Jameel Mohamed flew from Los Angeles to Honduras late last month, expecting to spend a week at the two factories that his company, LCA Apparel, has in San Pedro Sula, on the country’s Caribbean coast.
He ended up staying for two weeks, most of that time spent holed up in a company-owned house, as Hurricane Mitch pounded Honduras, Nicaragua and other parts of Central America. The storm killed more than 8,000 and left hundreds of thousands homeless including more than 350 of LCA’s 1,500 Honduran workers.
None of LCA’s workers was killed. But for more than a week, few were able to come to work. And with San Pedro Sula’s airport and Honduras’ two seaports closed, finished clothing men’s and women’s underwear made for Wal-Mart, Mervyn’s, Sears and other stores could not be shipped to the United States.
City of Commerce-based LCA lost 50 packages of materials, including 30 rolls of fabric, when the airport was flooded, according to Mohamed, the firm’s director of purchasing. Already, the storm has cost the company $250,000, and the losses could soar if retailers cancel their contracts because of delays.
“There are some things we cannot recover at all,” Mohamed said.
LCA is not alone. Numerous L.A.-based companies have opened operations in Central America over the last several years, usually to take advantage of low labor costs there. As a result, Hurricane Mitch not only had an impact on Central Americans and their families in the United States, but also on local companies.
In 1997, some $45.6 million in imports came from Honduras into the Los Angeles Customs District. More than half that amount $28.2 million consisted of apparel.
LCA was lucky. Its Honduran factories are situated on high ground, and were not severely damaged by the storm. By last week, they were back operating at 100 percent capacity.
Downtown L.A.-based Design Zone Inc., which also has a factory in San Pedro Sula, did not fare as well. The company, which makes juniors’ and children’s apparel under the “Knit Works” label, has spent the last couple of weeks locating its 300 displaced workers and if their homes were destroyed putting them up in the factory.
Like LCA’s factories, Design Zone’s Honduran facility suffered no significant damage. By last week, it was back up to 80 percent of capacity, and no retailers had yet canceled their orders because of delays, said Vera Campbell, Design Zone’s owner and president.
“So far our retailers have been very generous in giving us two weeks of extensions,” she said.
But, Campbell said, if her company takes more than two weeks to catch up, orders could be canceled. It’s a possibility, given the time employees will need to find housing and the delay of shipments due to cargo backups and closed roads.
One local company really feeling the effects of Mitch is Dole Food Co. Inc. The Westlake Village-based fruit grower is expecting a $50 million to $70 million write-off in its fourth quarter, which ends Dec. 31, for loss of equipment and crops, and for the cost of rehabilitation of farms.
Dole already suffering from depressed banana prices lost about 40,000 acres of bananas, sugarcane, pineapples and other crops. The company estimates that about 70 percent of its Central American banana crop was completely destroyed, said spokesman Thomas Pernice.
Pernice said it only takes about nine months from the time a banana tree is planted to when it starts bearing fruit. But because of the damage, it could be 12 to 18 months before Dole’s farms are cleaned, replanted and fully operational.
“Because of the infrastructure damage, we’re anticipating that it may take more time before things return to normal,” he said.
Meantime, Pernice said, Dole will be looking to its crops in other parts of the world such as Ecuador, Colombia, Costa Rica and the Philippines to try to make up for some of the shortfall from the lost Honduran, Guatemalan and Nicaraguan crops.
“We’re not sure how much we’ll be able to make up from other locations yet,” he said.
