Once the promise of hope in Haiti, textile park is now laying off thousands of workers

The Korean textile company that for a decade anchored the United States’ largest investment in a post-earthquake Haiti is downsizing — and eliminating thousands of jobs.

Sae-A Trading Co., which operates as S&H Global inside the Caracol Industrial Park in northeast Haiti, informed its partners and others this week that it will be closing one factory, which employs approximately 1,000 workers, and instituting “widespread” layoffs across its five remaining factories in northeast Haiti. The reductions will take the number of employees from 7,000 to 3,500.

It is the latest blow to Haiti’s apparel manufacturing which, while known for its T-shirts, also produces U.S.-bound hospital garments, leggings and other clothing for customers like Walmart. Since December 2021, the country has lost 11,000 apparel jobs, with more expected in the coming months, says a member of the local Association of Haiti Industries that monitors the sector.

The country is now down to about 49,000 garment jobs from 60,000 after the 2010 earthquake.

“Several U.S. retailers say the current economic climate is slow and they expect the same in the first half of 2023,” said Mark D’Sa, a South Florida resident and former top executive with GAP who later helped Haiti’s efforts to attract direct foreign investments through textile jobs. “It could precipitate further reductions in apparel and textile jobs in the region, including Haiti.”

Until three years ago, D’Sa worked as a consultant promoting the Caracol Industrial Park and helping companies like Sae-A remain committed to Haiti. He took on the job in the wake of the country’s devastating 2010 earthquake, which came three months after he attended an investment conference in Port-au-Prince hosted by former President Bill Clinton in his role as United Nations Special Envoy to the Country, and the Inter-American Development Bank.

Neither Sae-A nor the park were a reality yet, but the idea of opening a second industrial park in Haiti, after an existing one in the capital near the international airport, was being pushed by Haitians during the event in hopes of returning the country to 100,000 factory jobs. Now, instead of growing jobs, Haiti is looking at losing them.

“Sae-A’s layoffs are partially caused by Haiti’s protracted problems,” D’Sa said. “The other major driver is the slowdown in U.S. retail precipitated by excess inventories, reduced consumer demand, rising interest rates, higher fuel costs and the fear of a pending recession. Sae-A’s situation in Haiti is not unique and other large U.S. brands have laid off workers in El Salvador and Nicaragua too.”

Worsening environment

Sae-A’s layoff announcement comes just days after the IDB announced it would be disbursing $65 million for the expansion and modernization of buildings inside the industrial park. The funding is part of $300 million the IDB had allocated for the park after the earthquake. As of 2019 the bank had only disbursed $243 million for the park.

The $65 million IDB disbursement came years after the decision was taken to finally provide the remaining funds to Haiti and after the country lost what would have been its first knitting mill. The mill would have provided an additional 2,000 jobs, but after the Haitian government failed to deliver on buildings that had been promised since 2019, the company took its business across the border to the Dominican Republic. The delay on the buildings was the result of slow IDB disbursements because of Haiti’s political volatility.

The lost textile jobs inside the Caracol Industrial Park are part of the latest in a list of closures, both in textile and other industries in Haiti, said what everyone agrees is a disastrous economy and worsening security environment, on top of social unrest and political upheaval.

In October, a spokesperson for the U.S. Department of Agriculture confirmed to the Miami Herald that the agency’s Animal and Plant Health Inspection Service had decided to close its mango preclearance program in Haiti by the end of January 2023 “due to the worsening security situation in the country.”

“The safety and security of our 10 employees in Haiti is our highest priority,” spokesman Lucero Hernandez said in an email. “The current situation in the country has made it unsafe for APHIS employees to conduct program activities in the field. These employees ensure that U.S.-bound mangoes from Haiti are free of invasive plant pests and diseases before they ship to the United States.”

On Thursday, the agency said that since this is now the off-season for mangoes, closing the program has no immediate impact on any current trade between Haiti and the United States.

“APHIS will continue to work very closely with the Haitian Ministry of Agriculture and ANEM to discuss the potential for reopening the program,” said Tanya Espinosa, a spokeswoman.

Wilhelm Lemke, who heads the Association of Haiti Industries, said the country is being hit hard.

“Our nation’s difficult socioeconomic challenges are worsening, putting thousands more out of work, and fueling migration,” Lemke said. “Haïti’s globally competitive job-creating and foreign exchange-generating export industries, as illustrated by S&H Global’s significant layoffs, are enduring losses like most small, medium and large enterprises in our economy today. ... Our socioeconomic crisis that is compounding the level of misery is magnified by the wave of insecurity.”

In correspondence, written in both English and French, Sae-A’s Haiti company, S&H Global, said its layoff announcement is being done “with a heavy heart.”

The company lists a number of reasons behind its decision. They range from a global economy under pressure from high inflation and interest rates, to the war between Russia and Ukraine, to the slow recovery from the COVID-19 pandemic and supply chain disruptions. But it is the ongoing instability in Haiti, industry watchers say, that was the final nail for the company whose business struggles in Haiti date back to well before the July 7, 2021, assassination of the country’s president, Jovenel Moïse.

“They’ve been raising red flags for more than three years now with the government’s mismanagement of the park, since before Jovenel was killed,” said Georges Sassine, the former president of the Association of Haiti Industries. “I even told Jovenel we are going to have problems if we don’t do anything.”

At the time, Sae-A had begun to quietly open buildings across the border in the Dominican Republic, raising concerns in both Washington and New York about an eventual move out of Haiti.

Hope and fanfare lauded by U.S.

When Sae-A Trading moved to Haiti, it was done amid much fanfare and hope. Hillary Clinton had personally closed the deal, as secretary of state, persuading the company’s leadership to come to Haiti after a similar effort fell through years earlier due to political instability. At the time, the Caracol Industrial Park was but a vision, its future home still a bean field in northeast Haiti not far from the Dominican Republic’s border.

At a luncheon in 2012 celebrating the park’s opening, Clinton, accompanied by her husband, told the room of investors and Haitian government officials that supporting long-term prosperity in Haiti meant providing more than just foreign aid.

“It required investments in infrastructure and an economy that would help the Haitian people achieve their own dreams,” she said.

The moment of hope, however, turned into frustration and disappointment, as the U.S. State Department and the IDB increasingly turned over the running of the park to Haitian authorities. Haiti’s government, in turn, failed to deliver on promises, as did the United States.

Despite bulldozing dozens of shacks along the Cap-Haïtien waterway, for example, a bridge connecting the city to Caracol to help trucks take containers faster to the seaport was never built. Plans for a new seaport, or the revamping of the existing Cap-Haïtien port, never came to fruition, the latter nixed altogether by the Moïse administration.

And while Sae-A never fulfilled its own promise of creating 20,000 jobs over four years, before the COVID-19 pandemic it reached 12,000, cementing its position as the industrial park’s largest employer. A recent drive through the area and the nearby town of Trou-du-Nord showed the spillover effects of Haitian employment and the industrial park’s presence. The region has round the clock electricity thanks to the U.S.-funded power grid that provides electricity to the park and thousands of residents nearby, and the streets are bustling with economic activities, unlike elsewhere in Haiti.

Sassine said the current situation is frustrating. In addition to Sae-A, other companies announced their intentions to lay off workers. In some cases, companies are closing altogether. Valdor, a U.S..-owned company that operated two factories in Haiti, put 1,200 people out of work when it recently closed its two factories.

Adding to the companies’ woes, Sassine said, is that even after last year’s gang blockade of Port-au-Prince’s fuel terminal was lifted, companies still could not get their containers out of the port and were subjected to onerous fees.

Company forced to suspend operations

In its letter, Sae-A Trading said that during the past year it was forced to suspend operations numerous times due to Haiti customs strikes, border closures and other acts of social unrest that culminated in a two-month forced closure late last year, when the local power plant shut down because it could not get the the fuel oil it needed to run. It was the first time in 10 years that the power plant could not provide electricity.

“Throughout the year, these disruptions caused numerous instances of incoming materials shipments delayed, production paralyzed, finished product shipments blocked, orders canceled and trust lost from our retailer customers in the USA as they suffered significant losses from delayed and non-delivery of merchandise,” the Sae-A Trading letter said. “For 2023, our business is down as the loss of confidence from our overseas’ clients is at an all-time low. Orders are being rerouted elsewhere around the Caribbean and Central America leaving us, S&H Global with a dearth of orders.”

Despite the reality, the Association of Haiti Industries is still fighting for the U.S. Congress to extend trade preferences for Haiti before they expire in 2025 under the legislation known as HOPE-HELP. The preferences allow Haitian-sewn apparel to enter the U.S. duty-free, and fabric can come from anywhere in the world.

“It’s more important than ever today that it is renewed,” Sassine said. “It will send a psychological message, which is important.”

Otherwise, Sassine said he fears how many jobs would be left if the trade benefits were to go away.

“No matter what, we have to promote HOPE-HELP because the signal it will send is that Haiti isn’t shutting down,” he said. “There is hope if things get fixed.”