Approximately 1,700 people will be without employment when apparel company Gildan withdraws production from Mexico over the next six months.
News broke yesterday that the Canadian-based entity will shift its Mexican operations to countries in Latin America and the Caribbean where production costs are even cheaper. The equipment at the two facilities being shuttered will also be transported to facilities in these countries.
The move is a blow to Mexico which has been known for being competitive production and manufacturing.
The company reported an eight per cent drop in third-quarter net revenue as it earned US$104.9 million, down from US$114.3 million for the corresponding period in 2018.
Gildan shares have lost value since mid-October when it revised forecast for revenue and profit due to the slowing of its core business of creating clothing basics.
In a statement, the company said “while weaker imprintables order flow in North America and ongoing softness in international imprintables markets is currently dampening sales and earnings growth in 2019, we do not believe this reflects a structural change to our business as a leading supplier of basic replenishment apparel driven by our large scale, low-cost vertically-integrated manufacturing system.”
Currently, Mexico accounts for just under 10 per cent of Gildan’s production worldwide.