VZCZCXYZ0017
RR RUEHWEB

DE RUEHGE #1028/01 2761517
ZNR UUUUU ZZH
R 031517Z OCT 06
FM AMEMBASSY GEORGETOWN
TO RUEHC/SECSTATE WASHDC 4191
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNCOM/EC CARICOM COLLECTIVE

UNCLAS GEORGETOWN 001028 
 
SIPDIS 
 
EB/TPP/ABT - THOMAS LERSTEN 
COMMERCE/ITA/OTEXA - MARIA D'ANDREA 
STATE PASS USTR - ABIOLA HEYLIGER 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KTEX ECON ETRD GY
SUBJECT: TEXTILES AND APPAREL SECTOR: UPDATED 
STATISTICS AND PROJECTED OF FUTURE COMPETITIVENESS (GUYANA) 
 
REF: STATE 138090 
 
¶1. SUMMARY: The textile and apparel sector in Guyana has 
approximately one large manufacturer and five small manufacturers. A 
steep decline in prices has offset a slight increase in production. 
While not an engine of growth, the textiles and apparel sector makes 
a small but valuable contribution to GDP, foreign exchange earnings 
and employment in Guyana. The sector is a particularly important 
generator of employment for unskilled female workers, who comprise 
95% of the labor force in the sector. END SUMMARY. 
 
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PRODUCTION STATISTICS 
--------------------- 
 
¶2. Requested data on the Garments and Textiles Sector for 2005 and 
mid-year 2006 is as follows: 
 
 
 
       2005    Mid-year 2006 
Total manufacturing production 
(estimated USD million)     154   N/A 
Total garments and textiles 
production (USD value)     N/A   N/A 
Garments and textiles 
share of Guyana's imports (%)  1.02           0.94 
Garments and textiles share 
of Guyana's exports (%)     1.35   2.04 
Total garments and textiles 
imports (USD 000's)    7,899.7     3,957.5 
Total garments and textiles 
exports (USD 000's)    7,429.8     5,409.1 
Total garments and textiles 
exports to the U.S (USD 000's) 6,879.4      5,256.7 
Total manufacturing sector 
employment (estimated)         32,300      32,800 
Total garments and textiles 
employment(estimated)   2,500      2,580 
Total garments and textiles 
production (dozens)      127,312.3    72,037.9 
Sources: Guyana Bureau of Statistics, Bank of Guyana, Guyana Census 
2002, post estimates 
 
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STATE OF THE INDUSTRY 
--------------------- 
 
¶3. Guyana's manufacturing industry as a whole grew by 1.9% in 2005, 
while textile production increased by 3.7%. Nevertheless, Guyana's 
producers have faced declining prices. The U.S. dollar value of 
Guyana's textile exports fell from $11.3 million in 2004 to $7.4 
million in 2005, a decrease of 34.6%. Guyana's largest manufacturer, 
Denmor Garments Manufacturers, has reported an increase in the 
number of orders as compared to years past, resulting from an 
increase in demand from current customers (which include Wal-Mart, 
Russell Athletic, and Victoria's Secret) and also due to new 
companies seeking to source their product in Guyana. 
 
¶4. G&C Sanata Company Inc. of China is the only textile factory in 
Guyana that is operated by foreign investor. The company ceased 
operation in June 2003, citing heightened international competition 
locally, regionally and internationally. The company also blamed 
high production costs (particularly electricity), lack of market 
access, high transportation costs and increased imports from China 
and India as other factors that lead to the closure of the factory. 
 
---------------------------- 
IMPACT OF GLOBAL COMPETITION 
---------------------------- 
 
¶5. According to GOG and industry sources, U.S. and EU restrictions 
on certain imports of textiles and apparel from China, effective 
through 2006, have not affected prospects for Guyana's 
manufacturers. According to officials in the Ministry of Foreign 
trade, the GOG does not have any plans to implement safeguards or 
other measures to reduce the growth of imports of Chinese textiles 
and apparel into Guyana. 
 
¶6. The increase in global competition has not affected local labor 
conditions by causing employers to trim employment, reduce wages, 
seek flexibility from government required minimum wages or restrain 
union activity. On the contrary, Denmor Garment Manufacturers, the 
nation's largest textile manufacturer and a supplier of apparel to 
the U.S. under the Caribbean Basin Trade Preferences Act (CBTPA), is 
in the process of increasing the company's labor force due to the 
increase in orders from existing customers and the receipt of orders 
 
from new customers. The firm's owner intends to open a second 
factory in the Berbice region that will cater primarily to the 
domestic market. The sector is not unionized, and employees have not 
undertaken efforts toward union representation. 
 
-------------------------- 
EFFORTS AT COMPETITIVENESS 
-------------------------- 
 
¶7. Private industry has taken action to increase the country's 
competitiveness, such as improving infrastructure, lobbying for a 
ease in bureaucratic requirements, moving to higher value added 
goods and also identifying niche markets, such as uniforms and 
sports apparel. Industry is also in the process of introducing 
Quality Management Systems (Denmor boasts a 0.6% Acceptable Quality 
Level, for which it has been praised by its suppliers), seeking new 
markets and exploring new avenues for the sourcing of fabric. 
 
¶8. The GOG has also taken actions to increase the country's 
competitiveness, such as ensuring duty free status on imports of 
machinery for the sector, introducing a 75% tax rebate on profits 
from non-traditional exporters and scrapping the consumption tax on 
the sale of local garments. However, at least one producer expressed 
concern about apparent inconsistencies between the Value Added Tax, 
set to be implemented in January 2007, and the current duty-free 
import scheme for manufacturing equipment in current customs 
legislation. Producers also continue to cite high transport and 
electricity costs as major obstacles to competitiveness. In 
addition, the high cost of finance capital (Guyana's average lending 
rate is 15%) reduces the ability for manufacturers to upgrade 
equipment. 
 
¶9. COMMENT: The GOG's competitiveness strategy has primarily focused 
on modernization of the sugar sector, development of the services 
sector, and promotion of non-traditional agriculture. Accordingly, 
the GOG has done little to develop the textile and apparel sector. 
Aided by the CBTPA, around 95% of Guyana's textile exports are 
destined for the U.S., making it extremely vulnerable to demand 
swings and increased competition for access to the U.S. market. An 
analysis of the sector prepared by the Ministry of Foreign Trade 
identified low labor costs and a low time-to-market relative to 
China and India as comparative advantages for the sector's 
competitiveness. However, without improvements to the investment 
climate that would attract investment in more large-scale 
production, Guyana's textile industry will not remain competitive in 
the face of heightened international competition. END COMMENT. 
 
ROBINSON