Guatemala Special Report by Coral Gables Magazine

Guatemalan Resurgence

Miami’s trade and investment links with Central America’s textile king

BY YOUSRA BENKIRANE

Since its founding in 2007 in the bustling logistics hub of Doral, the Deka Trading company has been devoted to one clientele – the more than one million Guatemalans living in the United States, including 150,000 in Florida and 70,000 in South Florida. Today, with warehouses in Guatemala and Doral near Miami International Airport, it generates around $20 million in annual revenue, consistently importing shipping containers filled with 500,000 pounds of Guatemalan goods each week. These shipments, arriving through PortMiami and Port Everglades, include products such as breads, pasta sauces, spices, condiments, chips, and beverages, all bringing a taste of Guatemala to American supermarkets.

“I came to the US thirty years ago and I remember that I saw something in the supermarket. And I said, ‘Oh, this is from Guatemala. I have to get it!’ I took maybe twenty units of the same thing because I didn’t think I could get it again,” says the President and CEO of Deka Trading, Carlos Mencos, “We wanted to change that, so that now when you go to the supermarkets in some areas, you see a lot of Guatemalan products.”

Guatemalan imports to the U.S. go beyond food and beverages, however. The leading imports are knit sweaters and knit T-shirts, more than a half billion dollars of which came through the Miami Customs District (South Florida) last year. And in the other direc-

tion trade is equally robust, with telephones, computers and cars totaling $427 million out of a total of $1.8 billion in exports in 2023.

With daily direct flights, strong port service lines, proximity ensuring short transit times, and cost-effective shipping options, doing business between South Florida and Guatemala has proven so strategically advantageous that the Central American nation is now the Miami Customs District’s 8th largest trade partner, with bilateral trade reaching $3.38 billion in 2023 and $1.75 billion in the first half of 2024. “South Florida is so close to Guatemala that it’s easy to travel. Sometimes I go to Guatemala early in the morning and come back later at night,” says Mencos, “When we have a problem sending things back because of compliance issues, we can ship it back, fix the issue, and re-export it. Being in Miami makes it easier to work.”

THE PILLARS OF TRADE

A significant driver of the trade relationship between South Florida and Guatemala is the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), a free trade agreement between the United States, the Dominican Republic, and five Central American countries: Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. Signed in 2004 and implemented in stages starting in

SUPERMARKET GOODS IMPORTED FROM GUATEMALA

2006, CAFTA-DR aimed to reduce or eliminate tariffs on a wide range of goods and services, thus promoting increased trade and investment among member countries.

One of the key benefits of CAFTA-DR is preferential access, which allows participating nations to export specific products to the U.S. with reduced tariffs or even duty-free, making their goods more competitive in the U.S. market. This has been especially beneficial for Guatemala’s textile and apparel industries, where manufacturers can produce goods at lower costs and export them more efficiently to the U.S. market. The agreement also creates opportunities for U.S. companies to access Central American and Dominican markets under favorable conditions, fostering economic growth and strengthening trade ties across the region.

“One industry that has greatly benefited from this agreement is the apparel and textile sector,” said Natalia Samayoa, the Trade Commissioner for the Consulate General of Guatemala in Miami. “You might not know this, but much of the clothing sold in stores like Target, Walmart, and other U.S. retailers is actually manufactured in Guatemala. For example, many NFL jerseys are produced in Guatemala. This makes the country a strategic location for companies from around the world, particularly from Asia – such as South Korea and Southeast Asia – who have invested in setting up factories here to manufacture clothing for export to the U.S.”

The result has been a growing tide of Guatemalan imports to the U.S. in recent years. Total imports reached $1.82 billion in 2022, marking an 18.4 percent increase from the previous year. In 2023, they totaled $1.58 billion – a 13.1 percent decrease from 2022 but still above pre-pandemic levels, and with every indication that 2024 will show a strong rebound; the first half of 2024 has already seen $798 million in imports. In addition to textiles, ag products are ringing in big numbers. As a traditionally agricultural-based

One industry that has greatly benefited from this agreement is the apparel and textile sector...

economy, the geographic proximity between Guatemala and Miami allows for a quick turnaround of these perishable goods. For 2023, imports of melons were at $153 million, legumes at $125 million, and bananas at $83.1 million.

In the Miami Customs district, Port Everglades and PortMiami are the primary recipients of these imports, as well as the leading ports for exports to Guatemala.

“Port Everglades, in general, is extremely Latin American centric. And if you look historically at our top 10 trade partners, there are always countries within Latin America and the Caribbean. Our very steady trade relationship with Guatemala is strengthened by our proximity,” explains Joseph Morris, CEO and Port Director at Port Everglades. “We’re so close to them – just a three-day transit –that it shapes the opportunity for trade. On the other hand, if you’re importing bananas from the Philippines, you’re looking at almost 30 days of transit, with increased uncertainty. Our geographyis incredibly advantageous to the flow of goods with Latin America."

Exports to Guatemala through South Florida’s ports are also rising, reaching $1.97 billion in 2022, marking an 18.7 percent increase from the previous year. Like imports, however, they slipped slightly in 2023 – totaling $1.8 billion, an 8.5 percent decrease from 2022.

NATALIA SAMAYOA, ABOVE, THE TRADE COMMISSIONER FOR THE CONSULATE GENERAL OF GUATEMALA IN MIAMI

BELOW: TEXTILE WORKER IN GUATEMALA

• #1 U.S. international freight hub

• #6 international freight airport in the world

• Leading airport for distribution of perishables

• CEIV pharma distribution hub

• 169 belly cargo / 108 freighter destinations

• FTZ magnet site

• $74.6 billion in CY 2023 total trade

• 82% of air imports between Latin America/Caribbean region & U.S.

GDP: $94.7 billion (2022)

Population: 18 million

Area: 108,889 square kilometers

Capital: Guatemala City

Other Major Cities: Quetzaltenango, Escuintla, and Antigua

Major Ports: Puerto Santo Tomás de Castilla (Atlantic) and Puerto Quetzal (Pacific)

Escuintla

Currency: Guatemalan Quetzal (GTQ).

Key Industries: Agriculture (sugar, coffee, bananas), manufacturing (textiles, apparel), mining (nickel, gold), and tourism.

Language: Official language is Spanish, though over 20 indigenous languages are spoken.

Sources: World Bank and International Monetary Fund; U.S. Census Bureau

Puerto Santo Tomás de Castilla

Guatemala City

Puerto Quetzal

Our very steady relationship with Guatemala is strengthened by our proximity ...

The first half of 2024 is already seeing a rebound, however, as exports rose 8.49 percent from the same time last year, reaching $953 million. Top exports in 2023 included telephones at $217 million, computers at $154 million, cars at $56.4 million, industrial printers at $35.8 million, and motor vehicle parts and accessories at $32.4 million.

BEYOND GOODS

There is one crucial aspect of trade that is not reflected in the statistics: services. While import and export figures provide a clear picture of goods traded, they often overlook the significant role services play in the economic relationship between Miami and Guatemala. This sector includes activities like financial services, consulting, and tourism, which contribute substantially to the economic ties between the two regions.

“We’ve become a major exporter of services to Guatemala. Many call centers, which primarily serve U.S. companies, have set up operations there. Guatemala’s familiarity with American culture and its neutral accent makes it an attractive destination for these businesses,” says Consul General of Guatemala in Miami Rosa Maria Merida Arias De Mora, “Business process outsourcing (BPO) companies are establishing themselves in Guatemala due to the

JOSEPH MORRIS, RIGHT, CEO AND PORT DIRECTOR, PORT EVERGLADES

GUATEMALA

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country’s young, skilled workforce. With a population of around 18 million, approximately 60 percent are of working age. So, we have a young population ready to work.”

Guatemala already has the largest economy in Central America, with a gross domestic product (GDP) of $94.7 billion in 2022. The country has experienced consistent economic expansion, with an estimated growth rate of 4 percent in 2022, a trend that has continued. Remittances, primarily from the U.S., increased by 9.8 percent in 2023, reaching $19 billion, up from $18 billion in 2022.

According to the Consulate, the Guatemalan government is implementing a strategy to increase English proficiency among its workforce, aiming to better capitalize on opportunities in sectors such as remote work. “Why not consider hiring someone in Guatemala, where the efficiency is high and the time zone is closer to the U.S., compared to hiring from the Philippines, which has a 14-hour time difference and sometimes challenging accents? This shift could position Guatemala as a key backup office and IT services hub for U.S. companies,” says Samayoa.

South Florida, and the U.S. in general, is also seeing a signif-

We’ve become a major exporter of services to Guatemala. Many call centers, which primarily serve U.S. companies, have set up operations there.

EXPORT PRODUCTS 2023

IMPORT PRODUCTS 2023

Source: USA Census Bureau; the Observatory of Economic Complexity

The Miami Customs District includes Miami-Dade, Broward and Palm Beach counties

ROSA MARIA MERIDA ARIAS DE MORA, BELOW, CONSUL GENERAL OF GUATEMALA IN MIAMI

icant influx of talent from Guatemala. Many U.S. companies are turning to countries like Guatemala, Colombia, Costa Rica, and Mexico to hire skilled professionals for their operations. Guatemala, in particular, benefits from a strong educational system, English proficiency, and a cultural alignment with South Florida, making it an attractive option for U.S. firms looking to expand their workforce. “The services sector is like the hidden trade giant. We see a lot of talent being recruited from Guatemala,” emphasized Alex Guzman, Customer Service Manager for Interport Logistics.

Previously, call centers and other service roles were commonly outsourced to China or India. Now there’s a noticeable shift toward hiring from Mexico, Guatemala, and Colombia – aligning with the broader trend of nearshoring. U.S. companies in general are looking to set up operations closer to home, from Mexico down to Panama, to mitigate risks associated with long supply chains and geopolitical uncertainties. The pandemic highlighted the challenges of relying on distant production hubs, with long lead times and high costs. Consequently, Guatemala has emerged as a strategic nearshoring partner, with U.S., European, and Japanese firms investing to reduce

ABOVE

production cycles and ensure just-in-time delivery.

This is especially relevant for companies manufacturing private-label products. For example, a U.S. company might hire a Guatemalan firm to produce plantain chips under its brand, benefiting from Guatemala’s competitive pricing, skilled workforce, and adherence to regulations. “If you were in the logistics industry during the pandemic years, you saw yourself – companies like us – and our customers having so much trouble bringing goods from Asia,” says Guzman “There were high costs, lead times were like 60-70 days, and you really couldn’t count on having a good plan for your business. We learned from that situation, and now customers are looking toward Guatemala, for example, for nearshoring opportunities.”

The U.S. has long been an important partner for Guatemala. According to the 2022 Coordinated Investment Survey published by the IMF, approximately 20 percent of foreign direct investment in Guatemala originates from the United States.

TOP LEFT: TEXTILE FACTORY IN GUATEMALA

BOTTOM LEFT: SITTING AT HIGH-ALTITUDE, GUATEMALA CITY

RIGHT: PREPARING BANANAS IN GUATEMALA FOR EXPORT

MADE IN GUATEMALA

One significant area of U.S. investment is Guatemala’s manufacturing sector. Companies like VF Corporation, a leading global apparel and footwear manufacturer, have expanded their operations in the country. Such new facilities not only boost local employment but also enhance Guatemala’s role in the global supply chain. This did not go unnoticed by American retail giant Walmart, which has announced a significant $1.3 billion investment in the region over the next five years – $700 million allocated for Guatemala and $600 million for Costa Rica. Although exactly how the money will be invested is yet to be disclosed, Walmart did announce plans to expand its store network in Guatemala and boost its logistics capabilities there. This includes the introduction of new in-store services such as facilities for sending and receiving remittances, which play a crucial role in the economy.

The coming years are poised for a surge in investment, highlighted by Synergy Industrial Park, an ambitious new industrial park in Guatemala’s third-largest city Escuintla. The project is set to transform 47 million square meters of sugar cane fields into a new urban complex featuring distribution centers and industrial

warehouses. “We were inspired by Guatemala’s potential to attract nearshoring investment,” said Alejandro Guillén, Industrial Park Business Manager. “Nearshoring is a reality, not just a trend. A new epicenter of manufacturing and logistics is emerging in Mexico and Central America [and] we believe in Guatemala.”

Synergy Industrial is a collaboration between two leading entities: Spectrum, an American real estate developer with over 27 years of experience, and Guatemala’s Grupo Pantaleon, a major player in sugar production. Grupo Pantaleon, with its extensive operations in Mexico, Guatemala, Nicaragua, and the United States, employs over 15,500 people and produces 1.201 million tons of sugar and related products annually. As a leader in Central America and among the top five in Latin America (excluding Brazil), Pantaleon ranks among the top ten sugar producers globally, exporting to over 40 countries.

The new development aims to spur economic growth by creating a business hub and generating employment. The first phase of the project, launched in 2023, includes the completion of infrastructure with power generation, fiber optics, and water services. Part of the industrial

TOP: PUERTO QUETZAL ON THE PACIFIC COAST

ABOVE: SYNERGY INDUSTRIAL PARK IN ESCUINTLA, FOR NEARSHORING

Cruise Capital of the World Global Gateway of the Americas

park is already operational and housing companies like PlastiMax, a packaging company for major corporations like Pepsi, alongside international firms from Mexico, Colombia, and Japan. “And the main market is Central America and the United States for those companies,” says Guillén. “We are currently negotiating with 70 percent international and 30 percent local companies. Those 70 percent come from United States, Mexico, South America, Europe, and Asia.”

Designed by global architecture firm Gensler (headquartered in San Francisco, California and ranked the largest architecture firm in the world in 2024), the Park spans 500 hectares and will offer a Free Trade Zone, high-quality services, and competitive prices. The Park also plans to feature housing, hotels, commercial spaces, universities, hospitals, entertainment, etc. “We are creating a new epicenter of opportunities, driving Guatemala’s transformation from rural to urban,” said Guillén.

Despite the overall positive outlook, there are challenges to consider. “We do have some challenges in Guatemala, particularly in developing more infrastructure like ports, airports, and roads, which we are lacking, and that makes our companies less competitive in the U.S. or global markets,” says Waleska Sterkel de Ortiz, Executive Director of the American Chamber of Commerce Guatemala. “However, we have been working closely with not just the private sector, but also the public sector, on various projects to address these issues. Right now, we are working on improving the ports and exploring new public-private partnerships.”

Guatemala’s current port infrastructure, crucial to the country’s trade and economic activities, also faces significant challenges. The main ports – Puerto Santo Tomás de Castilla on the Atlantic and Puerto Quetzal on the Pacific coast – are essential gateways

We do have some challenges in Guatemala, particularly in developing more infrastructure like ports, airports, and roads, which we are lacking...

DIRECTOR

for imports and exports. However, these ports are operating at near capacity, and the aging infrastructure struggles to keep up with the demand. Congestion, outdated facilities, and limited expansion capabilities hinder the efficiency of these ports, making it difficult for Guatemala to fully capitalize on its strategic advantages.

There is a concerted effort to turn things around. The relationship between Guatemala and its trading partners, particularly the United States, remains robust, driven by the understanding that mutual growth is key. “The relationship is extremely mature. But as they grow. We grow. You know, the ebbs and flows of international commerce,” says Robert Barceló, Senior Manager for Business Development at Port Everglades. “I recently met with the new President of the Board of Directors for the Port Authority [in Guatemala] and he’s very committed to turning the ports around, making it more productive.”

The ongoing focus on infrastructure will not only help Guatemala keep pace with its competitors but also ensure that its economic relationships, particularly with the U.S., continue to thrive. In the meantime, Guatemala’s geographic location, coupled with its favorable economic conditions – including stable debt levels, a strong currency, and numerous free trade agreements – continue to make it an attractive destination for U.S. and international firms. l

WALESKA STERKEL DE ORTIZ, ABOVE, EXECUTIVE

OF THE AMERICAN CHAMBER OF COMMERCE GUATEMALA

MAYAN RUINS AT TIKAL: TOURISM IS STILL IMPORTANT FOR GUATEMALA

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Track record of macroeconomic stability

Direct market access to the United States and Mexico

Availability of young and skilled workforce

Competitive & renewable energy

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