January 26, 2006

Honduras banana republic gives way to maquila hub

By Eduardo Garcia

SAN PEDRO SULA, Honduras -- Before going to work for the Villatex clothing factory on the outskirts of San Pedro Sula, Jose Tico earned less than $3 a day as a shift worker on Honduran banana, black bean and coffee plantations.

Today the 32-year-old father of two earns around $67 in a four-day work week sewing bra straps for brands like Lovable, Victoria's Secret and Vanity Fair in this brightly lighted, air-conditioned factory.

"Working in a maquila is hard work, it's very repetitive, but it was much harder when I had to work under the heavy sun," says Tico, who sews, like the other 600 workers, to the invigorating rhythms of Latin music over the buzz of machines.

Long dubbed a banana republic for the weight of banana production in its economy, Honduras is becoming a hub for maquila assembly plants, mainly in the apparel industry. Maquilas are plants, often foreign owned, that assemble products for export.

It is now the third-largest exporter of textiles to the United States after Mexico and China, and many here hope a new regional trade accord with the United States could give it a further lift.

The Honduran maquila boom mirrors the banana revolution of the early 20th century, with thousands of Hondurans migrating to the country's Northwest in search of factory work.

Textile factories flourished in Central America in the 1990s, creating low-paying jobs for hundreds of thousands of people, many of them young women.

Some Central American countries with higher-paid workers saw job losses after new trade rules last year that lifted quotas on Chinese textile exports, but after initial jitters Honduras and other nations with lower wages have fared better.

Leaders across Central America hope a new U.S. free-trade accord with Central America and the Dominican Republic, known as CAFTA, will take the edge off Asian competition by giving the region permanent duty-free access to the U.S. market.

The United States is Honduras' main trade partner, taking two-thirds of Honduran exports and providing half its imports.

"We know we cannot compete with China in terms of price, but we have invested heavily for years to offer buyers the full package and we are positive about our future," said Jesus Canahuati, head of the Honduran maquila association.


The textile industry generates 14 percent of Honduras' gross domestic product and employs 5.5 percent of its workforce. Like the banana giants in their heyday, maquilas pay little or no taxes.

The apparel industry does not wield as much power over local governments as banana multinationals once did, however.

In 1910 the United Fruit Company hired armed thugs from New Orleans to successfully install a new president when the incumbent refused to grant them multinational tax breaks.

But as the banana business recedes as a mainstay of the economy, the clothing industry is absorbing job losses.

Local subsidiaries of Chiquita and Dole, which control banana production in the impoverished country, slashed jobs after Hurricane Mitch in 1998 and more recent disasters.

In 1994 some 50,000 people worked in textiles. Now they number 132,000, most near the industrial hub of San Pedro Sula.

Labor observers say the legacy of labor in the banana fields, where workers formed powerful unions, has influenced the way Honduras' maquilas are organized.

"The Honduran union movement grew up in the banana sector. Now, Honduras is the country with the most maquila unions in the whole of Central America," said Homero Fuentes, who monitors maquila conditions in the region.

The main opportunity CAFTA offers is producing fabrics locally instead of importing most raw materials from the United States as dictated by the Caribbean Basin Initiative, the treaty that governed U.S.-Honduran trade until now.

To attract foreign investors, Honduras is offering tax incentives and has simplified import-export paperwork.

With some factories already planning expansions, the maquila association unveiled a textile university in November to train sewing machine operators, designers and technicians.

The Villatex factory, making about 85,000 bras a week, will add 200 more workers by February.

"Next year, we are going to grow by 10 percent in terms of exports, and we plan to create between 10,000 and 15,000 new jobs," the maquila association's Canahuati said.