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EL SALVADOR: Fraying of the Textile Industry

by Ginger ThompsonNew York Times
March 25th, 2005

Mondays are hiring days at the hulking garment factories that in the last 15 years helped lift El Salvador up from war and bring some 90,000 families out of extreme poverty. By 7 a.m., hundreds of women like Gloria Campos are lined up, hoping to get a tiny piece of prosperity.

But shifting global trade rules threaten to reverse El Salvador's industrial revolution. Employment in the garment industry, until recently a source of growth, declined in 2004 for the first time in a decade.

The government puts the number of jobs lost at nearly 6,000. Managers of assembly plants said the number was almost twice as high. Thousands more jobs will be lost this year, they predicted, threatening to drive up El Salvador's largest export to the United States: its people.

Trouble in the garment industry, brewing for years, has heightened here and in other struggling parts of Central America, as an end to global textile quotas at the beginning of the year spreads textile and clothes manufacturing to other parts of the developing world, particularly China.

But as close and nimble neighbors of the United States, El Salvador's exporters seemed to think that buyers in the United States would keep their workers busy in order to have a fast and easy alternative to Asia. And free trade agreements promised to buffer the region from outside economic forces.

That thinking comforted exporters throughout Central America, where an estimated 1,000 textile and apparel factories have employed some 500,000 people. But now, with quotas ended, merchants in the United States and Europe buy where it is cheapest. And here, as in Mexico, the trade agreements have led to more disappointment than promise.

As the biggest-name clothing brands hunt for bargains halfway around the world, the factories that became the engine of Central America's formal economy are starting to sputter.

In the first two months of this year, authorities said, 18 plants in Guatemala, Honduras, Costa Rica and the Dominican Republic closed; some 10,000 jobs were lost.

Nicaragua, with Central America's worst poverty and lowest wages, is the only country that has had an expansion in its young garment industry. Textile powerhouses like Guatemala and Honduras, the third-largest clothing exporter to the United States after China and Mexico, have managed to maintain a rough stability. But industry representatives said they expected orders to dry up at many factories by summer.

So far, the ending of the quota system - a 1974 pact known formally as the Multi-Fiber Agreement - has hit hardest in El Salvador. Part of the reason, industry experts said, was that four years ago, this country adopted the dollar as its official currency, giving it no leeway from a devaluation to keep exports competitive. As a result, it has the highest labor and transportation costs in the region.

Hiring days put a human face on this grim economics. On a recent Monday, long employment lines were filled mostly with mothers in tattered skirts and plastic sandals who had not finished grade school.

These were not new applicants, but seamstresses with years of experience - women who spoke as if they had been caught up in some storm that no one told them was coming. For the last seven years, Ms. Campos, a 42-year-old mother of three, had worked in the maquiladoras - the local term for the assembly plants - and the $5 she earned each day was her family's only income.

Then in December 2003, her employers skipped town without notice. They told her and the 400 other workers that they were shutting down the factory for the Christmas holiday. The factory never reopened, and the company left without paying a penny in severance.

She quickly found work at another garment-making operation. That one closed in October 2004. Ms. Campos has been standing in lines every Monday.

"I come every week with a lot of hope, " she said, "and every week I go home feeling sad. If I don't find a job soon, I don't know how I am going to survive."

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