ATLANTA — Although Miami has yet to hear the “great sucking sound” of business shifting from the Caribbean to Mexico, manufacturers are concerned over the long-term effects of the North American Free Trade Agreement.
Riding the 807 wave for the past decade, Dade County, which encompasses Miami, is now the third-largest sewn products manufacturing county in the U.S., according to the Beacon Council, Dade County’s economic development organization.
Apparel production in the county was valued at an estimated $1.7 billion in 1993, up 20 percent since 1987, with women’s and misses’ casualwear making up the largest segment.
But while 807 relationships — under which fabrics cut in the U.S. are assembled in the Caribbean and re-imported with tariffs reflecting only value added — with Latin American countries are well established and relatively stable today, the future implications of U.S.-Mexico duty-free trade make CBI (Caribbean Basin Initiative) parity a necessity, say manufacturers.
Here, WWD talks to some key players about the effects of NAFTA, 807 and CBI parity on Miami business, present and future.
Mano Howard, president, Bend ‘N Stretch, a knit and woven manufacturer and 807 sourcing company: “Until recently, people involved in 807 manufacturing had been in a holding pattern, unsure of NAFTA’s effect. But now, it looks like partial CBI parity, if not total, will happen, and business has picked up.
“We’ve just invested in a new Gerber cutter and now have the capacity to cut 500,000 pairs of pants a week. We’ve also been helped by high fabric prices and tight quotas in the Orient, which have made U.S. mills more competitive. With 95 percent of our business in 807, we’re in a stable situation here, but we’re just starting to look at doing business in Mexico also.”
Tony Iannazzone, president, S.O. Textiles Co., a hanger manufacturer, trim converter and supplier: “NAFTA hasn’t caused an overnight shift to Mexico, but contractors and manufacturers here are concerned about the impact down the road. There’s still growth here now, with new companies coming in, but without CBI parity, the Miami boom in 807 manufacturing could shrink, if not totally collapse.”
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Carlos Cuervo, president, Arca Knitting, a Miami vertical knit fabric producer: “Caribbean Basin Initiative countries, particularly Costa Rica and the Dominican Republic, have great stability, and we’ve built strong relationships there. No one we deal with is picking up and going to Mexico. We are, however, starting to participate in fabric shows in Mexico City. Doing business there, particularly in the Yucatan peninsula or Monterrey, would be quite accessible.”
Tom Travis, partner, Sandler, Travis & Rosenberg, a Miami law firm specializing in trade issues and 807: “There is great concern here over CBI parity. Everyone’s holding their breath. People are hopeful that the current proposal on GATT, which includes CBI parity, will pass. Nobody has really felt a pinch from competition with Mexico, but future business could suffer. There seems to be enough danger to the apparel industry in the Caribbean basin to propel the U.S. to pass CBI parity.”
Andrew M. M. Parish, a Coral Gables attorney specializing in international trade: “There’s definitely a shift in production to Mexico. We’ve received inquiries from companies for comparisons between Caribbean and Mexican manufacturing. However, production under 807 in the Caribbean is well established, while the jury’s still out for the garment industry in Mexico. I’ve heard of problems relating to border-crossing, duties and some quality problems.
“In many cases, the real issue is not what country is better, but what individual contractor suits a manufacturer’s needs. Efficiency is the real issue, with labor rates, transportation, duties and political stability all contributing factors. Still, the biggest threat to CBI is not NAFTA but China, as it gets into GATT.