PANAJACHEL, Guatemala – It has been three years since the U.S. economy took a nose dive. From 2008 to early 2010, nearly 2 million small businesses across the country closed their doors.
Overseas, many businesses rely on the U.S. market and have been adversely affected by that downturn. In a town in the western region of Guatemala, a group of indigenous women launched a cooperative during the U.S. recession ¬– and found success because of it.
Panajachel is a quaint town on the edge of Lake Atitlán, located about 90 miles west of Guatemala City. The streets downtown are lined with kiosks. There are artisans selling traditional crafts, from hand-made clothing to brightly colored pillowcases to rag dolls and other home décor.
“Pana”, as some call it, is a tourist town. But these days, it’s more like a ghost town. Since the beginning of the recession, artisans here spend their days soliciting the first person they see, hoping to sell something.
On one of the busiest streets in town, called Calle Santander, a group of indigenous women work out of a second floor storefront building. They are creating a new line of purses for the U.S. market. They belong to a group of 31 Mayan artisan cooperatives who make up “Mercado Global”, a non-profit group that works with the cooperatives.
Like thousands of other artisans throughout Central and South America, the women of Mercado Global banded together to form this cooperative to sell their items at a set cost. They are targeting an overseas market and, in turn, greatly increasing their day wages.
“In 2006 and 2007 was when we decided to transition our model to having a Guatemala based-staff and to have a wholesale model partnering with big companies in the U.S.,” said Ruth DeGolia, founder of Mercado Global.
DeGolia, an American, actually started the organization in the mid 2000’s when she began selling the handmade bags to college students out of her Yale dorm room. Then, using her business connections after graduation, she began to link the artisans with U.S. retailers.
By 2008, after a year of sales pitches, the women started selling bags that were used as swag by U.S. companies hosting annual conferences. They make about 68 to 100 “Quetzales” (Guatemala’s currency), or about $10 U.S. a day. That’s three times what an average street vendor would make.
Then, the Great Recession hit the U.S.
“It felt like the most horrible thing that had happened to us because all bets were off,” DeGolia said.
The artisans were gravely concerned they could lose customers.
“We were listening to the news from the U.S. They would say so and so famous store closed its doors,” said Lidia Garcia, an artisan with the cooperative. “And yes, we were really worried for a while.”
As they feared, the U.S. recession drove Mercado Global’s orders down, way down. A 14 percent hit during the first year of the recession. That shook their confidence.
“There is a pretty general sentiment that they can’t rely on the U.S.,” said Walter Little, a professor at the University at Albany, for the State University of New York, and an expert on the Mayan business industry.
Little said cooperatives – like Mercado Global – have had to re-think how they do business.
“I think it largely has to do with how flexible the artisans themselves can be in changing designs and the quality of fabric,” the professor said. “How quickly can they do it and still maintain those connections.”
Mercado Global did just that. In 2009, the cooperative took the few orders that came in to pay the artisans and raised funds to keep the cooperative’s administration going.
DeGolia hired and flew-in unemployed designers from the U.S. to help the women learn new product designs and use new materials. They redesigned their products, adding textiles and jewelry.
In a matter of months, high-end retail companies – including Bloomingdales, Nordstrom and Crate and Barrel – were interested. By 2010, their orders nearly doubled.
“In the end, what we realized, I know it might sound horrible to say, but the recession was the best thing that ever happened to us,” DeGolia said. “It forced us to develop a really smart sales and product design program.”
As the U.S. continues to climb out of the rough economy, businesses like Mercado Global look elsewhere for opportunities.
DeGolia said the cooperative sent their first shipment of products to Mexico, Costa Rica and Colombia earlier this summer. The opportunity was made possible through the Central American Free Trade Agreement.
