For the moment, cutters, contractors and related industries are enjoying continued growth for the most part, with a minimal threat from Mexican competition.
Industry players feel that 807 manufacturing has advantages that Mexico — a relative newcomer through NAFTA to many aspects of the sourcing game — cannot yet offer. But while business is reasonably stable today, most — though not all — feel the passage of a bill giving the Caribbean Basin Initiative countries trade parity to level the playing field with Mexico permanently is crucial.
With the fate of CBI parity still uncertain, Miami firms nevertheless are expanding and investing, offering more services in anticipation of new business.
Here, executives of Miami firms, in a series of telephone interviews, talk about the effects of NAFTA, today and tomorrow:
Robert Alexander, president, Gallery Industries, a Miami-based cutting and packaging company serving 807 manufacturers:
“Our business continues to grow. We’re expanding, with more space, hiring more people and offering more services. We’re projecting a 30-percent increase this year. We have heard people talk about going to Mexico since NAFTA, but we haven’t lost any business. Mexico is complex and more suited to large companies who are set up to handle business there.
“The Caribbean has a head start on Mexico and many advantages. Parity would make it more attractive, but with the flexibility and efficiency the Caribbean already offers, it’s not essential. No matter what happens, we as a company have to have more sophisticated equipment and offer more services to make it easier for our clients.”
Bob Lodge, president, Ivory International, a Miami-based sportswear firm:
“NAFTA has had no effect on our business. Of our 1994 sales of approximately $50 million, 30 percent is 807 business, with clients such as J.C. Penney, Sears and Kmart. We plan to grow that figure to 40 percent by the end of July 1995. We’re seeing more 807 business than ever before. Mexico doesn’t have a well-developed big manufacturing base, as does the Caribbean and Central and South America.
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“The biggest challenge to 807 operations now is competition from Chinese and Koreans who are setting up operations in Caribbean and Central American countries. Also, it’s been hard to find good middle management people in these countries, but that is getting better.
“We think parity is extremely important as a step toward open trade with Central and South America. Free trade and a clause requiring use of U.S. fabrics would give us an edge over Korean and Chinese interests here and would boost U.S. textiles.”
Scott Baller, vice president, manufacturing, Barbara Gerwit Apparel, a Miami-based cotton knit sportswear manufacturer:
“We’ve done all manufacturing domestically up until now, but we’re introducing a new label, Laurel Bay, that we want to produce through an 807 program in Jamaica or Honduras. This is a lower price line that we want to target toward mass markets. We can save 30 percent in labor costs over domestic production, and we know we can get quality.
“We feel the established apparel business in the Caribbean is superior to Mexico, which has some problems still and seems more oriented to heavy industry. Also, we believe that the Caribbean countries will be included in NAFTA, anyway.”
Alan Witten, president, Witten Sales Corp., a Columbia, S.C.-based trim supplier, and an owner of Blair-Witten, a Miami-based consolidator and trim supplier:
“It’s too early to tell. Mexico is becoming a player in apparel production, but 807 programs are well-established.
“The news out of Mexico is that there are problems — with the infrastructure, the labor force and communications. These same problems exist in the Caribbean and Central America, but there’s been more time to iron them out.”