Brazilian Suppliers Ready to Press Advantages
Cotton, Pulp, Energy Resources Bolster Industry; Currency Problem Predicted to Ease After Upcoming Elections
By Staff -- Home Textiles Today, 6/5/2006 12:00:00 AM
It all comes down to the real. The strength of Brazil's currency, the real, has made exporting a tough business for some time now, hitting Brazilian home textiles manufacturers in the area of big volume promotional and opening price point business. To keep the business going with U.S. customers, manufacturers have turned to higher quality/higher ticket products, as well as to China and India, in some cases sourcing goods for the American market from Asia.
“We are facing a huge problem because of our currency,” said Betania Landeira Waldrich, sales manager, Buettner Home Textil. “We are not having any positive margins, but we are keeping the business with the United States because we believe the situation will improve in three or four months, after our presidential elections. It's a huge movement here because it affects so many industries.”
The industry is also touting what it sees as Brazil's natural advantages in textiles production. Josué Gomes da Silva, who is president of Abit — the country's textiles and apparel industry association — as well as co-ceo of Springs Global, cites three factors that make the country a sound resource for goods.
First, he noted, Brazil is one of the world's largest exporters of cotton. The fact that Brazil's cotton remains un-subsidized will put the industry in good stead when American and China finally relinquish their own subsidizes, which da Silva considers inevitable.
Second, Brazil is one of the world's largest producers of pulp, placing it in a strong position to produce more of the types of cellulose fibers that advocates of the sustainable resources movement (especially, Wal-Mart) are supporting.
Finally, said da Silva, the country is self-sufficient in oil and the leader in sugar-cane-derived alternative fuel, making manufacturing cleaner and far less vulnerable to swings in fuel prices elsewhere in the world. Again, something that could be a big plus if other retailers follow Wal-Mart's lead and get religion about reducing their environmental impact.
“We are at the forefront of renewable resources in the world,” da Silva added. “Our environmental and labor laws are very strict. We're a very competitive country, and we have good designs.”
Still, he acknowledges that the overvaluation of the real – which some have put as high as 35% — has made business difficult. He predicts Brazil's central bank will move quickly to reduce inflation rates.
In the meantime, Brazilian manufacturers have been focused on service and speed to market, according to Eric Vergucht, who represents Dohler in North America and is a long-time Brazilian hand.
New orders from Brazil can turn in 60 days — reorders in 30 to 45 days, he said. The cycle for developing goods and shipping samples is also faster for Brazilian manufacturers than for those in Asia, he said.
“Brazil has always been about niche business and opportunities,” Vergucht said.
Buettner's Waldrich said what buyers are asking her company for now, are better quality products that will allow them to boost price points.
“Everybody is trying to having more profitability,” she said.
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