teams (if not in Haiti) and are relatively well
funded, the contract sewers have almost no control of the main cost of the garment, which is
the fabric. Typically only having one client, they are almost corporate extensions of the
buyer, and have limited involvement with the end buyer. They therefore have limited
possibilities of diversification from what is a very vulnerable model.
Operations involved in fabric making – i.e. knitting or weaving and wet process (dyeing) –
are not currently not done in Haiti, but for the VC2 value chains take place within the same
company group somewhere else, mostly the Dominican Republic or in Asia.
In leather (VC3), there is only a single producer. Its end product is mainly industrial work
wear, and there is no treatment of effluent. The value chain is not considered further in this
assessment.
A p p a r e l a n d T e x t i l e s S e c t o r A s s e s s m e n t | 10
Figure 10:
Processes in the mass industrial value chains
Coding
Type
Fabric
making
Wet
process/
dyeing *
Cutting
Sewing
Finishing
/ Packing
Fabric +
trims
Design
Comment
Example
of lead
firm
VC1a
Contract
sewer without
cutting
X
X
X
√
YES+ NO
Buyer
Buyer
Monoproduct+
client
Palm
Apparel
VC1b
Contract
sewer
with
cutting
X
X
√
√
√
Buyer
Buyer
Multiproduct +
client
Island
apparel
VC2a
Vendor buys own
fabric
X
X
√
√
√
Vendor
Buyer
Some control
of own piece
goods
Indigo
Mountain
VC2b
Offshore
vendor
makes
own
fabric
Inhouse
(not in
Haiti)
In- house
√
√
√
Inhouse
or
sourced
Buyer/
vendor
Full control
of own piece
goods
Willbes
VC2c
Border
model
Inhouse
(in DR)
+
bought
X
X
√
X
(Coming)
Vendor
Buyer
Finishing to
Haiti by 2014
end
Gruppo
M
VC3
Leather
√ Local
hides
Coming
Coming
Own
Buyer/
vendor
Full control
of own piece
goods
Cuirs
Hawtan
Curing
Tanning
√
Polishing
* dyeing- needs water
How can LEVE help these firms to grow, and attract more firms to Haiti? Figure 11
describes several distinct possible movements that LEVE could leverage for each VC. The
arrows indicate the possibility for vertical integration along the value chain (left arrow =
upstream; right arrow = downstream) or for expanding the number of firms (upwards arrow).
For example, contract sewers have potential to add cutting and finishing (if applicable)
operations. Companies with cutting operations could graduate to controlling their own piece
goods, i.e. buying them or making them. And those who do control their own piece goods
(VC2) should seek backward integration to better anchor such investments in Haiti. Haiti
should also seek investment by more such firms in the short term.
Figure 11:
VC
Potential movement along the value chain
Fin'g /
Pack'g
Type
Fab
Dye
Cut
Sew
Despatch
VC1a
Contract
sewer without
cutting
X
X
X
√
YES+ NO
X
Add PG/ client
/ complicated
stylings
Finance
VC1b
Contract
sewer with
cutting
X
X
√
√
√
√
Add PG
Finance
VC2a
Vendor buys own
fabric
X
X
√
√
√
√
Add investors
VC2b
Offshore
vendor
makes own
fabric
IH
IH
√
√
√
√
Add fabric
Confidence in
Haiti/ treatment
facilities + water
VC2c
Border
model
IH +
Bought
X
X
√
Add finishing
+ despatch
Treatment plant
for washing
X
YES+ NO
(Coming)
Desirable
Need
Value chain
movement
More investors
like this
PG = Piece goods, i.e. fabric and trims
Highlighted box = key target
1.5
The Contract sewers VC1a
These are of two categories: mono-client/mono-product sewers; and those that take orders
from a number of buyers in various stylings – i.e. VC1a and VC1b – multi-client and multiproduct. VC1b almost exclusively make tee-shirts, which are either outerwear (for possible
later printing) or underwear (often a singlet or vest), while VC1b make more varied products
sometimes quiet sophisticated like with more embellishment or garment baking.
Contract sewers without cutting (VC1a) are only able to compete on what they do, which is
just providing the sewing labor. Apart from quality issues, that basically means the cost of
labor and how efficiently they use it. This is precarious as there are countries in Asia opening
up now with significantly lower labour costs, but without preference, to the USA, which
could out-compete Haiti. In fact this kind of competition tends to reduce labor costs to the
lowest common denominator; it has been publicised a number of times how the owners of
factories have pressured the government not to increase the minimum wage for precisely such
a reason. The alternative may be to lose business.
Figure 12:
Average tee costs10
US cents per piece/ (TEU = 20'container FEU= 40')
Cost Item
Haiti
Bangladesh
Comment
CMP (exclude any trims)
40
25
Cut make and pack
Fabric cost at mill – based on a 330 gram
tee at $5.70 per kg (pastel colors) with 3
pieces per kg consumption
167
167
Price quoted based on Dec 2013 carded 24/single ex Pakistan
Freight - fabric to mill
12.5
4
Trims
12
8
Other - + 5%
12
10
FOB sub-total
244
214
Freight to USA
3
10
CNF Value (USA port)
247
224
Difference to Bangladesh
23
Current Duty – USA
0%
19.7%
0
42
LDP USA
247
266
Difference to Bangladesh
(19)
Duty value
Freight Intra-Asia is taken at $1000
per TEU and based on a load of
8000 kgs of fabric per TEU/For
Haiti take at $6000 for a 40' i.e.
16000 kgs
Regional trims are often reported
to be double Asian prices
E.g. Profit
Free on Board – export price at
port from origin
Freight ex Orient to EU taken at
$3000 -the normal load at 30,000
pieces in 1 TEU/Haiti estimated at
$1000 per TEU (guess)
Cost and Freight - price w/o duty
at destination port
Duty is on FOB value
Landed Duty Paid
So the mono-clients should be encouraged to branch out into taking direct orders, since their
existing model is vulnerable. The experience of one factory – Lucotex – is instructive.
Lucotex had only one client, and when that client died her children did not continue the
business. Lucotex has had no orders for 8 months.
Such factories fail to develop or enhance product development skills or merchandising or
marketing skills, and become dependent on the feed of fabric from the client. Also, the client
can determine exactly what is made in the factory and typically would have calculated the
number of garment minutes (known as GSD or General Sewing Data) that would be required
to make a particular garment, and then just pay a set price.
All of the factories complain that the GSD is often calculated in dedicated units elsewhere for
a given styling, and is based on much more competitive factories than those in Haiti that may
switch styles frequently. It is also often claimed by factories that the GSD calculations for
10
Fabric prices based on cost exercise in Pakistan in Dec 2013. CMP prices based on authors own research and
experience. Some freight values are estimated but unlikely to make a significant impact on the overall cost.
given styles are often wrong – but the factory has no choice but to take the orders they are
given since they cannot (or do not) pick and choose their clients.
As one factory put it11 “before the buyer used to come with samples, and now they come with
minutes”. By only supplying labor or Garment Sewing Minutes – factories are forced to
expose their margins, nor can they absorb overhead in the full FOB value of the garment that
would be typically be 3-4 times higher than just the CMP value.
While this kind of model may be the way to start a new garment factory – since typically a
new factory may not wish to risk money on buying fabric for new workers to work with (and
so it is good to use to someone else’s as a factory is started up), it is not a sustainable model
for business. It focuses and exposes producers’ cost structure in a very obvious way,
allowing, for example, buyers to directly compare Haitian costs with Asian ones
As mentioned, while labor rates have been increasing in Asia recently, new, lower cost Asian
markets like Myanmar are entering the fray.
LEVE’s objective therefore should be encouraging Haitian producers to broaden their
customer base. This may not necessarily involve widening their product range, since
changing new stylings or fabric may cause output or efficiency to go down or deteriorate. A
positive step would be to help producers to start sourcing their own fabric, and therefore be
able to offer to a wider range of clients than those who give them their piece goods.
It may be that the commercial risk of doing that
in the same location is quite high, if the client
realises that the factories are no longer dependent
on them for their whole existence. It might be
wise, then, to diversify at new locations. It is
encouraging, for example, to find that Multitex12
, a “mono” factory, is planning to expand from
Port-au-Prince and into Caracol, presumably
with a different client base.
1.6
The contract stitchers with
multi-product, multi-clients
(VC 1b)
How garment orders can be financed: example of
Bangladesh
In Bangladesh, the law requires the customer to pay
before shipment or open a letter of credit (L/C). A
letter of credit is a promise to pay in return for
certain documents at a future date – typically
against a bill of lading showing goods have been
shipped.
This L/C can then be backed locally (transferred) to a
mill or vendor (who supplies the fabric) in order to
purchase the fabric with.
The factory can then use the collateral of a future
order to obtain their raw materials without
significant additional pledges of assets as collateral
on its part.
This value chain includes those manufacturers
This backed L/C – k o
as a a k to a k L/C has
been a major factor in encouraging offshore garment
that wait for known clients to place orders and
vendors to place in Bangladesh since it reduces risk:
those that take local subcontracts (sometime
neither the stitcher or the mill or the offshore
known as indentors) from the one or two fabric
vendor gets paid unless goods are shipped.
feeders in the Dominican Republic that send
piece goods to Haiti for make-up at more than
one factory. While these generally only feed their own dedicated units in Haiti, there is one,
Fishman Tobin (Horizon in Haiti), that feeds multiple factories as well as their own unit. The
dedicated mills and cutting units in the Dominican Republic of Gildan supply Palm and
Apaid and those of Hanes supply the Apaid and Coles Group.
11
12
Magic Sewing in conversation
Based on conversations without independent corroboration with the owner of Multitex – Richard Coles
It would be an advantage in the future, though, to have a pool of available willing factories
able to take new orders without being dedicated just to one external client.
The main advantage of a buyer supplying the fabric is that it can control its (sometimes)
proprietary fabric constructions more closely - since the goods belong to the buyer, and the
buyer can prevent sales of its (frequently) branded goods through parallel channels. It also
gives the buyer control of its own main cost, which is the fabric (generally accounting for 70
% of garment cost), and its quality.
This is however also a vulnerable model since it presumes that the buyer is willing to take the
risk of supplying the factory fabric without any guarantees. There is also the extra effort and
merchandising skills needed at the buyer’s home office to buy, inspect and ship the fabric.
While in North America, there is still a residue of garment buyers and firms with these kinds
of skills and some brands, like Bestform, Russell and Vanity Fair, still do some part of their
own manufacturing in their own plants, this is increasingly being phased out. Also the skill
and knowledge base of buyers in North America is becoming more retail-focused with less
direct expertise in fabric merchandising. However the main factor is that with the
increasingly direct business (from apparel origin rather than offshore hubs like Hong Kong or
Singapore) being done by well-financed Asian vendors who can offer a “full package”
service, the buyer is not obligated to assume this risk or effort So the number of firms willing
to use this approach is unlikely to grow.
It is interesting to note that having been faced with the prospect of no orders – the Lucotex
factory is now planning to buy its own fabric by backing the buyer’s letter of credit to
purchase the fabric. So there are alternatives to the NFE model. Also, since the factories do
not have to buy their own fabrics and trims, they also don’t learn about the business beyond
Haiti. So they do not develop product design, nor do marketing or become adept at nimbly
responding to changing trends.
1.7
The vendor that buys its own, the offshore vendor and the
border model (VC2 a, b and c)
Unlike the contract stitchers, there are a number of Haitian-owned factories that do buy their
own fabric; and this seems to be increasing. This should be encouraged. The main problem
with buying one’s own fabric, however, is the distance to its origin generally in Asia. Unlike
garment origins where the fabric/fibre is local to a large sewing industry – e.g. India, Pakistan
or China, Haitian companies bear the added risk of having to pay for the fabric upon
shipment, since credit is problematic when goods pass through a frontier with a different
legal system and especially one so far away. So a company that pays for the fabric upfront
could have to wait 3–4 months before getting paid for the final garment, since fabric has to be
ordered further in advance when it is further away. Also, Haitian companies cannot send the
fabric back or replace it if defective or of an incorrect specification and still meet their
garment delivery.
Garment buyers like to place orders for fashion goods as close as possible to their selling
window – i.e. when placed on the shelves in a shop. The closer they are to the selling
window, the more accurately they will forecast the coming trends that will sell at the full
retail value. If garments arrive late or they mis-forecast fashion trends or seasonal demand,
then goods may be cancelled or remaindered faster at a discount. Since the mark-up from
FOB to retail is generally 300% (or higher for high fashion goods), the proportion of their
range that can be sold in the designated selling window assumes critical importance. While
many other garment origins also have to import their fabric – e.g. Philippines, their proximity
to the big fiber and fabric producers – often China, India or Pakistan - give them a certain
advantage. It can take up to 6 weeks for a Haitian company to receive merchandise from
Asia. This is a major issue for firms in this value chain.
Figure 13:
Country
Typical on-water time for fabric and garment (excludes manufacturing
time and includes custom clearance and procedures)
Weeks for garment to
reach market
0
3
3-4
5
4
Total on water
Mexico
China
Vietnam
Lesotho
Bangladesh
Weeks for fabric to reach
sewing factory
0 or imported 4
0
0 or imported 2
5
0*-2
Turkey
Morocco
Haiti
Jordan
Philippines
0
3
5
4
1
4
2
1
2-4
3-4
4
5
6
6-8
4-5
0-4
3
3-6
10
4-6
Source: Various; * if knitted locally- Bangladesh has a large knitting industry based on imported yarn. It has to do that when supplying the
EU (under the old rules) since otherwise it would get duty free to the EU. For the U.S. market, it doesn’t make any fiscal difference whether
the fabric is made locally or not, but it does help in terms of lead time and control for the fabric to be local.
The typical garment order from placement to shipment is often only 3-4 months from Asia –
with a shipment time (Asia-USA) of 3 weeks and the time needed to distribute it to the retail
store after arrival of 2 weeks, the fastest delivery would be about 18 weeks from placement to
arrival in-store - and the trend is to shorten the time. If a third of that is used up by fabric
being on-water, it makes a big difference to the willingness of a buyer to place.
Figure 14:
Country
Haiti
What happens when fabric or yarn is stockpiled in the Dominican
Republic
Weeks for fabric to reach
sewing factory DR/Haiti
1
Weeks for garment to
reach market HaitiMiami
1
Total on water
2
Many of the producers in this value chain are therefore producing in the Dominican Republic.
They are able to reduce the longish lead times for piece goods to arrive from Asia by
stockpiling yarns and greige fabric locally/regionally, and only completing the knitting
and/or dyeing locally. This gives them a quick turnaround that would not be possible if they
had to wait for the finished fabric to arrive from Asia.
Globally the most common kind of vendor in this category is the one that has its own sewing
capacity in offshore locations, but that buys its piece goods from other countries as and when
the price and delivery is attractive. Typically these kinds of vendors are very flexible: placing
different parts of the value chain all over the world and engaging in “triangular trade” – i.e.
buyer in one country, vendor in a second and sewing and/or fabric in a third or fourth
country. They are quite flexible in placing the sewing both in their own factories and that of
others. However, since much of the production in Haiti is dedicated to specific buyers, they
must come to Haiti, set-up factories and sew if they wish to manufacture in Haiti. Of course –
the sewing is also the critical transformation that confers Haitian origin and therefore duty
free.
An objective for the growth of this kind of value chain would be to see knitting being done
locally or regionally; and indeed SAE-A has indicated that it will start knitting from 2017
onwards. It foresees focus on two distinct market opportunities:
a. Fabric that can easily be stockpiled and doesn’t change much within the season or
from season to season. This could include uniforms, workwear and some kinds of
men’s pants, typically in poly-cottons, TC fabric, or denim for jeans. However,
since the risk of an order missing its delivery for a repeating style/shade (and
possibly being cancelled) is also reduced since it can be sold in the following
season with a reduced loss (compared to a complete write –off for a style that is
out of fashion by next season), the margins for standard items tend to be lower.
b. If dyeing can be added, then yarn that is fairly standard could also be stockpiled
and then dyed locally or regionally, which makes it unique. For a 24 single yarn at
180 GSM (grams per square meter), i.e. the standard tee-shirt fabric, the number
of possible variants is around the follows:
Greige yarn
5-10
Greige fabrics
10-20
Dyed shades
6 million +
So if dyeing can be added for these kinds of vendors, the length of the fabric lead
time is mitigated.
Another factor affecting the industry here is the need to anchor investments in Haiti.
Stitching alone doesn’t service as an anchor – it can be extremely fickle when only
preference-induced and when better or the same preferences are offered elsewhere. A main
“sunk” cost that would serve as an anchor investment would be dyeing, with all the ancillary
need for water treatment, whose plant can’t be easily moved from place to place.
1.8
The smaller scale stitchers and designers Value Chains
While the mass market serves export demand, the smaller tailors serves both export and
domestic markets. At the very basic level there are tailoring shops of one or two machines
that make some traditional fashion alter existing garments and sometimes make large orders,
typically school uniforms, placed centrally by INDEPCO, the main Haitian institution in
tailoring training. At another level, there is a generally female tailoring in better goods that
cater for the well-off, almost exclusively in Port-au-Prince, for ball gowns, other formal wear,
carnival wear and some beach wear. Many of these tailors also have shops that sell both
imported and local designs, and some do a little export, often in beachwear. Frequently these
shops mix in accessories and other artefacts and are generally own label. Where they are
design focused, better goods are frequently imported and where not – their range is limited by
available materials.
Recently 30 of the better end designers have merged together to form an association called
ModAyiti and have begun to develop a centralized manufacturing center while holding semiannual fashion shows of their designs. As such they constitute what could be called Haiti’s
fashion avant garde. Figure 15 describes the rest of the Haitian apparel industry:
Figure 15:
VC
The smaller garment industry
Type
Market
Sewing
Product
Ethical / Stock
Own
Whole- Internet
sympathy and Shop
design
sale
Sales
label
sell
VC4a
Designer 1
High
X
Haute Couture ladies
√
X
√
YES +
NO
X
X
VC4b
Designer 2
High
√
Haute Couture ladies
√
Often
√
YES +
NO
X
Small
VC4c
Ethno-centric /
Carnival wear
Low
YES + NO
Fad/ seasonal
√
X
X
X
√
X
Low
n/a
Hand bags / purses /
hair ties
√
√
√
X
X
YES
Low
Some
Wallets / sandals /
hangers
√
YES + NO
√
X
X
X
Mid
√
Uniforms
X
X
X
X
√
√
Varies
√
Varies
X
X
X
YES
X
√
√
√
X
X
X
Tees with print /
other
√
Often
√
YES
+NO
√
X
VC5a
VC5b
VC6a
VC6b
Accessories fabric based
Accessories leather and other
fibre
Small stitcher (dispersed order)
INDEPCO
Small stitcher
(independent)
Alterations /
traditional wear
/homewear
Mostly touristic wear
uisng trainees to
make commercial
goods in return for
training
VC6c
Trainer and
stitcher (NOT
INDEPCO)
Low
√
VC7a
Pri ter – (artisti
/ tourist) artisan
Low
YES + NO
VC7b
Printer - mass /
corporate
Mid
√
Tees with better print
X
X
Blanks
X
YES +NO
√
√
Bespoke men's
suiting * bespoke =
completely
customized to 1
person's body size
X
X
X
√
n/a
√
VC8
High end tailoring
High
While there are many types and some do overlap – the critical element is to combine an
existing stitching component with own design, like VC4 b and c. Many of these local
producers also use some sort of sympathy label in order to attract buyers – always foreign –
through sales at the only large scale tourist location, Labadee, or through the internet and to
the occasional other tourist. There is also a common mixing of donor finance with
commercial gain - for example, when a donor has financed a center that is also using trainees
to make goods that are sold to help finance the center.
The effectiveness of using an origin label to encourage sales is debateable. While some
customers may be concerned as to where goods come from, generally what gets them buying
(and coming back for more) is the availability of right style/fashion at the right time at the
right price. Also the use of sympathy labels on a garment can be controversial if it is not
backed up by a clear auditing process that guarantees that benefits flowing to some third
party are actually flowing. It would be best to focus on garments that sell on their own merits
rather than on some other intangible benefit.
1.9
The designers (VC4 a, b and c)
Despite the almost complete lack of formal design training,
there are a number of designers, mostly women, producing
such goods. Several have combined together in an association
called ModAyti, which enables designers to share production
facilities to make up their goods. At present this center
consists only of a shed built with the support of a grant from
the Clinton Bush Haiti Fund. It has yet to start operating and
doesn’t have any machines installed.
Maguy Durce:
One of the leading lights in
ModAyiti, has stated that some
of her dresses sell for upwards
of $2000 each – like this one
with special all-over hand
beading
A number of designers sell through various means from Haiti,
often capitalizing on its unique culture, especially the
Caribbean beach culture, its revolutionary history, or simply
being the inspired collection of talented individuals.
Underfunded and without pooled resources, the capacity and
range of these companies is often limited by simple things like
available fabric or even a mechanic to fix machines.
ModAyiti, with help from CHAPE (Le Centre Haïtien
d’Appui et de Promotion d’Entreprise) and HAND (Haitian Network of Designers), two other
organisations that link and help designers to pool resources, would like to address that in their
new center by providing a place that would stockpile available fabric and provide skilled
seamstresses to make up garment orders effectively and quickly for most kinds of order.
Haiti designers could be then well-placed to capitalise on the global Haute Couture market
with their own designs. They could also serve as a type of “sampling room” for others’
designs - able to make up just a couple of pieces or several hundred, allowing more
experimentation and flexibility and also reducing design
Example of Trinidad: Anya Ayoungrisk since the work would be made for others. This
Chee, winner of Project Runway 2011
could be especially for the rest of the Caribbean, in
producing creations with often a very high hand-sewing
element like beading work. This would complement the
strategies of some other Caribbean Islands that are
trying to become a desirable staging place for fashion
shows. While few of Haiti’s designers are well known
internationally, some others in the Caribbean have been
able to do very well. The goal would be to make such
goods for wealthier Caribbean Islands like the Bahamas
or Barbados? While some designers also have their own
shops typically in Petionville, catering to a relatively
small, local, up-market clientele, others have also sold
through the internet and through various regional or local fashion events such as Runway
Haiti. A number have also been sponsored to visit trade fairs to showcase their work. One or
two may have stores overseas.
ModAyiti would like to improve the visibility of a label highlighting Haitian design and has
stated the following plans: 13
Maguy Durce states (in an email) : “ je vous envoie comme promis les domaines d'interventions sur lesquels
MODAYITI souhaiterait un appui technique ou financier du projet LEVE.
13





Increase visibility – e.g. Runway Haiti
Pooled Workshop
Open a boutiques in Paris and New York – for all designers
Start a materials warehouse
Franchise and sell the ModAyiti label in Haiti and elsewhere
The designers earnestly desire to scale up, with access to a wider range of fabrics to work
with, more skilled production facilities and new markets.
Part of this value chain includes carnival-wear, which is often fairly crude in its makeup,
typically using draping garments that require less sewing. Considering that the various
islands of the Caribbean now have carnivals at different times of the year, the possibilities
could be immense in serving a region that, with the exception of the Dominican Republic,
doesn’t really have a stitching industry.14 Carnival-wear is slightly different since it is often
made only for local clients against order and sold wholesale.
1.10 The accessories makers (VC5 a and b)
This value chain includes distinct areas, depending on their material:
a. Offshoots from designers
A number of designers are also doing work with other materials. Simbi, for example, has
been making quality goods for ladies, often only on one color, and has used hangers covered
in sisal (a local fibre). Paula Coles uses fabric off-cuts from some of the mass industrial
factories to create hand-bags. These initiatives almost exclusively come with some form of
sympathy label - e.g. Simbi is involved in the provision of clean water to villages and Paula
Coles’ project supports an orphanage.
b. Local
Separate from the more designed efforts, there is a local market for mainly leather items, like
sandals. This divides in two, the low-end uses local leather and is focused on the local lowend market, frequently sold on the street and made in small shops or peoples’ homes. Its
potential is difficult to measure and the quality of local leather tends to be poor if not cured in
an industrial facility. The high end sandals market uses imported leather and is artisanal.
1- L'atelier MODAYITI ( Construction de l'atelier, équipements , formation des techniciens, fonds de roulement
pour couvrir le salaire des employés pour 6 mois et fonds pour une réaliser et mettre en vente une collection
collective);
2- Haiti Fashion Week ( Fonds additionnel pour sa réalisation en novembre 2014);
3- Ouverture d'un magasin d'intrants pour les designers a meilleurs prix), Fonds de demmarrage;0ctobre 2014;
4- Ouverture d'une boutique collective avec les designers (Fonds d'implantation); Décembre 2014;
5- Participation des designers haïtiens une mission d'exploration au Mexique en mai 2014;
6- Partenariat de MODAYITI pour la réalisation de Afro K 2014, un concours international de la mode afro
caraibeenne qui se tiendra en Haïti en octobre 2014.
Le Conseil reste a votre disposition pour toutes discussions et informations supplémentaires.”
14
Applies to other Caricom members not Latin America. The countries of the Caricom – e.g. Trinidad and
Tobago or the Bahamas do not have any mass industrial apparel industry. Sources can be found in OTEXA data
c. Local and tourist souvenir
There are many makers of other handicrafts, such as beaded bags for the tourist market.
While beading is certainly labor intensive - and the work is to some extent of better quality
than the more automated beading methods – its market channel is frequently the street or
through hawkers. The potential of this business is unclear, since it takes place largely within
the unorganised sector. The main exception is Gardé SA, run separately by Hans Garoute at
the INDEPCO center who sells local and exports from an organised business.
1.11 The small stitchers
Sometimes overlapping with the above – there are smaller stitching shops all over Haiti
a. INDEPCO (Institut National pour la Dévéloppement et Promotion de la Couture)
INDEPCO has a number of business models in commercial garment making and training.
Sometimes it is able to get commercial orders for the local market; sometimes it undertakes
dedicated training for the mass industry and when finance avails, sometimes trains small
stitchers. Commercial orders often occur intermittently depending on available fabric or
demand. They are produced mainly by dispersing the production throughout the country at
INDEPCO centers. These are monitored in terms of delivery and quality by regional
inspectors. This center has found that it has to constantly mix government orders with donor
finance and paid training provision in order to survive. Most of its operators are trainees
learning the basics of sewing. Very few of the INDEPCO trainees appear to have found their
way into the mass industrial industry, however, with the exception of some dedicated training
done at the early stages of the SAE-A project. This may be partially due to the philosophy of
INDEPCO that believes in training all-round garment making skills for the makeup of a
garment – i.e. tailoring rather than dedicating a trainee to simply one operation; factories may
not want employees with such diverse skills. It also may be due to the lack of an active
placement staff.
b. Other trainers and stitchers
Other centers also mix commercial and donor finance with some provision of training and
some commercial activities (generally using trainee labor). These include Le Jourdain
Atelier and Grahn-Monde. The latter helps victims of sexual abuse to find a vocation. In
many cases, the market is local or the tourist market.
c. Small stitchers – independent
This is two-fold: parochial village based stitchers and some work for the high end especially
occasional work for the designers and also in homeware.
In terms of the parochial, historically Haiti did have a unique fashion identity, but this has
been eroded by the Pepe market. The village-based stitchers using pedal machines are to
some extent the legacy of that industry. The market for a Haitian look was always local and
low end, and where this still exists, typically for older people; these stitchers also mix in
alterations of some of the existing Pepe wear. Figures on how many people are involved in
this are not available since the market is unorganized.
1.12 The printers (and embroiderers)
Printing exists on a variety of scales. There are at least three companies with the most
advanced (often digital) machinery available and also proper heat setting of the print. These
are IR ii, Astro Printing and Fairway Apparel. At the other end of the scale, there is hand
painting. And in-between, the use of manually operated screen prints. The difference reflects
the end market. On the one hand – the IR ii center is designed for export of mass garments
without crocking or color fastness and dye bleeding issues; on the other hand – the market for
hand prints is for a tourist market where the trade is passing and the durability of product
doesn’t affect future sales.
A third market exists for commercial printing for corporate or event wear, but many of the
local printers are small and unable to compete with mainly Dominican imports. But this
capability is developing, and some like Le Jourdain Atelier do have screen printing facilities
and some small scale embroidery machines (normally for corporate polo wear).
A hand painter at work – Labadee (source Fritznel Charitable) and a digital printing machine at IR ii (source Armstrong)
IR ii is also an interesting model for two reasons. Firstly the development of digital printing
allows a buyer to control the process remotely and stateside - a digital printer is almost like a
normal printer but in this case the client is remote. A buyer would thus be able to design a
pattern and send the “print job” straight from its office in the USA, without having to go
through the normal back and forth of sending artwork, then approving the strike-off, and then
going to bulk.
Secondly its working pattern has a group
orientation, different from the other tee shirt
makers. The workers are almost made into
subcontractors, since they buy the materials in
the morning and only make a profit if they sell
them back in the evening with the target
quantity to the right quality.
1.13 The high-end tailors
It is believed that there are at least two Screen printer at Atelier Le Jourdain (source Armstrong
individuals in Haiti who can make (or have
made) high end men’s suits, and there may have been a college feeding this capacity, called
Verona. More information is being sought.
1.14 Potential value chains
Haiti’s industry has a fairly small product mix. The potential for some additional value
chains has been based on the value chain’s ability to capitalise on Haiti’s duty preference and
proximity to the USA, or minimising the long lead time in receiving fabric by stockpiling
either the fabric or the yarn when it is relatively generic.15
Figure 16:
VC
VC
new
1
VC
new
2
VC
new
3
What could be – Possible new value chains
Type
E Tailor
Jeans
Printer/
embroiderer
for
corporate/
event wear
Variation of
fabric
constructions
Low
Can
stockpile
YES
Design
Risk/
finance
Bespoke
Low
because
customer
pays at
order
Order
size
One by
one
Design
focus
Typical
import duty
Make up
27.7 - 9.4 %
depending on
material with
suits costing
$800 up
Low
YES
Buyers
High due
to fabric
stock
Huge
Finishing
Blanks variation on
shade
Per season
only large
proportion
will be
white
black or
heather
grey
On print
only client
Medium
if blanks
are fairly
standard
Medium
Printing
Cotton pants
have 16. 1 %
import duty
and jeans
prices (for 5
pocket go
from $4 to $8
- depending
on fabric
weight and
finish
Import duty
of t-shirt 19.7 % and
also sales tax
on print. Tee
cost $2-3 and
print cost 15c
to 30c with 2
% wastage
1.15 The E- Tailors (VC new 1)
Before the advent of mass sourcing in the 1960s, many jackets and suits were made by
smaller tailors to a client’s exact specification. Typically the tailor had a workshop above the
retail outlet where measurements were taken. Normally the order had two stages:
measurement and fitting.
With the rise of cheaper Asian manufacturing which followed the communication revolution
from the 1970s and allowed outsourcing of fashion merchandising and off-the-peg mass
retailing, this declined until most suits sold today are made to a standard size assortment that
covers most people. While high end tailoring did continue, for example at Saville Row in
If imported tee-shirts are stockpiled – it is unclear what the final import duty rate would be since there is no
transformation or change of HS code.
15
London and in Hong Kong, it became increasingly reserved for a very exclusive and wealthy
market. However, Hong Kong is now merely an order-taking point with orders made up in
China and dispatched back, normally within 3 days. Some stitching remains at the order
taking point, where minor adjustments in the sleeve or hem can be made at the final fitting
stage.
With modern technology and relatively cheap air freight from some of the main garment
manufacturing centers, the age of tailoring can return. High end products can be offered
without the steeper price tag – often below
$1000. Speed to make up will always be an
important factor in this business, but many
consumers purchase for long-planned events,
and so the time between order taking and
fitting can go up to 6 weeks.16 Often orders
are taken with a body scanning machine,
possibly allowing for even more automation
at order taking stage, and allowing the
pattern to be made up there but sent
electronically to a cutting machine.
The market niche for Haiti opens as the
distance between order taker and make up
increases, with the need to get goods quickly
to market, and given that there is a fairly
standard and small range of fabrics for men’s
formal fashion ware.
Market example: A Suit That Fits, seen in the
picture, is a London based company that
takes order through a number of premium
outlets such as John Lewis on Oxford and
Bond Street. It started by sourcing from
Nepal but is now moving its production to
Bangalore, India and does fitting in another
location in London. The model seems to
work despite necessitating possibly three
visits by the client to the measurement point
– at booking, at fitting and at collection and
final fitting check.
As tailors build up a rapport with repeat
customers they come to know exactly what
critical points affects their clients’s fit and
adjust accordingly. Such data while formerly in the head of the pattern maker is now
increasingly held electronically.
16
See example below – A Suits that Fits
After several suits have been made and fitted – there is the possibility for a direct despatch
from the factory to the client without further intervention on the part of the measuring staff;
and indeed as that occurs it can go one stage further – for direct placement of orders by the
client electronically to the workshop.
This business combines a degree of automation in the high labor cost destination coupled
with the labor intensive needs of makeup.
1.16 Jeans
In other garment origins that are remote to a fabric supply, like Lesotho and Cambodia, jeans
are often part of the garment manufacturing mix. This is partly because the fabric is relatively
common – varying mainly from 8 to 13 ounce indigo denim and the degree of stretch. But is
it mainly because much of the distinct designs aspects of the garment are found in the
garment finishing – including the back pocket stitching – often a wavy line of some form –
(the most famous being the registered
trade mark of Levis which is a V shape), Examples of styles of jeans
the degree of wearing of the fabric
through whispering or sandblast or
through heavy and chemical washes.
Since the focus is on processing after
make-up, this gives origins without
indigenous fabric formation a level
playing field with those whose fabric
mills are next door.
While there is considerable variation in the styling of jeans – the variation tends less to be
imbued through the fabric construction and is not intrinsic It is more a question of the fit. So
if buyers can be persuaded to forecast their demand needs by fabric weight then stockpiling is
very possible.
Historically jeans were made in Haiti before 17and are still made partially (just sewing) at
Gruppo M’s plant in Codevi. Gruppo M plans to also move the cutting and finishing to
CODEVI by the end of 2014. The issues holding the company back are the fiscal rules of
origin for their global brands who also sell to Europe, the water supply, and the treatment of
discharge from washing.
Since light waste water treatment is now installed at Caracol, other new investors may be
encouraged to start producing in Haiti. Without water treatment, jeans production is a nonstarter for any reputable brand.
Jeans production is only possible if treatment plant facilities are in place for heavy chemical
washes. Since many of the major names in denim – VF, Levis, GAP, Western, LEE and
others are global brands, unless Haiti can “tick all the boxes” by conferring origin (and thus
duty free) with just the stitching, they simply won’t place even the U.S. portions of their
programs. Unfortunately this is not the case for the EU at present
17
Under the name of David Chambers, who made for GAP.
There is also a smaller market for denim jackets, painters, hot pants (often with rough edge),
shirts and other products.
1.17 T-shirt printers and polo embroiderers
This value chain would allow stockpiling of blanks and then fast turnaround to specific
customer print within a short lead time of just a few days. Buyer would not only save on the
import duty of the tee-shirt, but also on the sales tax of doing the printing. Haiti is already a
large tee shirt producer, many of which are then shipped to the USA for further printing. So
why not do the printing in Haiti? Quick turnaround and logistics are important, so this
opportunity requires proximity to a major airport – i.e. Port au Prince.
The design can be off shored as well – allowing the buyer to basically print a tee shirt on a
remote printer.
2
Causal Models
The following causal models describe the logic of the strategy or strategies that LEVE
suggests for each selected value chain.
Value Chain VC1 a and b - Mass production - Contract Sewing
Includes contract sewing with and without cutting
Situation Analysis
 50%+ of current factories
and around 15,000 workers
 A comparative advantage is
through preference; yet they
may not; and depends on
provisions giving origin with
just sewing
 Another comparative
advantage is low cost labor,
yet other countries may
compete on this factor;
labor costs may rise
 Proximity to major markets
 Mono-market, monoproduct, mono-client
 No styling or design
 Lack skills in marketing,
merchandising, pattern
making, costing. Many
skilled personnel are
brought from abroad.
 Lacks in-house cutting or
fabric inspection
 Fabric is made and cut in the
DR (close by, short turnaround), but also imported
as cut pieces from China
 Producers currently train
their own employees
 Stylings are repeating and
non-fashion items which
have lower margins
Activities
 Work with banks to
develop new financing
mechanisms esp. LoCs
to spread risk to buyer,
client and mill
 Work with CTMOHOPE, IFC, lead firms,
etc. on coordination
 Using designers –
change the image of
Haiti for investment
promotion.
 Support Lead firms to
diversify their client
base and add cutting
 Facilitate water supply
issues at Codevi and PIC
 Train for missing skills
esp. merchandising,
cutting, pattern making
 Work with communities
and lead firms to
improve literacy and
general of education of
workers (e.g. w.
Walmart Foundation)
 Help lead firms
diversify to the EU
 Help lead firms partner
with more DR vendors
 Targeted interventions
in return for job
promises
Outputs
Outcomes
 New financial
mechanisms
allow control of
piece goods and
move to full
package
 Send an
integrated
investment
promotion
message
 Interest from
new buyers,
 Wet process
investment is
possible
 Trained Haitian
personnel are
available
 Happier workers
 Lead trade
mission to the EU
and other
markets
 Work with DR
based outfits to
encourage short
turn-around
orders and undedicate existing
capacity
 New products
added with greater
value added (e.g.
polos, sleepwear)
 New markets/
customers
 New investments
by existing and
new companies
 Haitian producers
offer full package
 Additional
processes in Haiti
(e.g. cutting,
finishing, shipment
from Haiti)
 Haitian personnel
see greater
opportunity for
professional
careers in the
industry; investors
re og ize Haiti’s
deepening skills
resource
 Improved image of
the Haitian
industry through
synergy with the
design/fashion
value chains
Impacts
 Increased value
added of exports
 Improved and
less costly
logistics,
encouraged by
greater volume
flows
 Greater
sustainability of
investments and
exports –
reduced risk that
investments will
be temporary or
mobile
 New
entrepreneurship in the
sector, as youth
look to this and
other value
chains as good
business
opportunities
Objectives
Achieved
 More jobs at
worker level
 More jobs at
advanced level
 More control of
industry from
Haiti
 More sustainable
Jobs
 More buyer
options leads to
more jobs
Value Chain VC2 a, b and c - The full package vendor
(With full control of own piece goods, who makes their own piece goods, and/ or the border model)
Situation Analysis







These are the balance of
the mass industrial firms;
around 15,000 jobs.
Currently there are only
two border vendors
Comparative advantages
are through preferences
and proximity to end
market, yet only those
with fabric facilities in
the DR really benefit
from proximity
Comparative advantage
is low cost labor; other
countries compete on
this factor; vendors
compare costs
Dependent on the US
market. Sales to the EU
will depend on Haitian
ratification of key treaty
Styling or design done is
often done regionally
Skilled personnel are
often brought from
abroad; key decisions are
taken externally
Lack key infrastructure in
water treatment and
power (except in PIC)
Activities






Work with
CTMO-HOPE,
CFI, Lead firms,
zones, donor,
etc. to improve
investment
promotion
targeted to VC1
Encourage major
buyers to
purchase from
Haiti
Work with
government on
trade pact issues
Develop training
curriculum to
increase local
skilled staffing
Work with
communities
and lead firms to
improve literacy
and general
education of
workers (e,g.
Walmart
Foundation
Study water
treatment issues
Outputs







Impacts
Outcomes
New
investments by
existing and new
companies
Especially those
doing short turn
around with
Dominican fabric
Interest from
new buyers, old
buyers
EU option for
just origin with
sewing
reestablished
Trained Haitian
personnel are
available
Happier workers
Priority
infrastructure
and services are
put in place






New markets/
customers
accessed
Haitian producers
take direct orders
Full package
service
Haitian personnel
see greater
opportunity for
professional
careers in the
industry, and
investors
re og ize Haiti’s
deepening skills
resource
Less industrial
unrest
Add wet process
options for Haiti






Increased exports
Increased value
added of exports
Anchor
investments are
located in Haiti
Improved and less
costly logistics,
encouraged by
greater volume
flows
New
entrepreneurship
in the sector, as
youth look to this
and other value
chains as good
business
opportunities
Greater range of
products for the
buyer
Objectives
Achieved


More
sustainable
Jobs
More jobs
Value Chain VC4 - Designers
(With and without own sewing, and wholesalers for carnival wear)
Situation Analysis
Activities
• Includes 2 groups:
affiliated with
ModAyiti/ HAND/
CHAPE, and independent firms with or
without own shops
• Lack formal training.
Fashio hit rate is lo
and makeup limited.
• Excessive focus on the
historical tradition for
fashion inspiration
• Fabric range is limited,
which limits design
• Sales through add-on
empathy labels of
questionable efficacy
• Import of piece goods is
not done in bulk, hence
high input prices
• Lack seamstress skills,
leading to a large
number of draping
stylings (less sewing)
• High value items are
not leveraged
preference markets
• Excessive focus on the
EU and USA markets vs.
markets in Asia)
• Quality is very variable
• Selling channels like the
internet are embryonic
• Sampling is sometime
done overseas
• Finance and payment is
• Use coalitions of
designers to lead
investment missions to
Asia and LAC and take
part in fashion shows
• Help develop a
resource center for
trims and fabrics under
bond to give more
range to designers.
• Help develop a
technical resources
center to help
individual designers
• Help develop a
curriculum for a center
of technical excellence
to train entrepreneurs
and designers
• Examine the pooled
sewing center at
ModAyiti to identify
needed assistance
• OR consider a new
sewing resource center
- like a sample room
for short order
turnaround, samples
• Help to develop a
resource center for
order placing
• Help develop effective
internet selling
techniques to build
awareness of Haiti
Impacts
Outputs
• More investment
visibility in Haiti
through subtle soft
sell in target Asian
markets
• Give more range
to existing designs
• Solve problems
cheaply and
efficiently that
small units find
difficult to address
alone
• Get more and
properly trained
designers and
fashion marketers
within the industry
• More samples and
designs are made
and shown
increasing range
also for the mass
industry as well
• More business can
be placed through
non-dedicated
stitching units
• More sales quickly
for less cost
Outcomes
• More investment
in Haiti
• Existing designers
able to scale up
• Access to new
markets
• More sales
• Lower operating
costs
• More
entrepreneurs and
new business people
• More range =
more sales
• Sample
development
rooms are used by
other Caribbean
designers
• More volume
• Increased value
added of exports
• Upgraded image
of Haitian
capbilities
• New
entrepreneurship in the
sector, as youth
look to this and
other value
chains as good
business
opportunities
• More interest
from the rest of
the Caribbean as
a regional
sample room
• More sustainable
markets not
dependent on
tourist trade
• More business
• Design capability
is showcased
• Goods are sold
on merit not on
empathy and
customers
repeat orders
Objectives
Achieved
• More value
added Jobs
• Better Jobs
Value Chain VC6 a, b and c - The small stitchers
(Dispersed/INDEPCO and village level)
Situation Analysis
• 3 distinct models: small
village stitchers for
local and tourist
markets; trainer and
stitcher mixing
funding*; INDEPCO*
• *An exception may be
the “ilesia s ho do ’t
mix commercial orders
with training
• When donor funding
stops, training stops or
they are forced to do
commercial orders.
Dispersed production
may have quality
issues. Volume is
intermittent
• There are three
inoperative basic
stitching training
centers as a result
• At operators level,
factories prefer to do
training in-house if
they have to pay for it.
The trainee cannot pay
• Few of these centers
generate graduates
that are employed by
the mass industry
Activities
• Use some of these
centers as part of
the training center
of excellence
• Work with lead firms
to identify dedicated
training that they
will pay for
• Develop cadre of
skilled tailors and
mechanics useful to
designers
• Help some of the
existing stitchers set
up in Labadee to
broaden their
market
• Help some of the
training centers to
broaden their design
base from just ethnic
products/souvenirs
Outcomes
Outputs
• (As part of other
outcomes listed
above)
• Increase number
of skilled tailors
• More mechanics
• More tailors for
designers
• Some of the
centers reopened,
but with more
varied
clients/sources of
finance
• Skills gaps are
filled quickly as
the industry grows
• Support to VC4
• More sales/ more
sustainability
Impacts
• Increase in
general skill levels
• Support to the
training/
commercial model
• More dispersed
training around
Haiti
• More people with
potential to do
own design
Objectives
Achieved
• More jobs
Value Chain VC7 a and b - The Printers (and embroiderers)
(Small scale and bespoke with mass printing)
Situation Analysis
• Most printers for the
local market are small
and not competitive
for large orders (e.g.
compared to the
Dominican Republic)
• Customize tee shirts
are generally only sold
at Labadee
• Most printers do not
heat set their prints
leading to crocking
• At least three digital
printers exist – two for
the mass market and
one whose marketing
is unclear
Activities
• Identify local
printers that can be
assisted to scale up
for import
substitution for the
local NGO/ mass or
event market
• Find famous artists
whose prints can be
digitally printed in
Haiti or elsewhere or
as part of VC new 3
• Work with customs
to allow more
overruns of the mass
tee shirt makers to
be sold locally as
blanks
Outcomes
Outputs
• More tee shirts
are printed locally
than at present
• Better quality
prints
• Artists have more
streams of
revenue and Haiti
brand is further
disseminated
• Development of
local printing skills
useful in other VCs
(e.g. VC2 and VC
new 2)
• Haiti brand is
better known and
viewed
• Longer-lasting
prints on tee shirts
• Better designed
tee shirts
Impacts
• More printed tee
shirts
• Import
substitution
• Broadening of
Haitian product
range
Objectives
Achieved
• More jobs
Value Chain VC 8 - Tailors
Activities
Situation Analysis
•
•
•
Please see VC new 1
It is not clear if
anyone currently
offers this service
This service would
generally be for
export
•
•
•
Identify the
potential local
partners who are
already working in
this segment
Identify fabric that
needs to be
stockpiled
Identify
technology
Outputs
•
See VC new 1
Outcomes
•
See VC new 1
Objectives
Achieved
Impacts
•
See VC new 1
•
See VC new 1
Value Chain VC new 1 - E Tailors
Situation Analysis
• Relies on technology
and distancing
between measurer and
tailor to make high
quality suiting more
affordable to the
upper/ better goods
market
• Especially useful for
those with out-ofnormal assortment
body sizes e.g. tall or
heavy
• Often combined with
body scanning
technology to reduce
human input at
measurement stage
and increase precision,
and sometimes
generate the pattern
• Generally sold in-shop
or as add-on to existing
high end tailors
• It is possible for the
end client to order
directly to the offshore
stitcher once their fit is
known and tested
Activities
• Work with existing E
tailors and high end
e ’s tailors to fi d
partners in Europe
and North America
• Work with courier
companies to get the
logistics right
• Set up workshops to
receive data
electronically and
process efficiently
• Identification and
management of
fabric (generally
worsted) stockpiling
Objectives Achieved
Outcomes
Outputs
• High end tailors
serving the North
American and
European markets
• Broadens Haitian
product range
• May act as a draw
for tourists (as in
Hong Kong)
• Development of
advanced sewing
and pattern
making skills
Impacts
• Increased exports
• Increased value
added of exports
• More sustainable
Jobs
• Develops direct
relationship
between
manufacturer and
client
• LEVErages
proximity and
preference
Value Chain VC new 2 - Jeans
Situation Analysis
• Only one known jeans
maker in Haiti –
Gruppo M. But there
was jean production
during the MFA period
• Needs treatment of
discharge from
washing
• Currently only PIC may
offer that and only for
light washes. Unclear
if that facility will be
shared with others
• Allows focus on
garment finishing that
leverages proximity
• Some customized jeans
can sell for a very high
price
• Haiti’s origi is
conferred with just the
sewing and this means
denim can be bought
from anywhere; other origins will be
unable to compete
when their fabric is not
local
Activities
• Work with PIC and,
the IDB on water
treatment facilities
in PIC
• Solve issue with the
EU to allow
movement of
balance finishing
capacity to Codevi
• Attract new
investors in this
sector once the
water issues are
resolved
• Encourage other
zones to put in water
treatment facilities
• Work with buyers
and mills to allow
stockpiling of
common denim
weights
Outcomes
Outputs
• New investors and
new factories
means more jobs
• Can be very high
value addition
• Add-on of finishing
options that could
be subcontracted
to other smaller
factories
• New markets/
customers
accessed
• Greater product
range
• Can also bring in
hildre ’s orders,
since many
hildre ’s
garments are knit
tops and denim
bottoms
Impacts
• Increased value
added of exports
• Greater
sustainability of
investments and
exports
Objectives
Achieved
• Jobs
• Broadening of
Haitian product
range
Value Chain VC new 3 - The corporate printer + embroiderers
Situation Analysis
• No tees shirt printers
(or embroiderers for
polos) currently
exporting
• Adds on nicely to
existing tee shirt focus
• Current tee printers
are small and
uncompetitive – so
could allow some
import substitution for
the local markets
• Leverages proximity
since blanks can be
stockpiled
• Advantage for the U.S.
distributor is that it
saves import duty on
tee shirt and sales tax
(on print)
Activities
• Identify a number of
existing big tee shirt
printers in North
America
• Approach some of
the existing mass
industrial firms to
see if this can be
added on by
additioning some of
their output
• Add printing training
part to the center of
training excellence
• Review logistics
issues
• Advise on stock
holding and software
Outputs
• More tee shirts
are shipped
printed rather
than blank
• New cadre of
trained printers in
Haiti
Outcomes
• New markets/
customers
accessed
• Greater product
range and option
Impacts
• Increased value
added of exports
Objectives
Achieved
• Broadening of
Haitian product
range
3
Market opportunity18
As the overall shipping data in figure 2 suggests, Haiti has yet to fully capitalize on either its
proximity or preference – the two key planks that will determine the success or failure of its
garment industry.
Yet should the U.S. market remain its target for all VCs? For the mass industry, certainly so.
While the European Union may be larger in value and the Chinese market is now larger in
terms of volume of garments sold, there is no other market that offers the opportunity of huge
orders that could keep factories busy for season after season. While the EU market is of
similar size, it is far more fragmented and cannot offer nearly the same size of orders.
However smaller designers especially should explore other markets, even if they are not able
to benefit from any preference due to inexperience in preparing the export documentation.
Fashion and trend is fickle, and the more markets served, the more likely that their designs
are cutting edge, and the more learning that will take place.
Most of the discussion in this assessment relates to the U.S. market, but there are
opportunities and even current shipments for other markets.
The U.S. market will continue to be Haiti’s primary focus – it is a huge and varied market,
close to Haiti. As discussed in Section 1, the substantial new opportunities for Haiti in the
U.S. market are in expanding the variety of products produced in Haiti for U.S. buyers, and
of course in increasing the number of buyers purchasing goods from Haiti.
The benefits of HOPE/HELP are quite complex and contain some limitations on exports,
especially for men’s tee shirts. Haiti is not far away from by being impacted by those
restrictions, as detailed above in the Tariff Preference Levels, so an objective should be to
look at other potential areas - either new markets or new garment categories.
18
A good summary of GSP provisions for developing countries can be found at:
http://unctad.org/en/docs/itcdtsbmisc62rev5_en.pdf and here http://www.just-style.com/analysis/key-changesto-the-eus-new-gsp-trade-scheme_id120163.aspx
Figure 17:
Who to sell to?
Coding
Type
Local or
export
Who to sell to existing
Who to target
How to sell
VC1a
Contract sewer
- without
cutting
Export
Buyers who supply
fabric
Other brands of
same product
Referral
VC1b
Contract sewer
with cutting
Export
Buyers who supply
fabric
New product
Trade fair/personal visit
Export
Department store
Better Dept. store
Referral/online bidding
Export
Department store
Better Dept. store
Export
Department store
Better Dept. store
Both
Boutique
Upper end
Soirees/advertising
Both
Boutique
CARICOM/GLOBAL
Internet/fashion shows
Local
wholesale
Caricom
wholesalers
Exhibit at other carnivals
Local
Government
US Gov contracts
Through importers
Local
Parochial
Designers
Word of mouth
Local
Tourist/local
Labadee
Word of mouth
Tourist
Tourist/local
Direct to
consumer
Internet
Local
Local corporate
Haiti gov./NGO
Referral
Local
Local elite
Export market
internet/referral
VC2a
VC2b
VC2c
VC4a
VC4b
VC4c
VC6a
VC6b
VC6c
VC7a
VC7b
VC8
Vendor - buys
own fabric
Offshore
vendor makes
own fabric
Border model
Designer w/o
own sewing
Designer with
own sewing
Ethno-centric/
Carnival wear
Small stitcher (dispersed
order) INDEPCO
Small stitcher
(independent)
Trainer and
stitcher (NOT
INDEPCO)
Printer –
(artistic/
tourist) artisan
Printer - mass/
corporate
High end
tailoring
VC new
1
E Tailor
Export
n/a
Existing and shop
in shop
Demonstrate service
and fit
VC new
2
Jeans
Export
n/a
Big jeans wear
brands
Referral
VC new
3
Printer/
embroiderer for
corporate/
event wear
Export
n/a
Biggest printed
tee suppliers
Referral
3.1
New Markets
Haiti has the opportunity to also grow in several other national and regional markets. These
are described below:
The European Union and the European Common Area
The recent changes in the European EBA (Everything but Arms) trade preference 19schemes
should give Haiti a considerable advantage since it is the only LDC beneficiary in the
Americas allowing origin to be conferred with just sewing. That said, Haiti has yet to fill in
the necessary legislative steps to benefit from this. The Europeans have usually demanded an
origin to have at least a double transformation (e.g. sewing plus, for example, fabric making,
spinning or cotton growing) with national or regional fabric (regional accumulation), but
these requirements have recently been relaxed for LDC countries.
The EU has also indicated eligibility for what is called GSP+ (i.e. duty free) for product from
non-qualifying developing countries that are perceived as vulnerable and currently ship less
than 2% of all GSP exports to the EU. Eligible countries potentially include regional players
such as Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras,
Nicaragua, Peru, Paraguay and Panama. As of January 2014, the following 10 countries have
GSP+ status: Armenia, Bolivia, Cape Verde, Costa Rica, Ecuador, Georgia, Mongolia,
Paraguay, Pakistan and Peru. 20 Critically, GSP+ has now been granted to Pakistan, which has
a huge textile and apparel make-up industry. By definition the GSP+ is graduated out if
exports grow above the 2% cap and also if the country fails to maintain certain minimum
standards on human rights – for example, Sri Lanka gained and lost eligibility because of
abuses committed at the end of its civil war.
Does Haiti have any advantage in the new arrangements? Yes and no. The provisions of
GSP+ still require a double transformation that many of the above Latin American countries
cannot offer, since they do not have access to indigenous fabric formation and regionally
accumulated fabric is not competitive. So, while appearing generous, this is only really of
interest to Pakistan which is able to offer a double transformation; and Pakistan is only strong
in coarser cotton counts and poly-cotton. Also under the new EBA agreement, certain large
Asian producers are eligible with imported fabric21. So, while the potential is there, other
countries are likely to be quicker to benefit from the recent change in rules.
One company, Gruppo M, has indicated that they are using the new EBA provisions - and
that, since their buyers are global, the failure thus far of Haiti to ratify the treaty between
CARICOM and the EU is now causing movement of programs to Pakistan.
What is clear though is that there is no advantage for Haiti in items where other GSP+
countries are strong – i.e. from indigenous fiber onwards, and also with the basic cottons and
low end fabrics produced in Euro-Med countries (Turkey, Moldova and Morocco). This is
again demonstrated by Gruppo M, which is importing premium denims fabric from Italy and
then shipping it back again to Europe as jeans, but are making their basic knits in the
Dominican Republic (double transformation with regional accumulation). So there is
potential in very high end items in non-basic cottons, like tee shirts.
19
For general back ground on EBA and GSP and GSP+ see:
http://ec.europa.eu/taxation_customs/customs/customs_duties/rules_origin/preferential/article_781_en.htm
20
http://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_152012.pdf
21
The new rules allow import to the EU from Bangladesh with foreign fabric. This would also presumably
apply to other Asian LDCs, including Cambodia.
Ehttp://esango.un.org/ldcportal/documents/10179/22301/Bangladesh_case%20study%20summary.pdf - page 4
It should also be noted that the average duty saving for preference countries is 12%, and
10.6% for GSP non-LDC countries – so the benefits are much less attractive than for the
USA, where the duty can reach 32%. As a rule of thumb, many investors often state that
preference seeking behavior is only worth engaging in if the benefits are more than 10%.
It would be significant if Haiti were able to obtain duty free status from the EU on just the
sewing. Potential investors would have flexibility of market preference to the world’s number
1 and number 2 garment markets by value. 22 Meanwhile exports to the EU remain small, and
seem to vary widely. Possibly this is due to uncertainty over the change in origin rules to
allow non-originating fabric from LDCs23. However Haitian product is being shipped to
Europe frequently as a re-export from the bigger brands like Hanes and Europe and often
after printing. Or since it is often shipped through the Dominican Republic, the values are not
always clear from the official databases.
The value of t-shirts officially exported to the EU is shown in Figure 18, but is not clear if
they gained any preference. These seem to account for most of the volume shipped.
Figure 18:
T-shirts
Tee shirt exports to the EU (Euro ‘000s)
2005
2006
2007
2008
2009
2010
2011
2012
2013
4,106
6,706
10,726
9,919
7,485
4,420
2,667
8,802
10,937
Source: Eurostat by CN8
Canada
Haiti is currently exporting to Canada – one of its biggest buyers, Gildan, is Canadian. The
potential is good. Canada has a large Diaspora population of Haitians, and is partially
Francophone.
Canada’s rules on origin preference allow the cumulation of fabrics from other LDC origins
and demand at least 25 % local value added. 24 Garments would be able to get duty free status
if the CMT were done in Haiti. This would be useful depending on who else receives gives
duty free status. Exports to Canada for all apparel in 2013 were only C$23 million, compared
to US $803 to the North American market. 25
Other countries offering GSP – Australia, Japan, New Zealand
While the potential for the Japanese market is interesting, its proximity to China makes it
unavailable to Haiti, except for highly unique cultural products. Australia and New Zealand
also grant duty free status to Haiti (subject to some value added and transformational
requirements), but their free trade agreements with China also make them unrealistic markets.
22
China is number one by volume for garment consumption
Eurostat
24
http://www.cbsa-asfc.gc.ca/publications/dm-md/d11/d11-4-4-eng.html
25
Statcan
23
South and Central America
The potential in these markets is likely to be low, because of their indigenous fabric and
garment production, and differences from the North American in stylings, shades and make.
Chile, Costa Rica and Peru have their own free trade agreements with China.
ASEAN
Since this region includes a number of major garment producing countries, it is unlikely that
Haiti can explore any advantage except in the ethnocentric niche and High End. That is
unlikely to add much volume or be very sustainable.
CARICOM
While CARICOM also offers Haiti what appears to be a duty free option, the benefits of
Haiti’s membership are still being explored and are developing, especially since it has not
signed the CSME (Single Market and Economy) agreement. CSME would transform the
CARICOM area into a European-style single market. A number of Haitian designers have
boutiques in other Caribbean Islands and the potential for trade is good. The CARICOM
market in terms of population without Haiti is less than the whole of Haiti combined. So the
potential is small but good and probably more in value added products.
The provisions under CARICOM for the free movement of labor for up to one year without
work permits could allow partial on-shoring of Haitian labor to other Caribbean Islands. 26
The Dominican Republic
The Dominican Republic should, along with CARICOM, be one of Haiti’s first markets. This
should be explored for the joint production model of investment (i.e., as in Ouanaminthe,
production on both sides of a border with different development levels). The Dominican
Republic’s industry suffered from the end of MFA, however, and there is plenty of spare
capacity. So it remains to be investigated whether the Dominican Republic can be a
destination for Haitian sewed apparel27.
Other countries – Korea, China
The massive influx of luxury imported garments into China in the last few years has actually
been a saving grace for many famous brands. There is some potential for the manufacture of
high end designer wear, –since these kinds of brands like to produce in countries where this is
little potential of parallel shipments developing or where copy-write infringement is rare.
26
http://www.caricom.org/jsp/community/objectives.jsp?menu=community
Haiti’s minimum wages is $5 to $7.5 (if incentivised) per day while the DR minimum is $167 per month
which is similar
27
4
Competitiveness Potential
4.1
What are Haiti’s competitive and comparative strengths?
Haiti’s core strengths are the country’s proximity to the US market, and its preference
arrangements.
The trade package available to Haiti under HELP/HOPE is one of the world’s most generous
in terms of additional requirements given to any other country.
It is rare for a beneficiary country to receive preference from just sewing; preference options
(whether for the EU or USA or generally under GSP) normally need at least two
transformations, or a substantial transformation or an ad valorum (local value added) content.
In other words, does the preference come from just sewing, or does it require local fabric
making or use of regional or American fabrics as well.
This is a comparative strength since the offshore garment vendor will cherry-pick the origin
that confers the greatest duty saving relative to an existing and well established origin. At
present, the main benefits that will flow to Haiti from changes in others’ preference rates
relate to the exception granted to Nicaragua system, which allows Nicaraguan textiles made
with raw materials from countries outside of the DR-CAFTA (or the US) to enter the U.S.
without tariffs. Nicaragua’s arrangement will expire at the end of 2014.28
The advantage of proximity to the U.S. market is particular to sea freight. Except for Mexico
or Canada which share land borders with the US, Haiti offers one of the fastest transit times
to the US market. This is qualified a little by the provision within legislation to allow
shipment through the Dominican Republic. Many producers are shipping through the
Dominican Republic rather than shipping through Haiti’s ports at Port au Prince and Cap
Haitian. The average extra cost of shipping through Haiti is $120 per container in terms of
extra terminal handling charges29. However even when goods are shipped through the
Dominican Republic, Haiti clearly has an advantage in terms of frequency and transit time.
Other strengths normally identified are the substantial Diaspora market and source of skills
and investment capital, design (capacity and having a unique design), labor cost, and its
membership in a fairly small Francophone club.
Labor costs have already been substantially discussed.
It would be helpful to conduct a detailed survey within the Diaspora, to establish the number
of people of Haitian origin who design degrees and/or are decision makers in major apparel
firms and retailers, and could be prevailed upon to look at Haiti.
The design element normally relates to artistic content, including fine art. A possible
opportunity would be to license artwork for printing on to tee shirts that would be sold
through high end channels
28
29
https://www.usfashionindustry.com/policyadvocacy/issues/651-cafta-dr-a-nicaragua-tpl
Authorité Portuaire National
A Francophone area in the Americas preference includes some of the Caribbean countries,
but tends to be driven by France or Quebec. It is disappointing to find that, unlike some other
Francophone countries like Madagascar, Senegal and Mauritius (mixed Anglophone and
Francophone), Haiti has attracted little interest from garment investors in those locations,
except for Gildan (Canada). In particular, Mauritius is a major garment hub and should be
leveraged, since apart from the obvious emotional appeal of a common language, it does help
to have staff at a junior level who would have a stronger sense of the local environment,
unlike, for example, expatriates brought in straight from China, who may take several years
to learn the local language or settle down culturally.
New zone in the North
Irrespective of any infrastructural or other issues, new doors have been opened in the north
industrial zone at Caracol – PIRN. For one thing, electricity issues of outage unreliability and
cost have been largely “solved”. Electricity cost in the PIRN is $0.23 per KWH, compared to
$0.29-33 per KWH in Port au Prince. Caracol has 10 megawatt capacity, but currently is
only using 1 megawatt.
Light treatment has already been established, and so the park may attract investors who want
to engage in garment washing. However, this is changing rapidly and, as detailed below, if
the current two plans for wet process of fabrics move ahead, the park will rapidly have used
up its water capacity. Right now, however, the door is open.
Mix of zone facilities available
While sheds are in short supply, land in organized zones is not and is available under a
number of models, allowing rent, lease or outright purchase, and often with a free trade
option. Frequently these can be completely turn-key and built by some of the existing
factories who have also turned their hands to mentoring new investors, e.g. Palm and Gruppo
M.
Government is responsive and “open for business”
Haiti has revamped its official marketing arm and is very keen for business, and while there
are always teething problems, especially with an industry that needs to import all its inputs,
new factories are starting all the time.
Communication resources and skills are good
Land lines are practically non-existent in Haiti and so most people including businesses use
mobile phones; this means that everyone can communicate readily. As Haiti moves to higher
bandwidth, Haiti won’t have to deal with an ageing telephone and communication network.
A typical garment factory will need an administrative staff that is fluent in English, French
and Spanish – and these are readily available. Less available are people with skills in Chinese
and Korean who will probably be the two main investor groups in the future.
4.2
What are Haiti’s competitive and comparative weaknesses?
Air freight options for samples
The mass industry typically requires the dispatch of around 36 samples per order; and often
these are what are called “salesman’s samples”. These are samples to be used to help pre-sell
the order before it arrives and must be exactly as per the bulk order. They have to be
dispatched as the bulk order is being produced and are always urgent. Haiti may be
physically close to the USA main airport hubs like Miami, but the volume of cargo moving
compared to Asia is much smaller and less frequent, and so air freight is not significantly
cheaper or faster. Factories from the two Northern garment hubs of Caracol and
Ouanaminthe, although there is an airport at Cap Haitian, send their samples through the
Dominican Republic. This is a major headache in terms of getting more orders for those
factories, and also keeping the customer aware of shipping information.
Uncertain environment – politically and socially
At a macro level, Haiti’s security has been guaranteed by the United Nations for some time.
There is now talk of a draw-down of MINUSTAH’s activities, and it is hoped that Haiti can
maintain sustainable law and order.
On a micro level, local disturbances like the ones last December in Port au Prince over
minimum wage rates and in Cap Haitian over electricity supplies have caused serious concern
to a number of investors. These disturbances have affected production by blocking roads,
sometimes for extended periods. 30
Increasing minimum wages compared to its closest neighbor and Asia
Figure 19:
Garment manufacturing labor costs (US$/hour) by Countries
Asian Competitors
Bangladesh
Cambodia
Pakistan
Viet Nam
Sri Lanka
Indonesia
India
China(remote/inland areas)
China (other coastal/core
areas)
China (Prime coastal areas)
Malaysia
Thailand
0.22
0.33
0.37
0.38
0.43
0.44
0.51
0.55-0.80
0.86-0.94
US Regional Suppliers
Mexico
2.54
Honduras
1.72-1.82
Dominican Republic
1.55-1.95
Nicaragua
0.97-1.03
Haiti
0.49-0.55
EU Regional Suppliers
Turkey
2.44
Morocco
2.24
Russia
1.97
Tunisia
1.68
1.08
1.18
1.29-1.36
Bulgaria
Jordan
Egypt
1.53
1.01
0.83
Data Source: ILO Report, 2011 & NCM-April, 2013 * this report is for comparative reasons – the exact hourly rate varies
depending on the incentive used in Haiti and has been subject to change recently.
30
Three factories reported this and that it made them more willing to close down or sell-up but their comments
shall be record anonymously
While the minimum wage is 200 Haitian gourdes ($5.00) per day for industrial and
commercial work; 300 Haitian gourdes ($7.50) per day is, by law, an achievable target for
workers paid at a piecework rate. In other words, workers should be given the option to meet
the higher target if they are able and willing. The issue is not so much the minimum wage as
the degree of incentive, since the factories have to have the higher figure as a target when
designing their piece rate systems. Recent proposals to raise the minimum without changing
the incentivized target could seriously affect the ability of the industry to compete, since the
higher target would also be affected if workers could obtain the higher target without the
normal effort to reach the incentivized target.
HELP/HOPE are at the discretion of foreign governments
Haiti’s industry is now growing because of the availability of preferences. This preference is
very much a “gift” from the U.S., and potentially could be removed quickly by Congressional
act or Presidential fiat. While that is unlikely in the current situation, it remains a risk. The
industry’s dependence on sales to the U.S. market is overwhelming; without access to the
U.S. market, the industry could not easily re-gear to service another export market.
Vulnerability to tensions with its neighbor
Much of the trade ships in and out through the Dominican Republic and uses their ports and
airports, so clearly tensions with the Dominican Republic could cause serious disruption.
However another factor is the degree to which parts of the manufacturing process are also
performed in the Dominican Republic, especially the cutting - if that were to be disrupted,
then around 60% of Haiti’s production would be affected.
Preferential trade agreements like HELP/HOPE may eventually fall foul of the WTO’s
Most Favored Nation (MFN) principle:
According to the Asia-Pacific Review, “ They are, however, allowed by the WTO as
an exception to the general most favored nation (MFN) treatment prescribed in GATT
Article 1, as long as the following three criteria are met:
1. Trade barriers must not be raised higher than they were before integration;
2. Trade barriers are to be abolished for substantially all trade; and
3. Regional integration must be completed within a reasonable length of time.
These conditions are problematic, however, because their content is ambiguous.”31
Once Haiti’s trade takes off, it won’t be long before those who have lost volume to Haiti will
complain to the WTO about unfair preferences.
Electricity costs and availability
Haiti is the only country in the Western Hemisphere where the vast majority of the
population does not have access to reliable electricity.32 For the small scale producer with
their foot powered machines, this doesn’t affect them too much except at night. But for the
larger industries in the south, this is a major concern. It is also not just a question of cost but
31
32
Asia-Pacific Review, Vol. 9, No. 1, 2002
http://www.haitilibre.com/en/news-2468-haiti-electricity-modernizing-haiti-s-energy-sector.html
of reliability – a power outage in the middle of a production run can also damage garments
and lead to down time - so many factories just use their own petrol powered generator all the
time. Obviously this creates cost and pollution issues.
Water issues
While the new park at Caracol has enough water at current levels of investment, there is a
conspicuous lack of water treatment facilities in all the other parks and over pumping of
ground water. While this is being addressed at Codevi, the situation in Port au Prince and
Carrefour precludes wet processing at this juncture.
Transport issues
Transport issues in the two main ports create problems in both costs and scheduling. This is
being addressed but will take several years to really fix.33 It is also surprising to note that
petrol supplies (of critical importance to many factories) are delivered overland to the North.
Should either of the two main routes South – North routes be blocked – this would become a
major issue.
Government and donors have followed a flagship investor approach for the new Caracol
Park
While it is certainly true that getting a “ball moving” with regard to investment is important,
the reliance on a single investor to kick start a “look north” strategy at the new zone has its
risks. Should the lead investor pull out or be found to be polluting or mistreating its workers,
the image of the whole industry is affected within Haiti as is the image of Haiti especially in
the eyes of other potential investors. The success of that zone and to some extent of Haiti
would be critically impacted. The examples of similar occurrences, such as those of Tri-Star
in Uganda and Ramatex in Namibia, should be noted.
Lack of trained supervisory labor encourages poaching between factories
While importing trained staff seems relatively easy and there are few complaints of issues
with labor permits or work permits, the growth of the industry means that those locals with
key skills will be in demand.
Lack of skilled operator level training and those workers lack social skills
The figures on this are very mixed. While some factories complain that they have to train
workers and some of them lack even the social skills in knowing proper hygiene, others
report that they have 1,500 skilled workers on their waiting list for jobs.34
33
34
Autorité Portuaire Nationale
Joseph Blumberg Gruppo M
4.3
What is the Quality of the Enabling Environment, and how
does the Enabling Environment Impact the Value Chain’s
Competitiveness?
The quality of Haiti’s enabling environment is quite good compared to many developing
countries.
Government departments receive regular feedback on needed areas of
improvement.
Some main concerns for the mass industrial sector relate to customs, CFI and country
marketing, technical services, finance and available sheds, buyer visits, trims, spare parts, and
location of sheds.
Customs
Haiti’s industry is based on import for reFranchise issues: the example of H&H in Carrefour
export. Haiti doesn’t make any of the inputs H&H operates within a defined free trade zone in which
that go into garment production, and so the all traffic in and out is controlled by a dedicated customs
industry is dependent on importing the officer at the gate. This works well for full container
loads, whose seal is broken after delivery to the FTA area
fabric and trims in order to re-export them as and in the presence of the local customs.
garments. However, these same items can
If loose cargo is sent, however, the situation is different.
also be used for the local market and Loose cargo has its container seal broken at the port,
therefore could incur an import tax if the since not all the cargo is for one consignee, and is split up
items were not then re-exported. Some at the Container Freight Station (CFS). H&H told the team
control has to be put in place then to prevent that, on at least one occasion, CFS cargo took 4 months
to arrive and was only delivered when the cargo was
fiscal leakage from the Haitian Treasury. driven to the zone with the Customs Director
Furthermore new investors operate in an accompanying in the same vehicle.
entirely tax free environment for the capital
items they need as part of the production process – such as sewing machines and generators;
and again some of these items may have currency within the local environment and should
incur duty if not used for the export industry.
All of this requires customs control at both import and to some extent export to confer origin.
Although the U.S. Customs was meant to handle the export documentation locally as part of
the CTMO–HOPE provisions, it has yet to do so.
The manner in which the Haiti Customs authorities handle the import of restricted goods –
both capital and work-in-process - is critical. Normally this is done by what is called a
“franchise” – i.e. a declaration at start-up of what will be needed to be imported. There are
numerous complaints as to how this system is being operated. This matter requires further
investigation by the LEVE team. Factories find over time that they need to import items that
were not declared in their original franchise. (Also, if they had declared every possible input
that they could need, it is possible that their franchise would not have been approved.)
Haiti needs to look for better systems to control import and export outside the Free Trade
Zones (Carrefour, Lafiito and Codevi). A system of declaring piece goods at import based on
the final export of garments could probably be put in place, with a limit of how long the
factory has to re-export such items. In Cambodia this is called “The Garment Book”. For
capital items, a broader allowance could be given to new investors and narrowed as the
investment becomes operational. Or a system of bond and inspection could be instituted.
CFI and country marketing
Many complaints have been received about the way Haiti is marketed.
While the CFI should generally be the first port of call for any potential investor, many other
agencies and organizations also have input; and in practical terms may not coordinate
enquiries or actions with the CFI. Examples of pertinent organizations include:








Industry bodies – ADIH, CCIH
Statuary bodies – CTMO-HOPE
Some zones – Sonapi, Shodecosa, Codevi, Lafito
Government departments and Ministries
Haitian embassies overseas
Existing factories (as an example, Palm Apparel was able to help and bring investors
to the new FTA in Carrefour)
Development banks
The U.S. State Department (which has engaged a full-time consultant to promote the
northern industrial park at Caracol, known as PIC or PIRN).
The effectiveness of marketing goes beyond the overlap or stove piping of roles. It may be
that the methods and responsibilities of marketing Haiti as a destination for investment need
to be rethought, since the number of new investors coming to and then investing in Haiti has
not been impressive in the last few years. With regards to Caracol, only three investors
arriving in three years does not seem very impressive especially when the lead firms have
been induced by numerous “sweeteners”35
Technical services
Many garment firms in developing nations are often impacted by the non-availability of
technical services for specialist machines since their industry size doesn’t induce the bigger
industry suppliers to station specialists there permanently. Often this is seen in pattern
making, with the two main market dominating firms – Lectra and Gerber. Also other major
suppliers, like Juki, will not maintain as large a pool of spare parts as they would elsewhere:
China has roughly 100,000 garment factories, and Bangladesh 4,000, while Haiti has 30.
While the proximity of the Dominican Republic and the United States tends to mitigate the
problem, it is still an issue.
Finance and available sheds
Much of the finance for capital formation for the industry is not commercial, but is provided
by donors, notably the IDB since the private sector has yet to step in. This is an issue for the
provision of factory sheds - although there are local banks that can build them, they then find
that non-industrial tenants are willing to pay a higher rent. It is noted for example that, in
Caracol, the IDB’s agreement with SAE-A precludes building sheds for anyone else.
35
Subsidies include housing and electricity – details withheld
Since it has also been cited that there are few empty industrial sheds in Haiti 36, the lack of
built sheds for new investors to “hit the ground running” is a problem, as is the use of the
facilities that are there for warehousing.
Also sheds built to individual investor’s specifications by the IDB and others are frequently
huge – 5000-8000 square meters - and cannot be easily subdivided later for smaller investors
should the lead investor pull out. Provisions of sheds on flexible terms, whether for rent or
lease or outright purchase, may encourage investors to come, since they can start production
up to 3-6 months faster if the shed is already in place. Furthermore, while it is possible for
investors to purchase the sheds in some of the zones (which is desirable since the fitting out
of the shed represents a major sunk cost that cannot be recovered if the lease is terminated),
the maximum leasehold for government sheds is only 9 years.
Buyer visits
Getting major buyers to come or divert an existing buying trip to Haiti (from the rest of the
Caribbean) is always a challenge, and so the more facilities they can see quickly in one visit
is critical to the effective selling of Haitian production. The decision makers regarding
placement of orders and investments are often remote and external – e.g. in Korea. The
industry would benefit from aggressive, effective approaches to encouraging and facilitating
buyer visits.
Trims
Few trims are available locally. Trims may include items such as thread (standard colors and
dyed to match), buttons, snaps, zips and other closures, interlining and pocketing fabric,
polybags, packing materials and gussets, labels, hangtags and barcoded labels. All of these
have to be imported. While it is understood that fabric must be imported, the issues with
accessories is that, if they are mis-supplied to the wrong specification or to insufficient
quality or quantity, they can hold up an order worth much more than just the value of the
accessory. So while a policy of encouraging investment in stitching is paramount, a
secondary and following objective will be to encourage the major global trim suppliers, like
Coats or A&E, to locate in Haiti, offering stock and in common items.
Spare parts
There is such a variety of machine types in Haiti, leading to a plethora of spare parts needs.
The availability of a bonded area in which common spare parts could be stockpiled would
certainly help the industry. The industry, as separate firms or through some joint
arrangement, must otherwise hold a much larger stock of slow-moving items. An excellent
arrangement would be to issue spare parts to recipients duty free from such a warehouse that
holds a franchise in the particular item.
Most new machines come with around 2 years’ worth of common spare parts; but after that
the cost of spare parts is quite high relative to their cost to make. Spare parts may be
genuine, generic or copy/fake.37 Haiti generally has only the option to use the expensive
36
No sources beyond the anecdotal
One of the biggest stockist of generic and genuine spare parts is Dunlap Sunbrand International which is
based in Kentucky and has an office in the Dominican Republic
37
genuine parts since it doesn’t have a sufficiently big industry to encourage a market in fakes
or generics.
Location of sheds
According to the government planning body, CIAT, expansion of the industry within Port au
Prince is not desirable 38 - since every industrial worker pulls in 100 other workers and this
tends to lead to pressure on housing. However, most investors want to come to the capitol,
because they have access to better facilities, services, government offices, permits and
licensing, and because their buyers have access to better hotel and travel facilities. For
Caracol and Codevi, buyers are often brought in through the Dominican Republic.
The enabling environment for the smaller scale industry is quite different
There is something of a split of needs here. On the one hand, existing designers want to scale
up what they are already doing. On the other, there is an identified demand by external
designers (within the Caribbean and within the Diaspora) to use Haiti as a type of “sample
room” for making up their designs. This is currently unavailable. Designers from the
Caribbean region could use Haiti as a convenient place to make up their range if a facility for
small scale manufacturing, like that of ModAyiti, were available.
Mechanical, technical services and special machine availability
While large factories have in-house mechanics to fix nearly all problems quickly, this is not
the case for the smaller scale ones. Some pooling is already occurring with ModAyiti.
Other issues include:






38
Working Capital – while many have their workshops in place, ongoing finance issues
for working capital limits the range of fabrics they can buy, which in turn limits their
design and means they may have to wait for one customer to pay before taking other
orders
Fabric and trim range is limited leading to a narrower range of design output since
producers can’t import enough range of fabric or accessories, and many are reduced to
simply hand carrying fabrics back from trips to the States.
Available skilled seamstresses in the advanced skills, when and where they are needed –
in a “stop-go” industry, it is difficult to employ people full time unless there is some
pooling of resources with other designers who have a different schedule of orders.
Available local designers with proper training – The team did not meet anyone with
formal design training and while not essential, this does help to avoid a lot of common
mistakes at startup for a new business.
Knowledge of export markets – individually most of the designers would not have
enough knowledge of the HELP/HOPE provisions to leverage the duty saving.
Marketing through the internet – this always take time to build up and frequently internet
selling is not enough. Marketing requires additional promotion - e.g. face-to-face
meetings or a well-known brand or mark of quality
CFI in conversation – CIAT was not contacted directly

4.4
Integration with other CARICOM fashion initiatives, such as the joint staging of fashion
events and integration into some ideas on cultural value added that seek an integrated
approach on music, dance, retail, art, etc.
Workforce and workforce development
In many industries, a presumption is made that education comes before a career. Someone
trains in some vocation and then enters that profession. In the apparel industry, that is not
always the case and there is a lot of “seat-of-the-pants” training for people who were merely
looking for a job rather than a career. Even for major designers, a design degree is not always
a prerequisite for commercial success. As such we should consider more how we can help
existing workers within the industry upgrade their skills for onward promotion and how some
as they age can be transitioned to other employment.
The following functions have been identified within the Haitian industry, and their training
needs assessed:
Figure 20:
Job functions and related training
Actor
Typified by
Typically trained
by
In-house
Training needs
Controversial –
center training has
not been successful
Drop-out/fatigue
rate
High * Multi
training increases
pickup rates for
new operations
and gives more
job security
(INDEPCO)
Low
Industrial Machinist
Worker in existing
mass producer
and dedicated to
one operation
Sewer home
Ladies making
garments at home
Self/family
Master tailor – sewing
Various – working
in smaller units
Older man with
30+ ears’
experience
Older man who
learnt it manually
Various
Various former
sewer
Trained from
manuals in-house
but formal
training is good
Can also be done
by merchandiser
In-house
Already
Formal training
needed often inhouse
At least 3 month
course to set basic
minutes
Depends on
whether using
GSD
Historically one of
the weakest areas
in the industry
Older lady –
former inline
supervisor/other
Only at the
biggest
Has to
understand makesheet
If done by rule of
thumb for repeating
items or planned
very carefully
Already has skills
Degree course
Low
Master tailor + pattern
maker
Pattern maker –
electronic
Supervisor – inline
GSD piece rate
setter/Industrial
engineer (time and
motion)
Production planner
QA/QC supervisor
Stitching technologists
Traditionally inhouse
Done by supplier
of equipment
None – they learn
fro the a hi e’s
manual
None – what they
need is practice
Pattern making
course – at least a
year
3 month course
Low
Low
Low – but crucial
to cost control –
may set
consumption
High – stressful
job
Low
Actor
Textile technologist
Merchandiser – factory
Merchandiser – fabric
Merchandiser –
samples
Merchandiser – buyers
end
Sample makers
Packers
Typified by
vendors/buyers
Only at the
biggest
vendors/buyers
Lady – learnt on
the job – typically
issues prod. Order
and checks trims
are ready at bulk
Trained on the job
Typically trained
by
In-house
Trained on the job
Various
Former machinists
too old to
maintain piece
rates
Need to be
reasonably fit
Fashion
marketing degree
In-house
In-house
Packing supervisor
From line or
merchandising
Spot cleaners
Lowest skilled
applicants
Shipping clerk
Must be literate
and accurate
In-house
Shipping supervisor
Warehouse receivers
Former clerk
Must be literate
and accurate
Must be accurate
In-house
In-house
Warehouse supervisors
Factory designer
Former clerk
Works with
vendor
In-house
Design degree
Freelance designer
Works with buyer
Design degree
Trend forecaster
Forecast future
trends for
planning
Implements
orders/also
chooses vendors
for range
Design degree
Places orders on
commission with
Warehouse Pickers
Buyer – foreign buying
office
Garment agent/jobber
Must understand
PO and make
sheet
Not much training
needed
In-house
Training needs
Drop-out/fatigue
rate
Degree course
Low
On the job
High – very
stressful job
Some fabric
technology useful
Some stitching
technology useful
Already
Low
Full tailoring course
Medium –
stressful
High – very
stressful
Low
Some training given
but maximum 2
weeks is ok
Already
High
3 days is ok
High – these
chemicals can be
dangerous
Low
Seminars on
HELP/HOPE/EU
GSP/EBA
Already
Unskilled
Low
Low
Low
Increasingly
automated in bigger
units
Already
Refresher
courses/travel to
fashion centers
Paid when designs
are used or when
they sell
Already/travel to
fashion centers
Low
Varies
Varies
Former employers
Already
High – very
stressful being
intermediary
between factory
and buyer
High – income
varies sharply
Low
Low
High
Varies * typically
separate agency
Actor
Typically trained
by
Typified by
factories
Varies – former
line supervisors
would be ideal
Boy good with
fixing cars
Trainer – sewing
Mechanic – inline
Former
employers/sewing
course
Training
center/on the job
Mechanic/maintenance
building
Older man
None/other
factory
Entrepreneur
Experience within
the industry
Fashion
marketing degree
but this is far
from common
Training needs
Drop-out/fatigue
rate
Varies
3 months course
useful but will then
need to dedicate the
brand of machine
With new
technology on
renewal electricity
could skill up
Can be stressful if
a ’t fi the
machine and
production target
for machinist
drops
Low
High
As shown in Table 21, Haiti offers several training centers offering a variety of skills
development. However, at least three of them are not really operational.
Figure 21:
Existing training centers
Center Name
Don Bosco
Running?
Yes
Quality
Very thorough
HAC
INDEPCO
Location
CH FL Goin Cayes,
PaP
PAP
Trou du Nord
No
30 %
INDEPCO
PAP
Partial
Mixed results
Tailoring and dedicated
seems good but not one
is willing to pay for it
Ditto
INDEPCO
Gonaives
Hinche
Jacmel
Jérémie
St Marc
Sonapi
Unknown
Ditto
Unknown
Good
CH
Yes
Thorough
CH
Yes
Poor
Haiti Tech
Atelier Le
Jourdain
Grahn Monde
Verona
ILO/Better
Work
No center
Yes
No information obtained
as yet and may be
inactive
As per objective – soft
anyway
Detail
3 year course on all aspects of
cutting, sewing and pattern making
Sewing (industrial) + QC/QA
Sewing industrial + tailoring
(machines with pedal)
Mainly pedal machine doing
handicrafts/artisanal bags and
other courses
Mainly pedal machines doing
uniforms (schools)? Not reviewed
Mostly non apparel related courses
but willing to do customized
courses. Has plans to offer mobile
training
2 years part time – pattern making
and tailoring
Not clear – makes commercial
goods using trainees – focus on
hand embroidery
Runs soft skills mainly at
supervisory level
4.5
SWOT Analysis of the Haitian Apparel Industry
Figure 22:
SWOT analysis for the Haitian apparel industry
Closesness to factor
determines strength
Strengths
32 % duty saving *
Avai l abl e l abor
Passports for i nvestors
Sea transit time
Tax i ncenti ves
No work permi ts
Many sheds can be rented onl y
Freehol d l and for sal e
Forei gners can own l and
Water treatment
Hi story of a 10 x bi gger i ndustry
Labor code l i beral
Concentrated l abor
(PAP + envi rons)
Local curreny not underval ued
Shi p thru DR
Heal thy l abor
Other garement ori gi n wages ri si ng
Communi cati on
Currency dol l ari sed
Ease of getti ng overseas staff to come
Grants avai l abl e from donors
Local management avai l ai bi l i ty
Locati on of i ndustry
Cost of fi nance
Di aspora
l ocal tai l ori ng
Beach cul ture
Settl ed parti al l y urbani sed l abor
Threats
Opportunities
Ski l l ed operators
Pol i ti cal envi ronment
Soci al envi ronment
Customs del ays
Li terate l abor
Regi onal market smal l
PaP port expensi ve
Avai l abi l i ty of embel l i shment
pri nti ng
age of entrepreneuri al cl ass
No desi gn trai ni ng
embroi dery
Avai l abi l i ty of embel l i shment: washi ng
No fabri c formati on
Techni cal servi ces
Labor cost
Ai r frei ght
sal ary expectati ons
Pattern maki ng ski l l s
Mi numum wage too hi gh
Mechani cs
Preference i nduced
CAD /CAM
spare parts
Range of product
NFE fabri c
Country marketi ng
No cutti ng Fi nance access
Fi nance type
Shed avai l abi l i ty
CH port not oprati onal
Qul ai ty of l i fe for i nvestor
Buyer i mage
Earthquakes, Tsunami s + typhoons
No yarn or fabri c stockpi l e
2nd hand garment dumpi ng
WTO stri kes off HOPE/HELP as contrary to MFN
Weaknesses
* on s ome , but not a l l i te ms
Figure 23:
Assessment of factors used in a typical garment destination SWOT
Factor
Grade – Important/
Useful/Irrelevant
Concentrated Labor
Important
Cheap Labor
Important
Skilled labor
Useful
Production of main raw material e.g. cotton
Irrelevant
Conversion of that raw material to yarn
Useful
Locally available conversion of that yarn to fabric
Useful
Locally available finishing of the fabric
Useful
Cheap land
Important
Available buildings
Important
Cheap buildings
Important
Suitable buildings
Important
Buildings available for lease
Important
Undervalued local currency
Useful
Availability of embellishments e.g. embroidery/ printing/washing
Important
Easily available Bank finance
Useful
Cheap bank finance
Useful
Possibility for foreigners to own land in free hold and 100 % equity
Useful
Tax incentives
Irrelevant
Availability of local management
Useful
Quality of life for investor
Irrelevant
Free passport for main investor given by that country
Useful
Ease or difficulty of getting skilled overseas staff to go there and critically stay there to
manage the investment
Important
Culture of local labour force – Bedouin/nomadic/pastoral/urbanized/literate/calm/excitable
Important
Local market important for sales
Useful
Regional market
Irrelevant
Shipping/distribution
Important
Availability of trims – e.g. labels/cartons/thread etc or everything needs to be shipped in
Useful
Import clearing times
Important
Import and export costs
Useful
Export costs
Useful
Indirect overheads e.g. telephone
Useful
Communication
Important
Local business culture – clean/corrupt
Irrelevant
Local labor code – liberal/restrictive
Useful
Factor
Grade – Important/
Useful/Irrelevant
Other businesses in the area – a free hand or some competition for resources
Useful
Immigration rules – easy/difficult/expensive
Useful
Environmental rules – easy/restrictive
Useful
Health of labor force/ Age of labor force
Important
Local environment – extremes of hot or cold or humidity?
Important
Local environment – easy to build and maintain a factory
Important
Grants available for investor
Irrelevant
Passports for the investor?
Useful
Local fashion/design school
Useful
History of garment making
Irrelevant
Local tailoring
Irrelevant
4.6
Key success criteria
While there are many theories of what makes garment investors invest in a country one
element that is very simple to measure is salesmanship – is the country selling itself
effectively?
Much of the truth about salesmanship may simply be found in a herd instinct – when many
go in and the opportunities seem good, the opportunities get better: nothing succeeds like
success. Unfortunately Haiti hasn’t sold itself effectively, as measured by the simple criteria
of how many new investors have come, seen and built. And perhaps that is a core issue.
Having a ready package available, by which investors can just ship machines to ready sheds
and start training the workers or workers are already partially trained, may help to show the
potential investor what they need quickly. Selling or renting just an empty plot of land in a
zone (rather than a ready empty building) is a much harder sell and a much bigger
commitment for the investor.
Also, investors like neighbors; they help each other to feel more secure. As more of one
nationality – others come and social facilities develop for that particular group. While some
Koreans have invested after SAE-A, like H&H, more investments are needed, and the team
understands that the Korean industry is watching developments at Caracol closely – the jury
is still out.
Marketing and promotion focus could also be on others, like companies from mainland China
and Hong Kong, Singapore, Malaysia, Thailand, Pakistan and Turkey, as well as from
Mauritius. The more variety and the pioneers from any one of those countries will attract
more to come.
Apart from selling, investors must be able to benefit from at least one of three distinct
advantages: proximity, preference or labor cost.
The key success criteria are further described in Figure 24. The figure also identifies the
potential movement along the value chain.
Figure 24:
Key success criteria
Leverage
Detail
Proximity – high
fashion
Miami is 3-7 days
away by ship
Proximity –
stockpiled fabrics
with heaving
finishing
Proximity –
stockpiled
common fabric or
yarn
Absolute
Preference
Add value at the
end of makeup
process not wait at
the beginning
Stockpile greige
fabric (tee shirt
fabric or pique) +
just do dyeing
Duty free
Sheds (lack of)
BID/WB willing to
finance turnkey
units on easy terms
Maintains
preference
regardless of
HOPE/HELP
Estimated at 60 %
of available
workforce
No formal skill
addition at
advanced level
available
Allows Haitian
creativity from
indigenous art OR
input into design of
what is made
Investment
missions marketing
Investment
missions marketing
American fabric
Large unemployed
labor pool
Age + skills of
garment class
Design (lack of)
Attracting more
Chinese investors
Attracting
Francophone
investors
Attracting other
investment from
major garment
vendor locations
Investment
missions marketing
Up or down
the VC?
UP
Summary
Buzzword
Turnaround
UP
Finishing
Knitting + dyeing
Standard fabrics –worsted
Down * needs
at least dying
Greige
Synthetics/high value items
+ $20 FOB - other countries
loosing preference e.g.
Nicaragua
Getting investors started
quickly
Expand VC
32 %
Add more
Supima/Pima /Sea Island
cotton
UP + DOWN
Build them
and they will
come
Supima
What brings in jobs fastest or
safeguards existing jobs
Expand VC
Investment
Some form of institution to
bring in new blood
Deepens VC
Fashion
college
Printing/tailoring/haute
couture
DOWN VC
Designer
rolling ball approach
Add more
China
Add more
Mauritius
Add more
Pioneer
Focus on
Short high fashion items
which elsewhere would be
done by air
What can be stockpiled as
grey or are repeating fabrics
Finishing -jeans
5
Vision and Upgrading Strategy
5.1
Vision of what could be achieved
LEVE can assist the industry to move up and down the value chain, while also expanding the
volume of business at the critical, job-creating point (sewing), and deepening it by supporting
lead firms to extend their businesses. It will facilitate designers as the avant garde to lead the
marketing charge towards Asian investors – helping the mass industry and also helping the
designers.
5.2
Upgrading Strategy: A five-pronged approach (and possibly
one more)
The following initial recommendations for an upgrading strategy outline LEVE actions to
help the industry achieve this Vision:
1. For the mass industrial value chain, LEVE will help the lead firms and other sector
stakeholders to promote new investment in Haitian-based production, in particular in
the existing and planned industrial zones. It will help promote the existing zones in
Haiti (2 in and around Port au Prince, 2 in the north and one more planned duty free
zone) to encourage more Asian investors to come quickly. LEVE will also to help
anchor the investment by encouraging those sectors where there is also a focus on
finishing (jeans), where fabric formation or dyeing could take place.
LEVE will identify major shipments in the categories incurring 32% import duty
categories that are shipping from non-preference origins (like China) and then help to
contact both the source (i.e. vendor) and the buyer about the possibility of moving to
Haiti. This will be done with the PIERS (Port Import and Export Reporting System)
or other database.
It will also work with banks and major fabric mills to see how transferable letters of
credit or other financing or guarantees can LEVErage the industry into buying its own
fabric. Alternatively discussions will be engaged in with major knitwear producers
about positioning standby containers in Haiti to get faster turnaround and hopefully
more orders.
2. For the smaller sewers, LEVE will assist lead and entrepreneurial firms to scale up
their activities through internet sales and promotion to new markets, especially Asia,
that has hitherto been neglected. This will also improve the image and visibility of the
Haitian industry in the main centers of the Asian garment trade, contributing to the
industry’s overall promotion. Asian markets are growing fast and now have an
immense demand for quality and different overseas products that Haiti could
capitalise on in the short term.
3. For both sectors, there is an increasing ageing of skilled personnel, with gaps filled
too readily by foreigners. LEVE will work with the existing training providers and if
need be, facilitate new training arrangements. One outcome will be to develop an
industry recognised diploma in all aspects of the garment industry. This training will
create a new Haitian cadre of garment managers and entrepreneurs. LEVE will also
support the creation of a resource center, perhaps at one of the exiting training
providers, to help the smaller sewers and designers scale up rapidly.
4. LEVE will also encourage off shoring to Haiti of operations that allow Haiti to
provide value added along the value chain. For tee shirts, for example, goods are
frequently printed after arriving stateside, and more of that activity could be located in
Haiti. Haiti’s proximity and availability of skilled sewers suggests that some high end
and suiting functions could be rebased in the country with access to advanced
technology - E- tailoring.
5. The industry is not a happy one – workers are constantly battling against what they
regard as low wages and do not see career progression. It may be that providing
vocational and soft skills training (e.g. English or Spanish language training) for
personnel at the operator level will enable employees to view their work as an
investment in skills that open new opportunities.
6. AND maybe: LEVE has received a number of proposals for investments and
targeted interventions in infrastructure that beneficiaries’ claims would generate
significant numbers of new jobs. If those guarantees (of job creation) could be
verified and formalised, LEVE could consider earmarking some funds.
At the outset of LEVE, the involvement of MSMEs will in particular be encouraged in the
smaller sewer/designer strand of the industry. These businesses would reflect a new “avant
garde” in the industry, entrepreneurial in starting up growth businesses that target market
niches and innovative market opportunities, and changing perceptions within Haiti, Caricom
and critically within the broader investment community (typically Asian) by being scaled up
and given greater visibility (participation in foreign fashion shows and events).
5.3
Additional actions towards the Upgrading Strategy
Cross cutting and consultation (May – July, 2014)
Activity
Consultation
Institution
All mass industrial/ADIH/CTMO HOPE/CFI
Detail
Seminar on direction and needs
Consultation and
workshop
Roundtable
Small sewer and designer
Seminar on direction and needs
All training provider
INDEPCO/INFP/Silesians/HAC/other e.g. Haiti
Tech
Existing and new mass fashion buyers
Discussion on implementation
Buyer internet
conference
Additional research needs (May-June, 2014)
Activity
Foreign Jeans wear buyers and
vendors polled/investigation of
washing capacity
Value chain
Jeans VC new 2
Detail
Help to persuade existing buyers to also
place denim if washing capacity is in place
Try to persuade new vendors to rebase in
Haiti
Help to encourage interest and marketing
of Haiti
Identify target vendors and buyers
from non-preference countries
VC2
Discuss with existing USA based E
tailors
Discuss with service providers on
design software/body scanning on
practicality
Discuss with fabric mills on stock
needs
E-Tailor – VC new 1
With banks and donors discuss new
financing methods for buying fabric
and possibilities of standby
containers of standard fabrics
VC1
Back to back L/Cs or other methods
Investigation of best forum for
showcasing Haitian design and
adding to overall Haitian promotion
+ developing integrated Haitian
artisanal/haute brand
Investigation of internet selling for
haute couture
Draft curriculum for revised charter
for HAC (change stakeholders)
Review of current printed t-shirt
production in Haiti
VC4
Review of current tailoring training
and scale up
Review of general education
provision – worker level with mobile
classrooms possibly teaming up with
the Walmart Foundation or fitting
their curriculum into an overall
package of training
With zones and finance providers –
build standard model for shed
provision
Review of targeted interventions in
return for jobs promises
Study on how existing franchise
system can be improved with
Customs
VC6 and VC new 1
Review of existing trade shows and
investment approach as well as possibility
of buyer + vendor coming together in Haiti
i o e arket o th et .
Review if ModAyti
Review of current high fashion selling
trends and needs for scaling up
Review other technical training college
(foreign) and how it could be implemented
See what is being done now especially on
printing methods and where current tee
shirts are coming from
Need to see how it current provision fits
into VC3
Workers will be leveraged with provision of
missing general education and garment
technology awareness
Build up comprehensive plan as to how
they can rebase in Haiti with plant, training,
stock and technology needs.
Preparation of detail technical proposal
including review of air freight needs
VC4
VC1, 2 and4 +VC new
1 and3
VC New 3
VC1 and2
VC2
Full turnkey costing with contacts and land
available – all info summarized
VC1+2
We have received two proposals
VC 1, 2 and 4 possibly
Allow selling of old stock to release
funds/allow better and more visible control
of the system with online checking or
permits
Possible Institutional interventions
Activity
Capacity building at CFI
Value chains helped
All
Refocus HAC or
other/find foreign
training provider to
moderate course
content
All
De elop I de t odel
as a resource
center/central one stop
shop for shared services
and sourcing
VC4 and VC new 1
Foreign fashion shows
Foreign trade missions
to targeted vendor
technical training
center/resource center
and indent center
Trade missions to buyers
(USA)
VC4
VC2
Take selected vendors on foreign promotion missions
Asia + Turkey + Mauritius
All
As revised technical training center/resource center
and indent center
5.4
Objective
Analyze and re-gear activities to achieve more
investment
Review whether they need professional capacity
building help from professionals
Review existing management and make more inclusive
of real stakeholders
Develop detailed curriculum (with help from foreign
training provider) to re-gear HAC as a management
training center and not as an operator training
provider
Technology training center/resource center/indent
center
VC2 and4, and VC new
2
Exit Strategy for LEVE
While LEVE will some grant funding, the project will avoid financing operations or training
that shuts down once LEVE support ceases. Ongoing activities should respond to clear
demand from the industry, and as much as possible owned by the lead firms in the industry,
but we should also assist businesses to serve new markets and trends – underwrite the risk of
new approachs and technologies.
So LEVE would hope to nurture an industry that is responsible for its own destiny – that has
a multiplicity of actors – and not just an industry that could largely shut down tomorrow if
one of two firms decide to leave. This means attracting more of the same kind of vendors –
i.e. firms who control their own piece goods. It means more piece goods formation and above
all more creation of an entrepreneurial class to drive it forward.
LEVE must look at instilling knowledge and confidence of a garment (and possibly other
assembly) future for Haiti, even if preferences ceases or labor cost rises – garment industries
still exist in niche cutting edge areas in some quite expensive countries like Italy. The
sophisticated fashion business is all about the flow of information at the right time, and the
ability to recognize market opportunity.
LEVE must enable Haiti to leapfrog over many development steps straight to the cutting
edge, and that needs a new cadre of young Haitians. That said – LEVE cannot build treatment
plants or run training centers that close once the project winds up. For that reason, LEVE will
use a cost-share or partly commercial model. In particular, a LEVE strategy that involves
training must lead to a recognized qualification that becomes respected within the industry as
the graduates find employment and are valued for their training and this is evidenced through
their certificates. Over the course of LEVE, such training will be charged for increasingly
against cost or sponsorship will be sought from industry actors leading a weaning off of
donor finance by the end of the project.
Anticipated Impacts
LEVE will have both a top down and bottom up impact – leveraging the small businesses so
that they can become bigger, but with all the elements of a sustainable industry within Haiti
that eventually can lead some of the bigger firms into offering a full package of services.
Haiti will become an important stop on the garment buying circuit, offering a wide range of
buying options to the buyer.
As that comes to Haiti, others will follow, making the environment even easier to operate in
as thread, zips, buttons, carton makers, polybags and hanger companies come and at least
stockpile more of their range locally: the whole gamut of ancillary services that are currently
external to Haiti. Neither will it forget the operator and engage in mass education to help
create a more harmonious future – one where everyone has a future within or beyond the
industry.
Opportunity for job creation
While the small sewer, design and fashion value chains will certainly generate new jobs as
they grow in numbers and size, LEVE will look to the mass industrial sector as the major
source of short and medium-term job growth in the industry. If LEVE could assist in
attracting five new investors a year, and each one would occupy one or two sheds of 3050,000 square feet each, around 1,000 jobs per investor should be created. Over five years,
this would lead to the creation of the jobs target of 25,000 jobs.
Opportunity for increasing revenues, exports or import substitution
If Haiti can add 5000 workers a year for five years, the industry will basically double, and
Haiti would achieve an export FOB value of around $1.6 billion.
5.5
Anticipated impact on women and youth
In many countries, the major part of the operator workforce is female - often 60 %+. The
workforce in Haiti’s industry reflects this pattern.
If industry growth development occurs in the Northern Corridor, village level labor,
especially youth, will be encouraged to remain rather than migrate to the towns.
Opportunities may exist for vocational training of youth from 16 onwards but they should not
expect to enter the factory before the age of 18.
5.6
Risks and Mitigation
An industry based on one market and preference will always be vulnerable to changes in
preference arrangements, and to local shocks such as currency appreciation or civil unrest.
Clearly a footloose industry such as sewing should be anchored by investments with higher
sunk costs, like dyeing.
If, as proposed, the HELP Act is extended to 2030, Haiti will be able to offer greater long
term security to the existing industry and encourage others. That said the current APEC
discussions to make the Pacific region duty free are a concern.
Further unrest within the Haitian industry could also have an impact, not just in terms of
localized physical damage but also in image. As such greater and meaningful dialogue should
be encouraged with organized labor.
6
Annexes
6.1
Annex 1: Summary of Meetings
LEVE – apparel component - summary of meetings
Date
Organization
Persons Visited
2/28
World Bank
2/28
3/4
2/28
Winner
CLED
Simbi (design)
3/7 Thurs
3/7 Thurs
7/3 Fri
IDEPCO
CTMO HOPE
Multitex, IRii + Paula
Coles (creations)
Island Apparel – Andy
Ansaldi
Chamber of Commerce
Dept. Nord Est
Lafito FTZ
Le Jourdain Atelier
President, Indepco – Hans Garoute+ Jean Robert Lebrun
Yvres Savain Executive Director
Jeff Blat, Paula Coles, Richard Coles (by telephone)
SAFI
Zone contractor
Mario Davila
Patrick Michael
INDEPCO CH – Caracol
and Trou du Nord
USAID housing
Yolette Saint Preux, Cherelie Bastien Paul
Gruppo M,Codevi
Mercedes Capalan (by telephone) Also Rafael Reyes (social projects
coordinator) Limber Cruz, Victor Thomas, Christian Capellan
Claude Lamothe
Sue Richardson Site Manager
7/3 Fri
7/3 Fri
8/3 Sat
10/3 CH
10/3 CH
10/3 PM
CH
10/3 PM
CH
10/3 PM
CH
11/3 AM
CH
11/3PM CH
11/3PM CH
12/3 AM
CH
11/3 PM
CH
11/3 PAP
11/3 PAP
11/3 CH
12/3 CH
13/3 PM
14/3
14/3
14/3
CH Port Authority
Labadee, Royal
Carribean
SAE-A
World Bank/IFC, Lia Mamniashvili, Senior Chargé of Operations,
IFC, Maria Kim, Chargé of Operations on Haiti Reconstruction
Funds, WB, Christophe Grosjean, Agriculture Specialist, WB.
JRE and Mario Kerby (DCOP)
Lionel Delatour
Lori Steed, Marie Therese Hilaire, Sandra Russo
Andy Ansaldi III
Fritz Jean
George Sassine
Carl Jean Louis
Informal chat with some of the new residents at the USAID housing
Chris Kong, President, S&H Global. Also Ms Chae.
Grahn Monde
Dr. Harold Durand
DKDR
MGA
Puisance Divine
Connextion
Silesians CH
Cuirs Hawtan
Port CH
CFI
Modayti
Mr. Joseph Song
Mr. Park
No management present
P. Mytilien Andre
Daniel Gallagher
Alix Celestin
Norma Powell + Gregor Avril + Gina Coles
Maguy Durce
Date
19/3
19/3
19/3
19/3
19/3
20/3
20/3
20/3
20/3
21/3
21/3
21/3
21/3
21/3
21/3
21/3
24/3
24/3
Organization
Fairway
OWA
Quality Sewing
Horizon
SIMBI + others
H&H
Palm
Lucotex
Wilbes
KOICO
Simbi 2nd to plant
INFP
HAITI TECH
CTMO HOPE
Wo e ’s
empowerment
Jeff Blatt
SONAPI
INDIGO MOUNTAIN
24/3
24/3
25/3
25/3
Apaid Group
GLADIATOR TEXILES
Better Work Haiti
27/3
27/3
27/3
Gruppo M
Fishman Tobin
27/3
27/3
28/3
28/3
27/3
27/3
4/2
4/2
4/2
Seminar
Les Ateliers Le
Jourdai
SALESIENS DE DON
BOSCO
SAE-A
GRAHN MODE
CODEVI(2nd visit)
Labadee
INDEPCO NORD
Modayti Center
World Bank
IDB
Persons Visited
Danny Liu
Charles Henri Baker ii
Manger
Rucelle Manalansang
Lori Steed, Birgit Coles, Marie Hilaire, Sandro Russo + one more
Jay Kim
Alain Villard
Dieunor Luccin
Antonio Yang
Sae Chul Oh
As above
Mervil Guillaumette
Rhoney Desrogne
Henri-Claude Muller-Poitevien
Danielle Saint-Lot, Ambassador at Large Special
Jeff Blatt
BJ Shettini DG
Yatin Shelar
Clifford Apaid
Missing contact
Janika Simon
Various seminars : " Ministère de la Planification et de la
Coopération Externe" et le " Ministère de l'Economie et des
Finances "
Joseph Blumberg
Reschedule
As above 2nd meeting
As above 2nd visit
Refused to meet further
Dr Harold Durand
As above
Mr. Fritznel
As above
Visit only
Maria Kim
Jose Irigoyen
6.2
Annex 2: Bibliography
Better Work Haiti: Garment Industry 7th Biannual Synthesis Report Under the HOPE II
Legislation, ILO Better Work, 2013, for CTMO HOPE. Print.
Bringing Hope to Haiti’s Apparel Industry, Improving Competitiveness through Factory-level
Value-chain Analysis. Nathan Associates, Inc. September 2009.
Industrial Revolution II: Manuel de Politiques d’Enterprise. Inter-American Development
Bank (IDB). 2012.
Industrial parks review to agree sharing of knowledge. Inter-American Development Bank
(IDB). Web. 2014. http://www.iadb.org/en/projects/project-descriptiontitle,1303.html?id=HA-T1191
Mitigating the Social Impacts of the Caracol Industrial Park. Inter-American Development
Bank. May 2013.
Project Abstract Haiti Increasing Employment Opportunities through Willbes (HA-L1069).
Inter-American Development Bank (IDB). 2014.
Armstrong, Timothy. Haiti Apparel Center Strategic Plan: 2011 to 2014. Global
Communities, formerly CHF International. 2011
Boone, Peter. Haiti Apparel Center Strategic Plan. USAID/Carana. 2010.
Cahn, D., Clifford, R. Health, Safety, and Environmental Issues in Haiti. Inter-American
Development Bank. 2012.
Collier, Paul. Haiti: From Natural Catastrophe to Economic Security. A Report for the
Secretary-General of the United Nations. January 2009.
Hornbeck, J.F. The Haitian Economy and the HOPE Act. Congressional Research Service 75700. www.crs.gov RL34687. 24 June 2010. Print.
Krakoff,C. Miller and Armstrong, T. Development of the Industrial Park Model to Improve
Trade Opportunities for Haiti – HA-T1074-SN2. For The Inter-American Development Bank
(IDB). September 2010.
Krech, R., and Krakoff, C., “Reform Strategy: Haiti’s Industrial Park and Economic Zone
Regime,” International Finance Corporation, Investment Climate Advisory Services for the
World Bank Group, Washington, D.C., April 2009.
Whittenburg, Cynthia, F. Memo to the Director, Field Operations United States department of
Homeland Security and U.S. Customs and Border Protection. Washington, D.C. 10
November 2010.
U.S. Department of Commerce Office of Textile and Apparel (OTEXA). Trade Preference
Programs for Haitian Apparel and Textiles. Web. 2011
http://otexa.ita.doc.gov/Webinars/FINAL_Haiti_presentation_for_May_2011_Webinar.pdf
OTEXA/ Public.
U.S. Department of Commerce, Office of Textile and Apparel (OTEXA). Trade Preference
Programs For Haitian Textiles And Apparel. Office of Textiles and Apparel (OTEXA), U.S.
Department of Commerce, 2014. Web. 24 April 2014.
United States Congress, Senate. Haiti Economic Lift Program Act of 2010. 111th Congress,
2nd Session. Washington, GPO, 2010.
United States International Trade Commission. Textile and Apparel: Effects of Special
Rules for Haiti on Trade Markets and Industries. Investigation No. TR-5003-1. USITC
Publication 4016. June 2008. Print.

Annex 1. LEVE Apparel and Textiles Value Chain Assessment

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