El Salvador battles China in cotton underwear exports to the US

Some recent articles in the textile industry press are reporting that El Salvador is holding its own as the leading exporter of underwear to the US, confronting new competition from China.

EmergingTextiles.com reports that El Salvador was able to increase its exports to the US by 9% so far this year. (Chinese imports increased 125%, but started from a much smaller position in the market). El Salvador maintained its position by being the lowest cost producer of underwear and lowering its prices by an average of 6%:

Prices for Salvadoran textile items have come down by an average of 6.12 percent. This is half the price decrease of Chinese items which have seen a decline of over 12 percent since January 2005, however. Average prices for Salvadoran apparel still remained lower than those for Chinese apparel, nevertheless. For example, the average Salvadoran cotton apparel price stood at $1.74 per unit compared to $2.65 for Chinese Cotton. However, El Salvador has still been hit by competition for the US textile market. The Salvadoran government has confirmed that three major and five smaller apparel manufacturers have shut down since 2004 equaling a three percent shrinkage of the industry. Such losses have seen over 6,000 jobs going in a sector where workers are paid $5 a day. However, the cost of labor is still higher than that in China.

For more detail on the textile industry, you can learn that
men and boys underpants exports to the US surged 52% in the first half of 2005, and ExpressTextile.com reports that El Salvador is one of the cheapest sources available for cotton t-shirts.

Why should you care? The garment maquiladora factories are one of the largest employers in El Salvador. The working conditions are not good, and wages low. Attempts to improve the conditions of workers will face an obstacle as factory owners face the global competition described in these articles.