Rezilta Sondaj 2020: Kijan COVID-19 Afekte Endistri Rad an Ayiti?

Survey Results 2020 How Has COVID-19 Affected Haiti’s Apparel Industry? Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Survey Results 2020 How Has COVID-19 Affected Haiti’s Apparel Industry? Copyright and Disclaimer Notice © International Finance Corporation 2020. All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 Internet: www.ifc.org The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability, or completeness of the content included in this work or the conclusions or judgments described herein. It accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content. About IFC IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org. About ADIH The Association of Industries of Haiti (ADIH) is a non-profit employers’ association that brings together companies mainly engaged in industrial activities, whose mission is to promote and develop the Haitian industrial sector on a competitive basis at the global level. Founded in 1980 and officially recognized by the Government of Haiti (GoH) as a public interest institution since January 5, 1989, ADIH is one of the most respected institutions in Haiti. ADIH seeks to enhance, support, and develop the manufacturing and service industries for both export and domestic markets. It is committed promotion a climate of sustainable social peace, high labor productivity, and policies and practices that protect the environment. For more information, www.adih.ht. About the Facility for Investment Climate Advisory Services (FIAS) Through the FIAS program, the World Bank Group and donor partners facilitate investment climate reforms in developing countries to foster open, productive, and competitive markets and to unlock sustainable private investments in sectors that contribute to growth and poverty reduction. The FIAS program is managed by the Equitable Growth, Finance & Institutions Practice Group of the World Bank Group and implemented by IFC Advisory teams. For more information, visit www.worldbank.org/fias. Cover photo: S & H Global Acknowledgments Executive Summary Purpose of the Survey Profile of Haitian Apparel Manufacturers before the COVID-19 Pandemic Effects of COVID-19 on Haitian Apparel Manufacturers Lost Production Days Cancelled or Reduced Orders Lost Revenues Lost Jobs Profile of Firms after Reopening Production Capacity Efforts by Buyers to Assist Producers Requests for Assistance Surveyed Firms’ Recommendations to the ADIH Textile Committee Annex A The Questionnaire Contents 2 4 8 10 14 16 17 17 18 20 21 24 26 30 32 5 6 6 15 17 17 18 21 21 Figure ES.1 Figure ES.2 Figure ES.3 Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Top five challenges identified by Haitian apparel manufacturers Employment in Haiti’s apparel sector in March and April 2020, by type of firm Revenue losses projected by Haitian apparel manufacturers for 2020 (percent of firms) Main challenges identified by Haitian apparel manufacturers Share and value of Haitian apparel producers’ orders cancelled or reduced by mid-June Revenue losses projected by Haitian apparel manufacturers for 2020 (percent of firms) Employment in Haiti’s apparel sector in March and April 2020, by type of firm Types of products produced and orders received by Haitian apparel manufacturers after reopening following closure caused by COVID-19 Reduction in production capacity reported by Haitian apparel manufacturers in May–June 2020 Figures 11 11 12 13 13 16 22 23 23 27 29 29 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Type of location of Haitian apparel manufacturers surveyed Source of capital of Haitian apparel manufacturers surveyed, by type of location Jobs in Haiti’s apparel sector, by firm size and type of location Production by Haitian apparel manufacturers surveyed between May and June 2020, by type of product Reported number of Haitian apparel manufacturers’ buyers, per firm Production days lost by Haitian apparel manufacturers surveyed as a result of factory closures Capacity of Haitian apparel manufacturers surveyed to produce personal protective equipment and other products Monthly capacity of Haitian apparel manufacturers surveyed to produce personal protective equipment products, by type of product (thousands of units, except where otherwise indicated) Number of Haitian apparel manufacturers producing personal protective equipment, by type of garment Requests by Haitian apparel manufacturers for assistance Requests by Haitian apparel manufacturers for assistance in training workers to repair equipment, by type of machinery Requests by Haitian apparel manufacturers for assistance in training workers in order to increase productivity, by type of worker Tables 2 ACKNOWLEDGMENTS 2 How Has COVID-19 Affected Haiti’s Apparel Industry ? 3 Wilhelm Lemke President Association des Industries d’Haïti (ADIH) Judith Green Country Manager, Caribbean Region International Finance Corporation This report presents the main conclusions of a survey of apparel producers in Haiti conducted between May and June 2020 to shed light on how COVID-19 is affecting the industry in Haiti and to help decision makers navigate the crisis. The survey was conceived by l’Association des Industries d’Haïti (ADIH) and the International Finance Corporation (IFC) of the World Bank Group. The report was prepared by Pedro Andres Amo, Ernesto Franco Temple, Martine Deverson, Daniela Yacaman, and Ji Woon Park, with the support of ADIH staff, especially ADIH’s former president, Georges Sassine; executive director, Marie-Louise Russo; and administrative assistant Alexandra Erau. Barbara Karni edited the report, Carolina Gonzalez Ruiz provided invaluable support on logistics and publication planning, and Ambidiestra prepared the report layout and design for printing. The export-oriented apparel industry is a major source of formal jobs in Haiti, employing nearly 53,000 people in 2019. The sector’s exports, which doubled since 2009, accounted for 85 percent of Haiti’s exports of goods in 2018. There is still room to grow, as the quotas for duty-free import into the United States have remained largely underutilized, and the Caribbean Basin Trade Partnership Act (CBTPA) is likely to be renewed before the end of 2020. The unprecedented global economic crisis caused by the COVID-19 pandemic has very negatively affected Haiti’s garment sector, jeopardizing its viability in the medium term. The government ordered a month-long shutdown of the industry in March as part of its measures to guarantee the safety and health of all in the industry, allowing it to reopen a month later only under strict sanitary conditions that helped ensure the safety of the sector’s workers. Production had to be organized by rotation to limit personal contact, reducing plant output capacity and financial sustainability. The situation worsened as raw materials became increasingly difficult to source and orders from the United States were drastically reduced and very few new orders were received. Firms are navigating structural shifts in the sector caused by COVID-19. A key factor is what types of apparel products from Haiti will be in demand moving forward. With supply chain disruptions and increased lead times, especially from China, executives are increasingly looking closer to home for their sourcing needs, as the crisis reinforces a near-shoring trend that began before the pandemic. Firms producing apparel can easily shift to washable personal protective equipment (PPE) to help meet the increasing global demand for masks, coveralls, surgical gowns, aprons, surgical caps, blouses, scrubs, and plastic PPE. We are grateful to the 33 members of the ADIH who took the time to answer the survey questionnaire. We would also like to thank Anouk Pechevy, Claudine François, Finn Holm-Olsen, Jennifer Fievre, Maria Soledad Requejo, and Mariana Vijil for comments on the questionnaire and an earlier version of the report. We appreciate comments by the report reviewers of the ADIH Textile Committee who participated in the validation meeting on July 14, 2020: Clifford Apaid, Fernando Capellan, Joseph Blumberg, Carine Felix, Dayana A. Villedrouin, Gina Coles, Mario Giovanni Jules, Nathalie Hermantin, Christian Aimé, Tammy Moon, Jason Lee, Minchul Hwang, Rachelle Jean, Lulu Yu, Hans-Josemy Fonrose and Tessa Jacques Antoine from CFI. This initiative benefited from support from IFC funding, the Facility for Investment Climate Advisory Services (FIAS), and the Korea-IFC Partnership Program (KIPP). How Has COVID-19 Affected Haiti’s Apparel Industry ? 3 4 EXECUTIVE SUMMARY 4 How Has COVID-19 Affected Haiti’s Apparel Industry ? 5 In May and June 2020, the Industrial Association of Haitian (l’Association des Industries d’Haïti [ADIH]), in collaboration with the International Finance Corporation (IFC), conducted a survey to collect information on the impact on, challenges facing, and opportunities for the export-oriented garment sector in Haiti arising from the COVID-19 pandemic. Thirty-three firms from the West and the North of the country that produce apparel products responded to the survey. Haitian apparel manufacturers surveyed included both foreign-born and domestic companies. The participating firms collectively employed more than 50,000 workers in March 2020, 94 percent of all workers employed by ADIH members. Eighty-two percent of respondents operated in a public industrial park or private free trade zone, and 70 percent were established with foreign capital. Before the pandemic, these firms produced an average of 1.6 million pieces of garment a month, 83 percent of all pieces made with knit-only materials. According to the ADIH, seven firms produced personal protective equipment (PPE), including gowns, scrubs, and coveralls with hoods. The most pressing challenges respondents identified included uncertainty about global demand, government restrictions (which prevented factories from working at full capacity until July 28), lack of working capital, and difficulty accessing raw materials (figure ES.1). Only 10 firms identified export restrictions as a key challenge. Among them, eight had had more than 20 percent of their orders cancelled. Uncertainty regarding global demand Government mandate to reduce workers Reduction of production capacity due to COVID-19 measures Lack of working capital Difficulty accesing raw materials Percent of respondents Figure ES.1 Top five challenges identified by Haitian apparel manufacturers 0 20 40 60 80 100 91 82 82 79 61 CHALLENGES 6 Employment by ADIH members plummeted between March and April 2020, falling by almost a third (figure ES.2). Source: Data for March 2020 were collected from firms that receive government subsidies. Data for April 2020 were collected by ADIH from its members. Seventy-six percent of respondents expected at least a 30 percent loss in revenues in 2020 as result of the pandemic (figure ES.3). Twenty-eight respondents (84 percent) reported a total of 723 production days lost between March 20 and April 20. Figure ES.2 Employment in Haiti’s apparel sector in March and April 2020, by type of location Figure ES.3 Revenue losses projected by Haitian apparel manufacturers for 2020 (percent of firms) 60.000 50.000 40.000 30.000 20.000 10.000 0 EMPLOYMENT 29.087 23.315 Public industrial parks March 2020 April 2020 18.637 9.780 Private free zones and industrial parks 5.599 1.700 Outside free zones and industrial parks 53.323 36.795 Total Number of workers employed EXPECTED REVENUE LOSSES 24% 52% 24% 30% or less losses More than 60% losses 30% - 60% losses How Has COVID-19 Affected Haiti’s Apparel Industry ? 7 At the time of the survey, in May–June 2020, only 22 percent of respondents were producing at least 60 percent of their previous capacity. All but one firm reported reductions in and cancellations of orders; and 52 percent of all firms saw reductions or cancellations of more than 50 percent. Twenty-eight firms (85 percent of respondents) reported that they could produce PPE, although only 20 had received orders for this type of products. Twenty-four firms reported being able to produce masks; 5 could produce gowns, 10 scrubs, and 2 coveralls with hoods. PPE production capacity appears to be underutilized, with only 67 percent and 39 percent of capacity used to produce masks and gowns, respectively. According to respondents, orders for masks and other PPE could help save these companies; exports should therefore not be subject to any restrictions. Firms reported the need for several types of assistance. In terms of financial assistance, they need working capital financing (11 respondents) and both short-term (8) and long- term credit (7). Other requests include support for market intelligence and assistance marketing and selling PPE, regular meetings with ADIH and increased support to operations, including authorization to export masks, assistance in shipping products abroad, and help attracting more international investors. Firms also identified their desire for assistance in building the capacity of workers to repair equipment and in training supervisors, sewing operators, quality controllers, and auditors. 8 PURPOSE OF THE SURVEY 8 On March 19, 2020, the government of Haiti ordered the mandatory closure of all factories, in order to contain the spread of COVID-19. Photo: Santo du Jour Free Zone How Has COVID-19 Affected Haiti’s Apparel Industry ? 9 On March 19, 2020, the government of Haiti ordered the mandatory closure of all factories, in order to contain the spread of COVID-19. The next day, factories closed. On March 25, the government closed the border with the Dominican Republic for the transit of people (merchandise traffic was permitted throughout the shutdown). On July 1, it reopened the border and resumed international air traffic. Between March 31 and April 20, the authorities progressively allowed factory operations to reopen, but they imposed restrictions to slow the spread of COVID 19, limiting the number of workers in a factory to less than 30 percent of capacity, for example. On July 28, the government lifted the state of emergency, allowing production but retaining some safety requirements. The survey aimed to measure the impacts of the COVID 19 pandemic on Haiti’s export- oriented garment sector, including the impact of cancellations and reductions of orders and the challenges facing firms when reopening. It also sought to identify (a) opportunities based on firms’ capacity to produce personal protective equipment (PPE) and (b) areas of needed support for the sector, including technical and financial assistance, worker training, and better services. 10 PROFILE OF HAITIAN APPAREL MANUFACTURERS BEFORE THE COVID-19 PANDEMIC 10 Photo: S & H Global How Has COVID-19 Affected Haiti’s Apparel Industry ? 11 SOURCE OF CAPITAL Eighty-two percent of the firms surveyed are located inside industrial parks or free trade zones, which are physical areas benefiting from tax exemptions (table 1). Seventy percent were funded by foreign capital (table 2). Haitian apparel manufacturers include both, foreign-born and domestic companies. Location Public industrial park Private free zone or industrial park Outside free zone or industrial park Total Location of firm Domestic Foreigner Public industrial park Private free zone or industrial park Outside free zone or industrial park Total Number of firms 2 2 6 10 Percent of total 16.7 13.3 100 30.3 Number of firms 10 13 0 23 Percent of total 83.3 86.7 0 69.7 Number of firms 12 15 6 33 Percent of total 36 45 18 100 Table 1 Type of location of Haitian apparel manufacturers surveyed Table 2 Source of capital of Haitian apparel manufacturers surveyed, by type of location LOCATION Source: World Bank Group Country Private Sector Diagnostic Mission, January 2020. 12 The 33 firms surveyed represent 87 percent of ADIH membership and employed 94 percent of all formal sector workers in the sector declared to ADIH. The sample included 6 large firms (2,000 employees or more), 20 medium-size firms (500–2,000 employees), and 7 small firms (less than 500 employees). The largest firms are located mostly in public industrial parks (table 3). Table 3 Jobs in Haiti’s apparel sector, by firm size and type of location JOBS Item Public industrial parks Private free zones and industrial parks Outside free zones and industrial parks Total Percent of ADIH membership Less than 500 0 1,308 943 2,251 97 500 - 2,000 10,632 11,945 4,656 27,233 90 More than 2,000 16,957 3,936 0 20,893 100 Total 27,589 17,189 5,599 50,377 94 Firm size Photo: Digneron Manufacturing S.A. How Has COVID-19 Affected Haiti’s Apparel Industry ? 13 Respondents collectively identified 44 buyers. About half of respondents had only one buyer; almost a third had four or more buyers (table 5). a. Two firms did not specify the quantities produced per month. They are excluded from the table. Note: One firm did not respond and one provided invalid information. PRODUCTION BUYERS Item Number of buyers per firm Knit Wovena Both knit and wovena Total 1 2 3 4 or more Number of firms producing Number of firms 16 6 9 31 14 5 4 9 Number of pieces produced 40,742,400 1,719,000 6,473,000 48,934,400 Percent of total production 83 4 13 100 Total 2,546,400 286,500 719,222 1,578,529 Number of units produced per month Table 4 Production by Haitian apparel manufacturers surveyed between May and June 2020, by type of product Table 5 Reported number of Haitian apparel manufacturers’ buyers, per firm Before the pandemic, almost half of the firms surveyed were using knit fabrics, 21 percent were using woven fabric, and 30 percent were using both. According to the ADIH, seven firms were active in the production of PPE and 6 specialized in large-scale production of t-shirts. Eighty-three percent of all units were produced by firms using only knit fabric. The average number of units per month per firm was about 1.6 million (table 4). 14 EFFECTS OF COVID-19 ON HAITIAN APPAREL MANUFACTURERS 14 Photo: S & H Global How Has COVID-19 Affected Haiti’s Apparel Industry ? 15 Surveyed firms reported five main challenges (figure 1): • uncertainty about global demand • government restrictions on the number of workers in factories • reduction of production capacity because of COVID-19 measures • lack of working capital • difficult accessing raw materials. Figure 1 Main challenges identified by Haitian apparel manufacturers Uncertainty regarding global demand Government mandate to reduce workers Reduction of production capacity due to COVID-19 measures Lack of working capital Difficulty accesing raw materials Difficulty accessing markets Conditions of public transportation available for workers Export restrictions Need of new facilities and/or equipment for new orders Need of workers’ training for new orders Haitian public procurement procedures Other Percent of respondents 0 20 40 60 80 100 91 82 82 79 61 45 36 27 24 21 18 12 CHALLENGES 16 Lost Production Days Twenty-eight of the surveyed firms (85 percent) reported reopening after closing. Together, they reported losing 723 production days (table 6). Note: Authorities allowed factories to reopen in phases, on the dates shown in the table. Two firms did not specify the date of resumption of operations. Other key challenges included difficulty accessing markets and the poor condition of public transportation. Ten firms highlighted export restrictions as a priority challenge. Among these firms, 8 had had more than 20 percent of their orders cancelled. Export authorizations and procedures have become difficult to manage since the ban on the export of masks, announced by the Customs Department on April 22, and the closure of the border with the Dominican Republic on March 25. Eighty-five percent of respondents planned to continue operations over the next six months. Among these firms, 22 (79 percent) planned to employ more than 60 percent of the workers they employed in early March; 3 (11 percent) planned to employ less than 30 percent. If conditions remain unchanged, 42 percent of surveyed firms did not exclude the possibility of temporarily closing their plants. Table 6 Production days lost by Haitian apparel manufacturers surveyed as a result of factory closures DAYS LOST Date firm was permitted to resume operations March 31 April 3 April 10 April 20 Total Total Opened Closed Did not respond Numbers of days lost 13 4 5 11 33 13 4 4 9 30 1 0 0 1 2 0 0 1 0 1 161 108 85 369 723 Number of firms How Has COVID-19 Affected Haiti’s Apparel Industry ? 17 ORDERS 35 30 25 20 15 10 5 0 Less than 20% 20% - 50% More than 50% Cancellation of orders Reduction of orders Volume (pieces) Cancelled or Reduced Orders Lost Revenues All but one firm reported having had orders cancelled or reduced. Among these firms, 52 percent experienced reductions or cancellations of more than 50 percent (figure 2). Figure 2 Share and value of Haitian apparel producers’ orders cancelled or reduced by mid-June Figure 3 Revenue losses projected by Haitian apparel manufacturers for 2020 (percent of firms) Seventy-six percent of respondents forecast that they would lose more than 30 percent of their revenues in 2020; eight firms (24 percent) expected revenue losses of more than 60 percent (figure 3). 7 11 11 Volume (pieces) Value (dollars) 5 8 13 Value (dollars) 6 14 3 5 8 13 Number of firms EXPECTED REVENUE LOSSES 24% 52% 24% 30% or less losses More than 60% losses 30% - 60% losses 18 Lost Jobs Employment at the 38 ADIH members declined by 31 percent between March and April 2020, according to ADIH reports (figure 4). Small firms and private facilities outside public parks and private free zones were the most affected, with declines in employment of 59 percent and 70 percent, respectively. Source: Data for March 2020 were collected from firms that receive government subsidies. Data for April 2020 were collected by ADIH from its members. Figure 4 Employment in Haiti’s apparel sector in March and April 2020, by type of location 60.000 50.000 40.000 30.000 20.000 10.000 0 EMPLOYMENT 29.087 23.315 Public industrial parks March 2020 April 2020 18.637 9.780 5.599 1.700 53.323 36.795 Total Number of workers employed Private free zones and industrial parks Outside free zones and industrial parks How Has COVID-19 Affected Haiti’s Apparel Industry ? 19 Photo: Palm Apparel 20 PROFILE OF FIRMS AFTER REOPENING 20 Photo: The Will Bes Haitian S.A. How Has COVID-19 Affected Haiti’s Apparel Industry ? 21 Production Capacity At the time of the survey, one firm remained closed. The remaining 32 firms were fulfilling existing orders, new orders, or both (figure 5). More than half of firms (56 percent [18 firms]) were producing at less than 30 percent of their capacity after resuming operations (figure 6). Figure 5 Types of products produced and orders received by Haitian apparel manufacturers after reopening following closure caused by COVID-19 TYPES OF PRODUCT 30 25 20 15 10 5 0 Existing order New order Material Type of Product Mask 22 5 Knit Woven 6 Scrubs 8 Gown Coverall with hood 3 2 19 Number of firms Figure 6 Reduction in production capacity reported by Haitian apparel manufacturers in May–June 2020 12 22% 47% 22% 9% Above 60% Less than 10% 30% - 60% 10% - 30% PRODUCTION CAPACITY 22 The data collected from the 31 firms that responded suggest that potential production capacity is 37.8 million units a month—59 percent PPE and 41 percent other garments (table 7). Table 7 Capacity of Haitian apparel manufacturers surveyed to produce personal protective equipment and other products APPAREL PRODUCTION CAPACITY Type of capacity Current production of personal protective equipment (PPE) Producing PPE but cannot give capacity Has capacity to produce PPE but is not producing it Has capacity to produce PPE but cannot specify how much and is not producing it Not interested in producing PPE Total 19 1 7 1 3 31 12,648 n.a. 6,290 0 n.a. 18,938 50 n.a. 2 0 n.a. 52 658 n.a. 1,050 0 n.a. 1,708 1,424 n.a. 65 0 n.a. 1,489 14,779 n.a. 7,407 0 n.a. 22,186 15,579 n.a. 8,007 0 14,256 37,842 800 n.a. 600 0 14,256 15,656 Number of firms Masks Coverall Gown Scrubs Total Total Other products Personal protective equipment Monthly production capacity (thousands of units) Note: n.a. Not applicable. How Has COVID-19 Affected Haiti’s Apparel Industry ? 23 At the time of the survey, the producers who declared that they had capacity to produce PPE were using two-thirds of their capacity (table 8). Of the 26 firms that specified the types of PPE they could produce, 23 reported being able to produce masks, 5 could produce gowns, 10 scrubs, and 2 coveralls with hoods. Only 20 firms reported producing PPE (table 9). Respondents did not provide information on production of surgical caps, shoe covers, and plastic face shields. A plastics manufacturer in Haiti (not part of the survey) has reportedly begun producing face shields, disposable boot covers, head caps, and gowns. Note: All of these firms were also producing other garments. Table 8 Monthly capacity of Haitian apparel manufacturers surveyed to produce personal protective equipment products, by type of product (thousands of units, except where otherwise indicated) Table 9 Number of Haitian apparel manufacturers producing personal protective equipment, by type of product MONTHLY CAPACITY PPE PRODUCERS Type of capacity Type of product (PPE) Current production Capacity to produce additional units Total potential capacity Current production as percent of total potential capacity Masks only Masks and scrubs Masks, gowns, and scrubs Masks and gowns Masks, coveralls, gowns and scrubs Scrubs only Total number of firms producing PPE Masks Scrub Gown Coverall Number of producers 12,648 6,290 18,938 67 1,424 65 1,489 96 658 1,050 1,708 39 50 2 52 96 11 4 1 1 1 2 20 Total 14,779 7,407 22,186 67 24 All respondents reported having enough resources and materials to comply with the obligations established by the authorities. These requirements include PPE for workers, handwashing stations, a chlorine carpet to disinfect shoes soles at the factory entrance, 1.5 meters between workers, and regular maintenance of facilities. Some respondents also reported taking additional measures, including the following: • temperature screening at the entrance • safe entry management • sanitization of equipment and hands (with disinfectant, paper, alcohol-based sanitizer gel, soap) • medical assistance and regular checking for respiratory symptoms • plan to evacuate confirmed cases. Efforts by Buyers to Assist Producers Some respondents reported that buyers had offered them alternatives to simply cancelling their orders: • 10 firms reported that buyers replaced their existing orders with different ones. • 3 firms were asked to complete their orders, 2 of them obtained extensions of their delivery deadlines. • 2 firms reported that buyers had authorized them to use the raw materials they had purchased to meet the buyers’ orders for other uses. • 1 firm reported that its buyers temporarily suspended their orders. • 1 firm reported having been given permission from a buyer to purchase fabric from other suppliers. One firm reported that it did not require mitigation measures, as its business did not suffer significant losses from the crisis. How Has COVID-19 Affected Haiti’s Apparel Industry ? 25 All respondents reported having enough resources and materials to comply with the obligations established by the authorities. Photo: S & H Global 26 REQUESTS FOR ASSISTANCE 26 Photo: The Will Bes Haitian S.A. How Has COVID-19 Affected Haiti’s Apparel Industry ? 27 The surveyed firms identified various needs for technical and financial assistance (table 10). Three firms requested assistance in obtaining PPE export permits and authorization, and one firm asked for support in implementing COVID-19 protocols in the communities of Ouanaminthe through education and social activities. Seventeen firms expressed interest in participating in a two-hour webinar that could include training and other relevant information. The Dominican Republic is a major source of equipment and materials. The closure of the border between the two countries in March therefore affected the preventive and scheduled maintenance of equipment. The surveyed firms requested assistance in training workers to repair equipment, especially air compressors, matter plotters, electronic motors, sewing machines, and embroidery machines (table 11). Table 10 Requests by Haitian apparel manufacturers for assistance REQUESTS FOR ASSISTANCE Type of assistance requested Number of requests from producers of personal protective equipment (PPE) Number of requests from other producers Technical assistance PPE design PPE manufacturing PPE marketing and sale Market intelligence Financial assistance Working capital Investment capital Short-term credit Long-term credit 1 1 3 3 8 2 2 4 0 0 2 3 3 1 6 3 28 With the Dominican Republic under shutdown, most of Haitian supply chain are under lock-down too. This also affects Haitian preventive maintenance, scheduled maintenance, and even dealing with breakdowns, as the Dominican Republic is the one of the main source of this type of service for the Haitian Industry. Photo: S & H Global How Has COVID-19 Affected Haiti’s Apparel Industry ? 29 The surveyed firms also requested assistance in training for different types of workers. There were 46 requests in total. Their top requests were training for supervisors, sewing machine operators, quality controllers, and auditors (table 12). Table 11 Requests by Haitian apparel manufacturers for assistance in training workers to repair equipment, by type of machinery Table 12 Requests by Haitian apparel manufacturers for assistance in training workers in order to increase productivity, by type of training REQUEST FOR TRAINING IN EQUIPMENT REPAIR TRAINING REQUESTS BY PROFILE Type of machinery Type of training Number of firms requesting assistance Number of firms requesting assistance Air compressor Marker plotter Sewing machines Electronic motors Embroidery machines Specialized printing Desk printer Power generator (other) Maintenance (other) Training of trainers and supervisors Training of sewing operators Training of quality controllers and auditors Training of special sewing operation Training in mask production Training in PPE production Training of cutting-room controllers 8 6 5 5 4 3 1 1 1 16 9 8 6 4 2 1 30 SURVEYED FIRMS’ RECOMMENDATIONS TO THE ADIH TEXTILE COMMITTEE 30 How Has COVID-19 Affected Haiti’s Apparel Industry ? 31 Ten of the surveyed firms made specific suggestions for consideration by the ADIH Textile Committee: Conduct regular meetings with apparel manufacturers, rather than only during a crisis. Meeting regularly would help firms act proactively and ensure that all firms are aligned with ADIH and the government in fighting COVID-19. Support firms’ operations. Firms are facing substantial losses as a result of closure, reduction or cancellation of orders, and lack of clarity on when business will get back on track. Suggestions include the following: • Authorize all firms to export masks and other PPE so that they can respond to inquiries they are receiving. • Recognize that mask production is not the only way for firms to surmount their difficulties. Mask production does not appear to be profitable for all firms, although it makes a valuable contribution to the survival of workers and firms. Alternatives need to be sought. • Do not revise the minimum wage this year. • Provide government grants to factories to maintain operations and jobs. Meet human resource and training needs in English and/or Spanish speaking, reading, and writing; computer skills; import/export or accounting-related experience; and medicine (doctors and nurses). Make Haiti more business friendly and inviting to international investors and buyers, by improving infrastructure, security, transparency, and governance. Such efforts would help prevent buyers that used to source from Haiti from shifting to more stable manufacturing destinations and help Haiti attract investors who are leaving China. Improve safety and government requirements: • Optimize space. Decreasing the distance between operators to one meter if barriers are placed between them would allow factories to employ more workers. • Extend the suspension period by another 60 days to prevent factories from operating and provide a direct subsistence subsidy to workers while factories are closed. • Raise the restriction limiting the number of workers in a factory from less than 30 percent of capacity to at least 60 percent. • Extend the validity of the Quitus (the compliance document firms must obtain before they can export) beyond the current one to three months. (In other countries, such a certification is usually valid for one full year.) Help factories ship products abroad. Improve trade and logistics service provision and infrastructure for companies to export efficiently. 1 5 6 2 3 4 32 ANNEX A: THE QUESTIONNAIRE The health prevention measures adopted against the spread of the COVID-19 virus have hit the Textile and Apparel Sector very hard. New opportunities are emerging, offering solutions to protect the Haitian industry and enabling it to get through the difficulties and uncertainties of this crisis. The purpose of this survey is to collect the necessary data so that the Textile and Clothing Committee of our association can establish a clear and precise roadmap to meet the new challenges we had already discussed during the past month. The treatment of your answers to this questionnaire will be confidential and will respect the principles of equity of ADIH. The final report will be presented and validated during a meeting to which all ADIH members will be invited. As a reminder, ADHI’s last similar exercise took place in 2017 and the data do not reflect the current profile of our members. We are expecting your response by May 16, 2020. Thanks for your collaboration. COVID-19 AND POST COVID-19 Losses, New challenges and Opportunities for the Apparel Industry in Haiti Textile and Apparel Survey May 12, 2020 32 How Has COVID-19 Affected Haiti’s Apparel Industry ? 33 Name of the member: Name of the contact person Phone E-mail Before the CODIV-19 crisis 1. What was the production of your plant? Knit Woven Both 2. What was the capacity of your plant? number of units per month 3. Who were your principal buyers? Buyers name Percentage of your total order % Buyers name Percentage of your total order % Buyers name Percentage of your total order % Buyers name Percentage of your total order % After the March 19 Decision of GOH to shutdown factories and to reopen them 4. Did you reopen after March 19, 2020? Yes No If yes, when? 5. What production capacity are you working with today? (in percentage of your normal capacity) Less than 10% Between 10% and 30% Between 30% and 60% Above 60% 6. What are you producing now? Existing orders: Knit Woven New orders: Knit Woven Masks Coverall with hood Gown Scrubs (blouse and pants) Surgical cap Shoe cover Plastic face shield Other 7. What is your capacity to produce (number of units per month)? Masks Coverall with hood Gown Scrubs (blouse & pants) Surgical cap Shoe cover Plastic face shield 8. Will you register losses for this year because of the COVID-19 crisis? a. Cancellation of orders: In volume: Less than 20% Between 20% and 50% More than 50% In $: Less than 20% Between 20% and 50% More than 50% How many brands cancel their order? over a total of b. Reduction of orders: In volume: Less than 20% Between 20% and 50% More than 50% In $: Less than 20% Between 20% and 50% More than 50% How many brands reduce their order? over a total of 34 9. Do you receive new orders? From existing brands and/or from new brands a. Type of new orders: Garment Masks Gown Coverall with hood Scrubs (blouse& pants) Surgical cap Shoe cover Plastic face shield b. New orders for when: Fall season 2020 Winter season 2020 Both seasons 10. What measures have your buyers offered to mitigate the impact on your factory? a. Replacement orders By existing brands By new brands Type of products: Masks PPEs Others b. Free use of their raw materials for other clients c. Other measures 11. What are the most important challenges you are facing? Put a number in the square to show your priority: High Priority is 1; Low Priority is 2; No priority is 0. a. Difficulty accessing raw materials b. Lack of working capital c. Access to market d. Uncertainty in global demand e. Need of new facilities and/or equipment for new orders f. Need of workers’ training for new orders g. Conditions of public transportation available for workers h. Due to new government regulation: h.1 Workers and staff reduction 30% or Less Between 30% and 60% More than 60% h.2 Economic performance in terms of reduction of your regular production: 30% or Less Between 30% and 60% More than 60% h.3 Export restrictions h.4 Haitian public procurement procedures i. Other challenges 12. Do you plan to ask the Ministry of Labor to temporary close your operation? For 15 days For 30 days For 60 days 13. Will you be able to continue your operation during the next 6 months? Yes No If yes, it will be with 100% of my employees 60% of them 30% or less How Has COVID-19 Affected Haiti’s Apparel Industry ? 35 14. What is the estimation of your revenues lost for this year? 30% Between 30% and 60% More than 60% 15. Do you have enough resources and materials to comply with the guidelines for protection against CODIV-19? Yes No If Yes, please check, boxes below: PPEs for workers Hands washing stations Chlorine carpet at the entrance Industrial space to accommodate social distance (1.50 meters) Regular maintenance of facilities Other 16. Do you require any assistance? 16.1 Technical: PPEs design PPEs confection PPEs marketing and sale Market intelligence Other 16.2. Financial: Working capital Investment capital Short term credit Long term credit Other 16.3. Other type of assistance Workers Training 17. Do you have equipment or machinery that you cannot find repair services for and that you think a service provider could potentially help with, in terms of training workers in equipment repair? Sewing machines Electronic motors Air compressor Desk printer Marker plotter Embroidery machines Specialized printing Other 18. Which skills do you think are missing and could help you to produce more efficiently with better quality, lower your operating costs, and create a better work environment? Training sewing operators Trainers, supervisors Quality controllers and auditors Special sewing operation training Cutting room controllers Producing masks Producing PPEs Other 19. Are you interesting in participating in a Webinar? 2 hours More than 2 hours Not interested 20. Please give your recommendations to the Textile and Apparel Committee of ADIH 36 Photo: UTE/Ministry of Economy and Finance, Haiti 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 www.ifc.org December, 2020