OCCASION This publication has been made available to the public on the occasion of the 50th anniversary of the United Nations Industrial Development Organisation. DISCLAIMER This document has been produced without formal United Nations editing. The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country or area in the development process. Mention of firm names or commercial products does not constitute an endorsement by UNIDO. FAIR USE POLICY Any part of this publication may be quoted and referenced for educational and research purposes without additional permission from UNIDO. However, those who make use of quoting and referencing this publication are requested to follow the Fair Use Policy of giving due credit to UNIDO. CONTACT Please contact [email protected] for further information concerning UNIDO publications. For more information about UNIDO, please visit us at www.unido.org UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Vienna International Centre, P.O. Box 300, 1400 Vienna, Austria Tel: (+43-1) 26026-0 · www.unido.org · [email protected] Distr. LIMiTED UNIDO/IS.595 13 January 1986 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATIOl\J ENGLISH UNIDO ECONOMIC RESEARCH SERVICES RESTRUCTURING OF THE MEXICAN TEXTILE INDUSTRY: REQUIREMENTS AND POLICY OPTIONS* Prepared by the Regional and Country Studies Branch Division for Industrial Studies Th11 d11•ign11tion• 11mploy11d 11nd th11 pr111111nt11tion of th11 m11t11rt11f in th1• docum11nt do not 1mplr th11 11xprH•ion of •nr opinion wh11t•o111111r on th11 p11rt of th• S11cr11t11ri11t of th11 Unit11d N11t1on• conc11rning th• 1119111 •t•tu• of ,,,..,, countrr, t11rritorr. city or 11r1111 or of it• 11uthoffti11•. or conc11rning th11 d11f1mit11tion of 1t• fronti11r• or bound.,i•• M11ntion of comp11ny n11m11• 11nd comm11rc111/ product• doH not imply th11 11ndor•11m11nt of tho Unit11d N11t1on• lndu"""' D111111lopm11nt Org11n1z11tion (UNIDOJ. Thi• docum11nr h•• b1111n ftlproduc11d without form11I 11diting. V.86-50,379 - i - PRIFACK The Regional and Country Studie• Branch bas developed ils current lconoaic Research Service• progr.... in re•pon1e to requiremeat• for analr•e• and information for indu•trial policr--aatlng la individual developing countrle•. Through lhl• progr.... , the Branch l• regularly •••isling policr-aaters in developing coanlrle• lo 110nltor perlinenl develoP1119nl• at the nallonal and regional level•, in particular •• concern• lndu•lrial policle• in other countrie• and progr.... • to upgrade relevant production proc•••e• and producl•i 8118rglng technological trend•; pro•p9ctlve change• in national and international aartel•; relevant trade pollcle• of aaln trading partner•. An •••c•... nl can then be aade of the •peclflc country•• coapetltivene•• of key iadu•trlal acllvitles la national and internatl~n&l aartet•, tbe technological •latus la lb••• activities, and aartet pro•pecl•. On this ba•ls lt l• po••ible to identify broad requir... nt• for re•lrucluring of various industrial •ub•ectors of the countrJ and to outline •upporllng policy option•. The pr•••nt •tudy wa• conducted by the Regional an~ CounlrJ Studies Branch on request of tbe Cover... at of ..aico. Using data collected through field wort bJ an international coa•ultancr COllpanJ (IOllEA.), •lallslics provided by the Kini1tr1 of C0111111rce and lndu1trf and lnforaation available at UIIDO beadquarter1, tbe report was prepared bf 1laff of lbe Regional and CountrJ 8tudie1 Branch, la close co-operation on technical i11ue1 wltb 1taff of UllDO'J Agro-lndustrie1 Branch. •r. Tonf Jenning• (The Univer1ity, Lelce1ter), UMIDO consultant, contributed •elected 1ectio~1 of the report (in 9arllcular chapter I). On the bails of tbl1 report 1 "'°rtsbop wa1 organized la llealco C!lf, 4-5 Noveaber 1915, attended by represealatlve1 of the llesican Gover ....nt, lbe - l l -· Mezlcan le~llle indu•lrr and a U•IDO leaa whlcb al•o contributed to the seminar bf reporting on the ezperience of selected countrle• lo the field of leztile pollcle•. tbe teaa co.aprl•ed U•IDO ataff 11811bera and lnlernatlonal con•ultanl•: Mr. Ralf K. llob• (teaa leader, UllIDO, Regional and Counlrr Studies Branch), Kr. Anlero lraneva (UlllDO, Agro-Indu•trle• Branch), Kr. Moon , Shin Hong (lorea Institute for Economic• and Technologr>, Kr. David llonlero (Minislrf or lndustrf, Madrid), Kr. WillJ Raaboer (Kinistrf of lndu•lrJ, • Brussels) and Kr. Brian Torne (Unlver•llJ or Soulh Carolina). - Hi - COllTEllTS CIU.PTIR I. llVl!V OF THI llKXICAJI TEXTILE INDUSTRY: ACHIEVEllEllTS AllD llESTllUCTUIING OBJECTIVES 1 1.1 lcon011.ic growth 2 1.2 Foreign exchange earnings 5 1.3 Ellployaent creation 8 1.4 Price stability and basic doaestic needs 10 1.5 Regional development 11 II. THE MDICAll TEXTILE INDUSTRY lN INTEiUIATIONAL PERSPECTIVE: PRICES. COSTS AllD COllPETITIVENESS 14 2.1 Price competitiveness 14 2.2 Labour cost 21 2.3 Other costs and cost str~cture 26 Ill. INTERNATIONAL PARAllETERS FOil A llEIICAll IEST~UCTURING PllOGUIUIE 27 3.1 Trends in world fibre production 27 3.1.1 Competition between natural and aan-aade fibres 27 3.1.2 Competition between aan-aade fibres 31 3.2 Trends in Mexican and world fibre consumption 34 3.3 Deaand outlook and implications for a Mexican restructuring progr&llll8 40 IV. IATIONAL PARAllETERS FOR A llEXICAll RESTRUCTURING PllOGUIUIE 4.1 The significance of rec~nt technological trends 47 4.2 llachinerr and productivitJ in the Mexican textile indus'rr 51 4.3 Production and capacitJ utilization in the llexican textile industry 56 4 .4 Structure of the industry 65 4.5 Organbatlon and aarketlng 66 v. SUIOIAllY AID a1cOIUIEllDATIOIS: TOWARDS A PIOGRAIOll OF ACTION 68 5.1 Penetrating new aartets 68 S.2 Increasing cOllpetitiveness: tbe role of tr•de liberalization 70 S.3 Raising prQductivity through 11e>dernization 71 S.4 The r~le of labour 73 S.S Selectlng enterprises 15 5.6 ~stablishing an institutional framework 76 AJIWIX I: Statistical Annex 78 ANNEX II: Technical Annex 92 - iv - LIST or TABLES Table No. 1 Share of teKtiles and clothing in aanufacturing production in developed and developing countries, 1953-1980 3 2 Value added of total aanufacturing and teKtile industry I and share in KeKico•s GDP 3 3 Sources of growth of teKtiles, clothing, footwear and leather industries in KeKico, 1950-80 Confectioning sector - estiaated production 1983 5 The KeKican teKtile industry as a net earner of foreign eKch3nge (aillions of pesos) 6 6 •~t trade in te1tiles and clothing in selected countries 6 7 Emplofllent generation in the Ke1ican te1tile industry, 1977-1983 9 8 Changes of eaployaent, value added and labour productivity in the Ke1ic•n te1tile industry, 1977-1983 9 9 Geographical distribution of the lle1ican te~tile industry, 1983 13 10 International labour cost coaparisons 22 11 InternationMl ranting of labour costs 24 12 World te1tila fibre production, 1900-1980 (selected years) 28 13 ~elative prices of cotton and share in world fibre deaand, 1957-1982 29 Kan-..de fiber productions and producing capacity, 1978-1984: Selected countries and fears 32 15 Actual and hypoth•tical con1uaption per-capita oi te1tlle fibers in selected countries, 1983 36 16 Consuaption per capita of natural fib-~• in lle1ico, 1.971-1983 38 17 kh1ican and world non-cellulo1ic fiber production: relative 1bares bJ f lber ln total lle1lcan ar.d world production 18 lle1ican e1pr:ts of te1tlle product1, 1977-1983 - v - List of Tables (cont'd) 19 The Mexican spinning sector - installed aachinery ('000 units) and their age 51 20 The Mexican weaving sector - installed aachinery and their age 52 21 Installed textile aachiner• in the world and their age 53 22 (a) International coaparison of Fpinning productivity, 1982 (selected countries) 54 22 (b) Intern•tional ce>11parison of weaving productivity, 1982 (selected countries) 54 I 23 Mexican textile production, 1983 57 1 24 International textile idle capacity, 1982/83 59 (sele~ted countries) 25 Installed capacity and production in the Mexican textil~ industry, 1983 60 26 Idle and obsolete capacity in Mexico's textile industry, 1983 63 Annex TablH A-1 Production of cotton fibres in ttexico, 1971-1984 79 A-2 Apparent n~tional consuaption of wool fibres in Mexico, 1970-1983 80 A-3 Production of textile fibres in Mexico, 1971-1983 81 A-4 CoHumptlon per capita of textile fibrH, 1970-1983 82 A-5 Quota utilization rates of Mexican textile exports to the U.S.A. by product, 1978-1983 83 A-6 Bilateral agrea11ent betw•en tlexico and the U.S.A. co&cdrning textile products: quotas, export' and utilization rates by products, 1984 87 A-7 Con•umptlon per capita of artificinl and synthetic fibr.e1 in Me1lco, 1971-l983 91 - vi - LIST or FIGUUS Figure 1 Geographical distribution of the llexican textile industry 12 Figure 2 International coaparison of retail prices for s-lected textile products , a. Sweater 16 b. Socks, stockings 16 c. Shirts 17 d. Trousers and skirts u e. Dress, suit 18 f. Jackets 18 g. Sheets 19 h. Blanket 19 Figure 3 International coaparison of retail