Manufacturing companies accounted for 33% of Honduras’ US$16.7 billion gross domestic product (GDP) in 2011. Thanks to the average 14 new maquila manufacturing plants that have opened annually since 2010, the sector has managed to recover part of the 33,000 jobs it lost after the worldwide recession in 2008.

From 2010 to September 2012, about 19,000 workers joined the workforce at maquilas – industrial manufacturing plants where parts of a product are made and assembled – said José Adonis Lavaire, the secretary of industry and commerce.

Honduras Manufacturing Maquila Industry

Maquilas also are used by companies headquartered in other countries who want to establish a presence in the Central American nation.

“This is good for the country because it means more capital coming in,” Lavaire said. “It also produces jobs that will help Honduran families improve their quality of life.”
José Adonis Lavaire, the secretary of industry and commerce, said the government respects the law, “which is how we guarantee that Honduras keeps its doors open to investors.”

Honduras Secretary-of-industry-commerce Jose Adonis Lavaire

José Adonis Lavaire, the secretary of industry and commerce, said the government respects the law, “which is how we guarantee that Honduras keeps its doors open to investors.” (René Novoa for Infosurhoy.com)
About 119,000 work in manufacturing as machine operators, packers and maintenance technicians nationwide. In 2011, the sector accounted for 33% of the Central American nation’s US$16.7 billion gross domestic product (GDP), according to Lavaire.

In order to weather the worldwide economic crisis, the government and private companies developed an alliance to improve competitiveness and increase investors’ profits by reducing operating costs, expediting the setup of a company and granting tax exemptions, according to Guillermo Matamoros, a representative of the Honduran Manufacturers Association (AHM).

“We overcame the crisis thanks to the macroeconomic policy we created as a sector,” Matamoros said. “Plus, we gave additional incentives to workers, such as transportation, meals, medical services, [bonuses and housing loans].”

Matamoros added the maquila industry invested in clean technologies, such as biomass, which uses organic material to generate energy.

Guillermo Matamoros, a Honduran Manufacturers Association’s representative: “The manufacturing industry is solid – that’s why we’ve invested in biomass for generating our energy and why we promote salary incentives for workers.” (René Novoa for Infosurhoy.com)
Beside protecting the environment, the production of renewable energy helps the country save in fuel imports.

“We’ve invested US$160 million installing the needed equipment to produce 220 megawatts through biomass,” Matamoros said.

Ranked fourth among exporters

Honduras is the fourth-largest maquila manufacturing exporter to the United States, behind China, Taiwan and Bangladesh.

About 85% of the maquila total exports are sent to the United States, with the remaining 15% distributed throughout the European Union, Canada, Mexico, the Dominican Republic, Australia, and Central America, according to Matamoros.

Walter Jiménez, general manager of Exiid International, which began operations in Honduras in early 2012: “We decided to invest in the country because of its high rate of return, as what’s manufactured in Honduras is of the highest quality.” (René Novoa for Infosurhoy.com)
The maquila industry accounted for US$1.6 billion of the total US$4.8 billion that Honduras exported in 2009.

From January to July of 2012, the maquila industry exported US$1.4 billion of the country’s US$1.6 billion of total exports, according to the Central Bank of Honduras (BCH).

Capital reinvestment

The maquila plants, which include 161 textile companies, 38 commercial businesses that can store raw materials and parts for machines and 10 companies that provide services, are located throughout 18 industrial parks nationwide.

In contrast to other export businesses, maquilas have special operation tariffs and do not pay taxes on imports, as they are exempt because the create thousands of jobs and generate revenue for the country, Lavaire said.

“Every year, [maquila plants] generate some US$448 million in salaries, social-compensation packages, local sales and service payments,” he said. “The movement of capital generated by manufacturing has spurred new businesses and micro-companies that operate within the local market, which in turn has created about 479,135 new jobs in the last five years.”

These resources are reinvested by the government to promote the creation of micro and small-scale businesses.

To attract investment

The government, private enterprise and workforce representatives signed the “Great National Agreement” in February 2012 to consolidate growth in the manufacturing sector.

The agreement has seven goals:

Promote economic growth;
Increase investments in the public and private sectors;
Spur the creation of jobs;
Establish higher wages;
Spark increased productivity and competitiveness;
Provide for the quick resolution of conflicts;
Protect the most vulnerable segment of the population.
In accordance with this plan, the country’s economic growth will rely on more dynamic public and private investments in construction; maquila-type and “light” manufacturing; the generating of renewable energy; the bolstering of micro, small, and medium-sized businesses; and the diversification and expansion of exports.

“By implementing these actions, the economic growth in 2012 will result in a real GDP growth [minus inflation] of 3.6%,” Lavaire said.

These incentives led Exiid International S.A. to relocate in Honduras in January 2012.

The company, which has 110 employees, represents Overton, an American clothing company, according to Walter Jiménez, Exiid International’s general manager.

“Honduran manufacturing is top-quality and we represent a brand that is well positioned in the international market, which is why we invested in Honduras,” he said.
By René Novoa for Infosurhoy.com – 16/10/2012