Brazil's textile and apparel industry is the seventh largest in the world, and is the third largest with regard to knitwear. It turns over US$22 billion per year, produces 7.2 billion garments annually and comprises 30,000 companies employing 1.4 million workers directly and another 1.6 million workers indirectly. Furthermore, it is a growing industry: the past eight years have witnessed US$7 billion in investment, while a further US$12 billion is earmarked for investment over the next seven years. More than 70,000 new jobs have been created since 2000, and the industry is expected to employ upward of 2 million within the next five years.
Additionally, during 2001, the balance of trade turned positive, with the industry exporting more than it imported. The textile and clothing industry in Brazil owns and operates some of the most sophisticated factories in the world, with sectors of the industry located throughout each of the 27 states and related to all aspects of the apparel supply chain.
Although it is a well established industry whose history goes back more than 150 years, a closed post-war economy, followed by a flood of cheap imports and massive inflation, kept it from establishing an export industry until just recently. Brazil currently exports an estimated 7 percent of its total production. Forty-three percent of this is manufactured clothing and 57 percent is textiles, including yarn, fabrics and knitwear.
Left to its own devices, the industry has exported between US$1.2 billion to US$1.3 billion per year over the past eight to 10 years, equivalent in today's terms to 0.3 percent to 0.4 percent of the world's market. But now, ABIT, the Brazilian Textile and Apparel Industry Association (www.abit.org.br), backed by the Brazilian government, has stepped in to promote exports. By 2008, ABIT plans to hold 1 percent of the world's growing textile and apparel market, which is predicted to total US$4 billion in exports.
Quotas to the United States are in most cases currently underutilized and in September 2002 the EU export quotas were abolished. This, combined with the fact that recent heavy investment has meant many of the factories are operating under capacity, means Brazil's textile and apparel industry is poised to focus on the global marketplace.
Additionally, the country is planning to expand its domestic market by 50 percent over the next few years, from approximately $20 million to $30 million.
Brazil boasts Latin America's largest GDP and the ninth largest economy in the world, making it a key prospect for international investment. In 2000, it attracted US$33 billion in direct international investment, compared with US$9 million in 1996. Brazil is the world's fifth largest country, with a surface area of 8.5 million square kilometers, and shared borders with every country in South America except Chile and Ecuador. Portuguese is the official language. Almost 82 percent of its 172.6 million inhabitants live in the major cities. Brasilia is the capital, while So Paulo is the economic, industrial and financial heart of Brazil, accounting for 33 percent of total GDP and 22 percent of total population. The average income of the total population (GNI) equates to US$3,060. The Brazilian currency is the real, introduced in July 1994 in conjunction with the "Real Plan," a series of economic measures designed to end spiraling inflation.
Background to Brazil's Textile and Clothing Industry
It's been 150 years since the Brazilian textile supply chain entered the industrial revolution, and the last few years have seen it enter a new revolution, dictated by the demands of a global industry and the necessity of providing quality, innovation and fashion to the international market.
This revolution encompasses the entire supply chain, from the growing of raw cotton - Brazil is entirely self-reliant and grows 900,000 tons per year, a figure expected to increase to 1.2 million tons by 2005 - through to the finished garment. The country boasts globally renown designers such as Alexandre Herchcovitich, Carlos Miele, Walter Rodrigues, Reinaldo Lourenco and Gloria Coelho and international model celebrities such as Gisele Bndchen, Fernanda Tavares and Caroline Rodrigues.
With 173 million Brazilian consumers, the textile and clothing industry is the seventh largest in the world. Nevertheless, since World War II, it has been monopolized by the domestic sector, mainly due to Brazil's internal political and economic fluctuations. During the war, however, the textile industry was the country's second largest industry. In 1945, more than 1 billion meters of cloth were produced. Brazil's per capita consumption of textile products equates to 11.2 kilograms of fabric per year. In developed countries, this statistic reaches 18 kilos per year per person, leaving considerable room for growth. In a cold country, 25 kilos per person annually is achievable.
Today the clothing industry is the largest manufacturing employer within the country. The industry consumes more than 1 million tons of raw material, 60 percent of which are woven; 40 percent knitted. Clothes represent a major portion of the GDP with an annual return of more than $20 billion a year.
The 1990s were a landmark for the textile industry, with government reforms and policy changes. The government opened the country to imports, which attracted cheap Asian apparel that crippled local trade. Thus, countermeasures were introduced. Two actions in particular - the Brazilian Program of Quality and Productivity and the Brazilian Program of Design - have proved the most significant. They have resulted in major investments, quality improvements and cost reductions that have enabled the industry not only to compete domestically but internationally. The introduction of a kind of "Brazilian brand" or consolidated look has heated up the domestic market whilst attracting international recognition. Moreover, fluctuating exchange rates have made textile exports more attractive.
Scope and Diversity of the Industry
While there is a significant silk industry that covers the supply chain from silk worm to finished product, and that rivals Italian quality, 70 percent of all spinning mills utilize cotton as their principal fiber. Gois is the main cotton producing state, followed by So Paulo, though both will soon be superseded by Mato Grosso, where a huge cotton growing growth program is underway. Crossbreeding research conducted in the 1970s produced a fiber length of up to 90 millimeters, the longest in the world and a variety particularly in demand by sewing thread producers.
The weaving industry currently employs 280,000 people and incorporates some of the most modern companies in the world, including Indego Denim, which may be the world's largest denim producer - hardly surprising for the largest jeans-consuming country in the world.
The state of Minas Gerais is home to many of the largest textile producing companies, including Cedro (2,500 tons per month with plans to expand to 3,500 tons), Cachoeira and Santanense, each over a century old. Some newer companies include Coteminas and So Jos, the first Brazilian company to produce fabric with a width of two meters.
Following a massive reinvestment program, So Jos currently produces 45 million square meters of fabric per year, distributed throughout Brazil and the Mercosul nations, with end uses in the clothing (80 percent), industrial (10 percent) and household textiles (10 percent) sectors.
Coteminas began operation 25 years ago and today operates 11 industrial units within four states. The company consumes 96 thousand tons of fiber per year - nearly 12 percent of Brazil's total cotton consumption - to produce yarns, woven and knitted fabric, T-shirts, socks, bath towels, bathrobes, and bed sheets for the domestic market as well as for export to the United States, Europe and other Mercosul countries.
The leading company for silk production is the Werner Textile Plant founded in 1904, which produces approximately 300,000 meters of fabric per month. It not only produces pure silk and mixed silk textiles, but also several types of crepe, including mousson and Chanel, pure silk georgette, taffeta, gazar, gabardine, crepes and satin with Lycra, and grosgrain.
Synthetic fibers and fabrics are produced principally in So Paulo. Rhodia Poliamide, for example, focuses on the nylon polyamide segment. The company employs 2,100 and turns over $250 million per year, half of which comes from the sale of textile filaments. Fibra Du Pont, Vicunha and Polyerika are also key synthetic fiber and yarn producers.
There are approximately 2,300 registered circular knitting enterprises in Brazil, whose main segments employ approximately 49,500 people in the manufacture of socks, underwear, beachwear, and other cut-and-sew garments. As the most important nucleus of flat bed knitting, Caxia do Sul contains 350 to 400 companies, most of which are medium sized (up to 500 employees) and produce about 8.5 million items per year, generating approximately 7,000 jobs.
In Brazil, a large number of private-capital family companies, most of which are small (up to 100 employees), predominate the clothing industry. Many of these operate on a CMT (cut, make and trim) or purely subcontract sewing basis. Most small companies developed out of small sewing studios, tailor shops and enterprises of immigrants who rushed into the textile field. There have been few foreign investors entering the industry.
Larger companies have often emerged as appendices to the textile plants, specializing in a particular type of fabric and interested in expanding their business by verticality, such as Coteminas. Because of the local production of cotton, and the temperatures within Brazil, 75 percent of all clothes made for the local market are cotton. Products of particular importance to the country include jeans, surf and beach wear, woven shirts, knitted shirts such as T-shirts and polo shirts and lingerie and underwear, while children's wear is on the increase. Currently, only about 15 percent of the country's 20,000 clothing companies export. Of those that do, this accounts for approximately 20 percent of their output.
Apart from traditional clothing, the sewing industry is very diverse, with home domestics such as bed and table linen and towels accounting for a significant amount of production. With the domestic market consuming approximately 150 million mostly branded beachwear items per year, Brazil also has become a leader in international beach fashion. The largest part of production - 87 percent - is concentrated in south and southeastern Brazil, primarily in So Paulo and Santa Catarina. Yet there are also niche areas of production. In Nova Friburgo and Petrpolis, for example, more than 1,000 lingerie producers can be found producing between 360 million and 400 million items per year for noteworthy brands including De Millus, Du Loren, Triumph and Valis re. The largest embroidery producer in the world, the Arp Lace Company, also resides in Nova Friburgo.
The city of Santa Catarina specializes in circular knitwear, table linen, batch towels and gowns. Among its producers is Dhler, Brazil's seventh largest textile producer, which exports about a third of its production to more than 40 countries and employs 3,200 direct employees. Its vertical operations utilize 560 state-of-the-art looms, eight printing machines and 60,000 spindles to produce 1,000 tons of yarn per month and more than 6.8 million square meters of clothing. This accounts for an annual sales volume of more than R$120 million (US$36.2 million) to the domestic market and R$45 million (US$13.6 million) in exports. Products cater primarily to the towel and home domestics markets.
Other Santa Catarina companies include Malwee, which employs 3,500 people and produces 2.5 million knitwear items monthly from three units; and Hering Textil S.A, which ranks No. 1 among Brazilian knitwear companies and is the largest T-shirt producer in the world. Hering employs 4,148 people and outputs 5.5 million items per month, 60 percent of which are produced internally. Production requires approximately 1,000 tons of yarn per month. In 1997, the company celebrated the sale of its five-billionth T-shirt.
Due to attractive local government grants and incentives, northeast Brazil is growing in importance as many companies delocalize or expand garment production in this area and accommodate several key textile plants. The state of Sergipe, for example, produced 11,172 tons in 1996. According to the industry, the labor cost in the northeast is 30 percent to 40 percent lower than in the more industrial areas. Around So Paulo, for example, the average sewing machinist wage would equate to around US$165 to US$195 per month, while in the northeast this figure is more likely to be US$125. The country's minimum wage is around US$55 per month.
Due to the closed nature of Brazil's fashion industry, many brands have grown up internally. Zoomp and M.Officer (jeans and casual), Rosa Cha and Lenny (beachwear), Iodice (knitwear, jeans and high-end fashion) are examples of quality, fashion-conscious Brazilian brands.
All of them have begun exporting to a greater or lesser degree, and in addition to the production capability of their country, it is their branding and design that they most wish to promote. Some companies are setting themselves up to do both. Marisol, for example, has a range of well-established and very attractive brands for men, women and children, franchise stores and is also setting up one of its sewing units exclusively for contract production.
Started in 2000, TexBrasil is a strategic export promotion program operated by ABIT, which addresses the entire textile supply chain. Encouraging the designers, the manufacturers and the technological centers to work together, its aim is to offer the best of Brazilian product to the international marketplace. TexBrasil helps with market research, commercial promotion, trade fairs and so forth, as well as international negotiations such as the recent removal of quota from the EU.
Apart from many internal fairs, TexBrasil takes exhibitors to the key international fairs including Texworld, Heimtextil, MAGIC, Pret--Porter, Lyon Mode City, ASR and FIMI, depending on their product offerings. During 2003, for example, TexBrasil will exhibit at more than 25 international trade fairs. Inside the country, So Paulo Fashion Week and Rio Fashion are the most prestigious events for fashion, with 50 of the most important Brazilian designers showing their wares.
Niki Tait, C.Text FTI, FCFI, heads Apparel Solutions, which provides independent assistance to the apparel industry in the areas of manufacturing methods, industrial engineering, information technology, quick response, etc. She can be reached at tel./fax +44 (0) 1237 423163, e-mail: firstname.lastname@example.org.