Manufacturing, A stitch in time
When the COVID-19 pandemic hit Central America, early in 2020, many companies saw business grind to a halt. Leading Honduran textile manufacturer Elcatex was an exception to the rule. Elcatex rapidly adapted to the new global scenario. In just 13 days, they were ready to start making face masks with a design that won the approval of the U.S. Food and Drug Administration. And 45 days later they were producing disposable medical gowns.
“They ended up making 45 million masks and 7.2 million medical gowns in a span of five months to export to the United States,” says IDB Invest team leader Mariana Coello, who is based in Tegucigalpa. “Elcatex put Honduras on the map by showing what they could do in an emergency – a year when we were hit not only by coronavirus but also by two major tropical storms.”
The Honduran government exempted the textile industry, one of the main employers in the country, from the lockdown. But companies had to rearrange how they operated. In order to meet social distancing requirements and other preventive measures, Elcatex reorganized everything from the workspaces on the factory floor to the seating on the buses they use to transport workers to and from town.
Contrary to so many businesses that hemorrhaged jobs during the crisis, Elcatex ended up hiring more workers – and stands to hire many more once its expansion project is completed. A US$64 million loan from IDB Invest, supplemented by US$32 million from the China Co-financing Fund for Latin America and the Caribbean, will help finance the plan.
Elcatex operates out of Choloma, the third- largest city in Honduras. Like many other companies in that part of the country, they specialize in making t-shirts and sweatshirts for the U.S. market. But unlike most of their competitors, they are vertically integrated, using imported yarn to make cloth and then cut and sew apparel. Their proximity to the United States is another strategic advantage in the age of fast fashion, when new products have to get from factory floor to sales floor in a matter of days.
Seeing an opportunity in the increasing demand for activewear – clothes designed for doing sports but typically worn by people working from home – Elcatex wanted to boost its production of cotton
and synthetic fabric and clothing, such as the now ubiquitous yoga pants. As their present facilities were producing at full capacity, they needed to build a new plant, San Juan Textiles, where they intend to hire some 3,200 people, adding to their existing workforce of about 7,300.
Besides expanding production, the project will pursue specific social targets. Using resources from the Women Entrepreneurs Finance Initiative, Elcatex is undertaking a program to increase the number of women- owned or -led small businesses in its supply chain. If all goes according to plan, by 2027 this could open opportunities for as many as 137 businesswomen.
“The closing of the financing with IDB Invest was one of our main achievements in 2020, especially given the pandemic,” says Elcatex General Manager Jesús Canahuati. “This transaction will allow us to make investments to double Textil’s capacity and satisfy a growing demand from our clients with a focus on our sustainability strategy.”