Costa Rican textile company likely to shut down

13 Sep '14

2 min read

Cartex manufacturing, a subsidiary textile company of American Hanesbrand Inc in Costa Rica, will possibly shut down by the end of this year and will lay off about 1,250 employees, Prensa Latina reported.

The textile company, which has produced men’s innerwear for export around the globe from Costa Rica for the last 40 years, will close its factories and is likely to shift its base to Vietnam, where the firm already has a manufacturing unit.

The director of operations, Mauricio Brenes said the reason behind shifting the company to Vietnam was to optimize the production flow to China, near to Vietnam, as most of the fabric suppliers are located in China. This will also help reduce the costs in production, he said.

With the company shutting down its operations, the workers in the HanesBrands Inc administrative offices will also be unemployed. The employees are likely to receive a severance pay with a notice period of one month.

According to the president of the Costa Rican Textile Chamber, Rodolfo Molina, in the last ten years, many textile companies have shifted base from Costa Rica, because of the expensive labor and high production costs, leaving about 12,000 workers unemployed and there are only 60 companies now that employ about 8,000 people.

Costa Rica has become an expensive country to produce, relative to other nations in Asia or Nicaragua, he added.

Cartex was operating in three Central American countries and employing nearly 60,000 people in 35 nations in the world. Costa Rica is the second largest country in Latin America with unemployed people. (GK)

Fibre2fashion News Desk - India