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The Rupp Report: 2010: A Year For Brazil?

Jürg Rupp, Executive Editor

As the New Year began, a few markets started to show some signs of recovery after the disastrous period of 2008 and 2009. After Asia, and particularly China and India, another part of the world presented some market improvement -- Latin America, and especially Brazil, while other South American markets, such as Argentina, are still struggling with the situation.

Huge Domestic Market
Yet, in some South American countries, local factors have had the same or a larger impact than has the global financial crisis. One big advantage for Brazil is its enormous domestic market, when compared to countries like Argentina or Colombia. However, there are always two sides of the coin. As the Brazilian Textile and Apparel Association (ABIT) states in its most recent Annual Report:

"The opening of the domestic market to international competitors in the past decade, required from the sector huge investments to modernize its machines, aimed at reducing costs and improving the quality of their products in order to face competition from large producers and worldwide suppliers, particularly some from Asian countries. Between 1990 and 2008 US$13 billion were invested for the purchase of textile machinery and equipment of the last generation."

And that's what the Brazilian textile industry did.

Textiles Of Increasing Importance

Not only in Asia, but also in Brazil, the textile sector is of increasing importance for the gross domestic product: Globally, Brazil ranks seventh in total textile production from fiber to fabrics, and holds sixth place in apparel production. From 2004 to 2008, the number of textile companies increased from 3,847 to 4,518. The number of spinning companies increased from 359 to 419 and weaving companies, from 448 to 601; while the knitting sector declined from 2,546 companies to 2,442. The biggest jump -- more than 100 percent -- was seen in the finishing sector, which grew from 494 companies to 1,056. But the importance of apparel also is growing: the number of companies changed from 16,531 in 2004 to 21,044 in 2008.

Innovation And Integration
ABIT President Aguinaldo Diniz Filho wrote in his opening remarks in ABIT's 2009 Annual Report: "The year 2008 was unusually challenging for all of us acting in the sector. To keep a Brazilian company running with this scenario characterized by lack of confidence, scarcity of financing, and yet, producing, employing and paying so many taxes in this environment of market recession was a mission fit to be included among the Labors of Hercules. However, the sector was able to transform an adverse reality into an opportunity to show creativity.

"Products with increased value added were able to create a differential to face the price war with more basic products. The key words of this and the next decade are innovation and integration. We are more than 30,000 companies in the chain, starting with fiber producers till garment making, including spinning, weaving and knitting. The motivation to renew, to introduce novelties is a daily must in each one of our companies, which have to evolve following a trend towards the integration of all segments."

ITMF Conference 2010

The next platform for the Brazilian textile industry to show its abilities and power is the forthcoming annual conference of the International Textile Manufacturers Federation (ITMF). The event will take place Oct. 17 - 19, 2010, in São Paulo. The Textile Industries Media Group , publishers of the Rupp Report and the magazines Textile World , Textiles Panamericanos and Textile World Asia has again been selected to be the exclusive media partner for the event. More information on the textile industry and its successes in Latin America in general, and Brazil in particular, is yet to come. Stay with us!

March 23, 2010