VF Jeanswear, the maker of Wrangler and Lee jeans, this week has announced it will close its three Costa Rica plants next month, laying off 400 employees and ending a 20-year run of exporting jeans from this country.
The closure, announced Monday and slated one month later for July 16, sounded alarms for those monitoring the textile sector’s climate amid cooling exports and looming uncertainty over the future of the Central American Free-Trade Agreement with the United States (CAFTA).
“People outside Costa Rica have been losing faith in Costa Rica because they can’t understand how there still isn’t a free-trade agreement here,” Miguel Schyfter, president of the National Association of Textile Industry Exporters, told The Tico Times yesterday.
Schyfter noted that VF is opting to maintain operations in Honduras and Mexico, but not at its Costa Rica sites, in Alajuela, Atenas and La Uruca.
Managers at VF Corp.’s headquarters in Greensboro, North Carolina, yesterday did not answer The Tico Times’ interview requests.
Textile exports in January dropped by 23.4% from January 2007.
Schyfter said that pushing the slide, and VF’s decision to close its plants here is Costa Rica’s heel-dragging on CAFTA.
“(Production) cost couldn’t have been a problem here for the company, it’s one of the biggest textile manufacturers in Costa Rica,” Schyfter said, adding that at its height VF employed 4,000 people and exports from its Tico plants grossed $120 million.
Costa Rica helped pioneer the free-trade treaty and last year ratified it by referendum, but the legislature, voting bill by bill, has made this country the last in the pack to enact it.