COSTA RICA NEWS – Cartex Manufactura has joined the list of companies closing their doors and headed out of Costa Rica, with hundreds of lay-offs in their wake.
Mauricio Brenes Morales, director of operations for the company in Costa Rica, confirmed Monday the closing of its manufacturing operations in Cartago and Grecia and the layoff of 1.250 employees on November 7th.
Cartex, a subsidiary of American company, Hanes Brands Inc., has been operating in Costa Rica for the last 40 years, manufacturing men’s underwear at its plants in Cartago and Grecia. In addition to the manufacturing operations, the company will also be shutting down its administrative services division.
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Bank Of America Leaving Costa Rica, Cutting 1.500 Jobs [/su_pullquote]The decision was made to optimize the production flow because fabric suppliers are in China, which leads to a reduction in production costs, according Brenes.
“It’s a very difficult decision, that strictly reflects a business decision. It clearly has an impact on both cost, and customer service. For the company it’s more profitable to move the plants near its suppliers, and then export the goods to the United States,” Brenes said in an interview with the El Financierio.
The president of the Costa Rican Textile Chamber (CATECO), Rodolfo Molina, said the news should not surprise anyone, because Costa Rica ceased to be an attractive destination for textile manufacturers, not only because labour is more expensive, but also for increases in other production costs, mainly energy prices.
Molina added that in the past 10 years the industry lost at least 12,000 jobs. Currently only 60 textile companies employing 8,000 people are operating in the country.
The CATECO president said it will be difficult for the laid-off Cartex workers to find employment quickly, mainly because they are unskilled employees with low education, the majority being heads of households.
For its part, the government agency the Coalición de Iniciativas para el Desarrollo (CINDE) – Coalition for Development Initiatives – has redoubled its efforts to attract more companies in the textile sector, but says the demand is for more skilled workers,
The president of CINDE, José Rossi, explained that the task is becoming more difficult because of stronger competition, since other countries in the region offer conditions to lower production costs than Costa Rica.
Source: El Financiero