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Jacobo Kattan Jr – Kattan family teaches Honduras a lesson in ambition

Contributed by Andrew Dabdoub on 01.10.2007:

Kattan family teaches Honduras a lesson in ambition

When you think of the Honduras of the 1920’s you think of a third world country subject to constant coups and military rule, a place where multinational banana companies controlled the economy, and a society struggling to keep pace with a politically and economically changing world.

But the 1920’s were also the days of the late Jacobo David Kattan, an enthusiastic entrepreneur who fervently believed in Honduras’ production potential.

“He always had mass production in mind,” says Kattan’s grandson Jacobo Kattan Jr., who today manages the company his grandfather built and is president of the Honduran Maquila Association. “He also had faith that Honduras could produce and sell in large quantities.”

The late Kattan bought 20 state of the art industrial machines and began to manufacture shirts and pants for the Central American market under the brand name Presidente Paz. “They grew to become the largest factory in Central America,” the younger Kattan told Honduras This Week.

But after more than three decades of successful production the Kattan family’s success took a turn for the worse.

After the 1969 war between Honduras and El Salvador — remembered today as the Soccer War — and Honduras’ subsequent succession from the Central American economic agreement, Presidente Paz was wiped out of the regional market.

But the late Kattan remained optimistic.

“The factory was too big for the local market, so [my grandfather] began to search for different markets and the United States responded to his request,” said Kattan Jr.

The visionary launched a series of joint ventures with U.S. companies like Van Hausen and began producing for North American consumers.

“He targeted his production to the Latin market in the United States and began manufacturing guayabera shirts,” said Kattan Jr., adding that his father Gabriel “turned the company into the corporation that it is today.” In the hands of Gabriel Kattan, “we penetrated the Central American market again and expanded in the U.S.”

The Kattan family’s companies have grown substantially since the days the late Jacobo Kattan sat in his Presidente Paz office in downtown San Pedro Sula. In 1977 the family created Manufacturas Industriales, S.A. and began to produce apparel in a joint venture with the U.S. company Arrow.

Like his grandfather, Jacobo Jr. believes Honduras has potential for great industrial growth. “We have always believed the Honduran labor force is highly trainable and we knew we could be highly competitive anywhere in the world if we only had the same opportunities,” he told Honduras This Week.

The new factory increased production steadily and now produces 60,000 polo shirts a week. But the family hasn’t stopped there. In 1988, they built INDELVA, Honduras’ first private industrial free zone.

“Years ago, when we wanted to use the National Port facilities for our merchandise, we were denied,” says Kattan Jr. “INDELVA is privately owned, but controlled by the government…. It broke down the barrier that nationals could not operate in free trade zones.”

Located in Choloma, the heart of Honduras’ export processing zones, INDELVA employs nearly 6,000 Hondurans and companies from 14 different countries, including the United States, Korea, Taiwan and Honduras, take advantage of the tax free benefits the free zone provides.

But the Kattan family’s luck could turn again. With the advent of the North American Free Trade Agreement (NAFTA), Central America could lose investors to Mexico.

Jacobo Jr., however, who inherited his grandfather’s optimism, remains undismayed.

“We need to attract new investors while we keep the old ones,” he says. “We, the government and the private sector, need to be more aggressive or the investors will indeed choose Mexico.”

His recipe for the nation’s success is based on his family’s own recipe: initiative, confidence and ambition.

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