Haiti: A Smart Sourcing For Manufacturers

March 4, 2010
New offshore opportunities are growing from more than just baseballs, apparel and textile manufacturing which has served as the number one job source for Haitians pre-earthquake.

When the earthquake ravaged this beautiful Caribbean country it gave it back a relevancy it hasn't seen in decades. The Haiti relief efforts by individuals and neighboring countries are so enormous that direct assist with their economy is a natural second act. New offshore opportunities are growing from more than just baseballs, apparel and textile manufacturing which has served as the number one job source for Haitians pre-earthquake.

Local Advantage

One of the most proven successful ways to step into capacity contracting in Haiti or, setting up one's own brick-and-mortar there, is to cash in on current success and not re-invent the wheel. No one knows the paths to follow more than the local shop owner in Haiti. Why blaze a new trail when the old ones are so well traveled. The primary Haiti skill set is the eagerness and ability to learn.

HOPE for Duty Free Exports

HOPE II has the most generous market access provisions, and the longest duration (10 years), of all the U.S. trade preference programs. The rules of HOPE II are simple, flexible and generous for manufacturers and importers. The program includes a variety of different preference options for apparel, including a capped value-added content rule, capped trade preference levels (TPL)s, and an uncapped single-transformation list of products.

HOPE II also includes a world-class labor standards compliance provision. The program provided for in HOPE II is built upon the Cambodian Better Factories program, which helped Cambodia establish a widely-accepted labor compliance framework for its apparel industry despite the challenge of inadequate governmental capacity.

For men's or boy's dress (CVS fabric) pants, that's nearly 30%. For some products, the duty savings alone can be equal to the cut/make costs of making in a neighboring country. Or, perhaps even though a finishing operation isn't available in Haiti, the garments can be shipped to the Dominican Republic, finished there, and then export back to the U.S. as a duty-free product.

This levels and may tilt the playing field in favor of Haiti exports and production, even when compared to Asian producers. For with all other factors being equal, none have duty free, and are in such proximity to the U.S. for 3 day transit time to Miami by ship.

Haiti's apparel manufacturing past has been filled with customers who focused on products that were generally considered low-dollar, high-volume, and low-skill. The cost formula for these clients was usually one that looked for labor prices that were comparable to the component costs of their commodity products. While famous for t-shirts, Haitian apparel manufacturing has grown in areas that include tailored jackets and tuxedoes, wool top coats, women's coats, men's outlet pants, or fashionable men's and ladies' camp shirt duos.

Medical uniform production has increased since the passage of HOPE, but so has men's and boys' casual pant capacity, with wrinkle-free finishing capacity also available at some facilities. This evolution will continue toward higher-end products, as those customers who are positioning in Haiti, begin to prosper and re-invest time, energy and efforts.

And now there is another reason to position in Haiti. As another humanitarian and supportive gesture, there is now the proposal to U.S. retailers to source as much as 1% of their products in Haiti called Plus One For Haiti. The ramifications of this are tremendous in terms of short-term and long-term efforts to increase employment and the manufacturing capability base of the industry in all of Haiti. Currently 25,000 employees in the industry in Haiti support only about 12 direct customers producing there. By reaching out and increasing that customer number by 3 or 4 times, the industry has a real chance of a true revival and long-term security intended to take the recovery to the next generation and beyond.

Of course, the hope is that Plus One For Haiti will serve as a catalyst for growth by attracting peripheral service businesses such as shipping services, suppliers of trim, machines and parts, banking services to support full-package products, which in turn will support the growth of current operations or new ventures. This is exactly how the Dominican Republic's apparel industry grew in bounds during the late 80's and 90's. Getting in early ensures one positioning of the short and long-term growth of these burgeoning enterprises as well as providing PR cover for the consumers who are determined to do their part by spending on goods that have helped the country.

Sourcing vs. Manufacturing

But how does one go about finding a contractor in Haiti? You must seek contractors who have full capacity and are creative with the terms of venture. It may mean developing a partnership with a Haitian contractor on a new operation by bringing in equipment or management advisors. It may mean allowing their managers to visit your factory to see how to set up a line, or study methods and operations. Or it may include introducing them to your already-established manufacturing partner from another country whose business is at risk due to the pressures of Asia, Haiti or elsewhere, and giving them both an opportunity to create a partnership for you. They might see that having a piece of the pie is better than not having any pie at all. It also provides a higher level of confidence in the developing operation for customers than having to take that ethereal leap of faith with every variable being absolutely new.

There is no substitute for knowing your own business, including knowing your own sewing and cutting methods. Being able to pass those methods onto your Haitian contractor will demonstrate and promote a higher level of trust and long term commitment between contractor and customer than just bringing product and waiting for the fruit to fall. One example of this, might be to find that it's possible to break into pieces, either the garment or the process to manufacture the garment, concentrating the efforts in Haiti on sewing, while sourcing the cutting, wash or other finishing process in the DR or elsewhere regionally. Haiti doesn't possess all of the facilities for every type of garment, but after 30+ years of apparel manufacturing history, their neighbor to the east most likely does. If one can learn to use the entire island's resources, as some already have learned -- the Haiti is a winning formula.

Andy English is Director of Sourcing for Blackthorn International. He has been sourcing production in the western hemisphere, including Haiti, since 1996. His past employers include Levi Strauss, VF, the Bayer Group, Kalikow Brothers, and Fishman & Tobin. He is a second generation apparel manufacturing engineer, manager and sourcing advisor. [email protected]

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