The recent deal to free up textile and apparel trade barriers between the European Union and Brazil is the latest thrust in the South American country's drive to access global markets. An export push being led by ABIT, the Brazilian Textile and Apparel Industry Association, backed by the Brazilian Government, aims to secure 1 per cent of the world's growing textile and apparel market by 2008 - as Niki Tait finds out.

Brazil's textile and apparel industry is the seventh largest in the world, generating revenues worth more than US$22 billion per annum. It produces 7.2 billion garments a year, and consists of 30,000 companies with 1.4 million direct employees - or 3 million workers if ancillary employment is included.

It is also a growing industry. $7 billion has been invested over the last eight years, and a further $12 billion is scheduled over the next seven. More than 70,000 new jobs have been created since 2000, and upwards of two million employees are forecast within the next five years.

During 2001 the balance of trade turned positive with the industry exporting more than it imported.

Automatic pocket attach at Marisol
The textile and clothing industry in Brazil owns and operates some of the most sophisticated factories in the world covering every aspect of the supply chain. But despite a history that goes back over 150 years, the country has only recently begun to establish an export industry. It currently exports around 7 per cent of total production: 43 per cent of this is manufactured clothing, 57 per cent is made up of textiles including yarn, fabrics and knitwear.

Over the last eight to ten years export levels have been maintained at $1.2-1.3 billion per year, equivalent in today's terms to 0.3-0.4 per cent of the world's market. But now ABIT, the Brazilian Textile and Apparel Industry Association, backed by the Brazilian Government, has stepped in to promote exports.

Carlos Miele,New York
Fashion Week,
spring/summer 2003

By 2008 ABIT plans to hold 1 per cent of the world's growing textile and apparel market, by that date predicted as $4 billion of export. Quotas to the US are in most cases under utilised, and in September 2002 EU export quotas were abolished. This, combined with the fact that recent heavy investment has meant many of the factories are operating below capacity, means the Brazil Textile and Apparel industry is set to address global markets.

In addition the country is also planning to expand its domestic market by 50 per cent over the next few years, from around $20 million to $30 million.

Background to Brazil
Brazil has the largest GDP within Latin America and the ninth largest economy in the world. This makes it one of the key international investment opportunities, in 2000 attracting $33 billion - a leap from the $9 million received in 1996.

Brazil is the world's fifth largest country with a surface area of 8.5 million square kilometres, and shares borders with every country in South America except Chile and Ecuador. 81.7 per cent of its 172.6 million inhabitants live in the major cities. Although Brasilia is the capital, São Paulo is the economic, industrial and financial heart of Brazil. The average income is $3060. Portuguese is the official language. The Brazilian currency is the Real which was introduced in July 1994 following the introduction of the "Real Plan," a series of economic measures designed to end spiralling inflation.

The textile and clothing industry

Highstil uses a variety of CAD design packages

In the last few years the Brazilian textile supply chain has been dictated by the demands of a globalised industry and the need to supply the international market with quality, innovation and fashion. From the growing of raw cotton (in which Brazil is entirely self sufficient, producing 900,000 tons per year), through spinning, weaving, knitting to finished garments, the country's apparel industry has grown to encompass globally renowned designers such as Alexandre Herchcovitich, Carlos Miele, Walter Rodrigues, Reinaldo Lourenco and Gloria Coelho and international models such as Gisele Bündchen, Fernanda Tavares and Caroline Rodrigues.

Since the Second World War Brazil's textile and clothing industry been monopolised by the domestic sector, mainly due to its internal political and economic fluctuations. Per capita consumption of textile products equates to 11.2 kilograms of fabric per year - but compared to 18 kilos per person per year in developed countries and 25 kilos per person per year in a cold country this figure leaves considerable room for growth.

Today the clothing industry is the largest manufacturing employer in the country. It consumes over one million tons of raw material of which 60 per cent are woven, the rest knitted. Within the gross domestic product clothes represent a major segment, displaying an annual return of over $20 billion a year.

Iodine collection,
spring/summer 2003

The 1990s represented a landmark for the textile industry with government reforms and policy changes. The country opened to imports, following which the local trade was crippled by cheap Asian apparel. Counter measures such as the Brazilian Program of Quality and Productivity and the Brazilian Program of Design have resulted in major investments, quality improvements and cost reductions, enabling the industry to compete both domestically and internationally.

Fluctuating exchange rates have made textile exports more attractive, while the introduction of a kind of 'Brazilian Brand' or look has also heated up the domestic market and attracted international recognition.

Industry scope and diversity
70 per cent of all spinning mills utilise cotton as their principle fibre. Goiás is the main cotton producing state, followed by Sao Paulo, though both will soon be superseded by Mato Grosso where a huge cotton growth program is being undertaken. A fibre length of up to 90 millimetres has been obtained - the longest in the world - which is in great 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 is probably the world's largest denim producer. This is hardly surprising given that Brazil is the largest jeans consumer in the world.

Minas Gerais is home to many of the largest textile producing companies including Cedro (2,500 tones per month with expansion plans to increase to 3,500 tons), Cachoeira and Santanense which are each over a century old, as well as newer ones such as Coteminas and S o José, the first company in Brazil to produce two metre wide fabric.

Jeans production at Staroup

Following a massive reinvestment programme S o José currently produces 45 million square metres of fabric per year, distributed throughout Brazil and the Mercosur nations (Brazil, Paraguay, Uruguay and Argentina).

Coteminas began operation 25 years ago and today operates 11 industrial units in four states. It consumes 96 thousand tons of fibre per year, nearly 12 per cent of the total Brazilian cotton consumption, to produce yarns, woven and knitted fabric, T-shirts, socks, bath towels, bath robes, and bed sheets, for the domestic market as well as exporting to the US, Europe and other Mercosur countries.

The leading silk producer is the Werner Textile Plant. Founded in 1904 it produces around 300,000 metres of fabric a month, including several types of crepe, pure silk georgette, taffata, gazar, gaberdine, crepes and satin with Lycra, and grosgrain.

Synthetic fibres and fabrics are produced principally in Sao Paulo. Rhodia Poliamide, for example, concentrates in the nylon polyamide segment employing 2,100 employees turning over $250 million per year. Fibra Du Pont, Vicunha and Polyerika are also key synthetic fibre and yarn producers.

There are approximately 2,300 registered circular knitting enterprises, whose main segments employ approximately 49,500 people making socks, underwear, beachwear, and other cut and sew garments. As the most important nucleus of flat bed knitting, Caxia do Sul contains 350-400 companies, most medium sized (up to 500 employees), producing about 8.5 million items a year.

Machinists work in small teams at Marisol

A large number of small private-capital family companies (up to 100 employees) dominate the clothing industry, many of which operate just on a CMT (cut, make and trim) or purely subcontract sewing basis. There have been no foreign investors entering the industry, so the larger companies have often emerged as vertical extensions to specialised textile plants such as Coteminas.

Three-quarters of all clothes for the local market are made from cotton. Products include jeans, surf and beach wear, woven shirts, knitted T-shirts and polo shirts, lingerie and underwear. Just 15 per cent of the 20,000 clothing companies export, with this accounting for approximately 20 per cent of their output.

With the domestic market consuming approximately 150 million beachwear items per year, mostly branded, Brazil has become an international leader in beach fashion. 87 per cent of production is concentrated in south and south eastern Brazil, with Sao Paulo and Santa Catarina the main areas. There are however niche manufacturing areas: in Nova Friburgo and Petrópolis, for example, over 1000 lingerie underwear producers make 360-400 million items per year for 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.

Santa Constancia has over
200 knitting machines

Santa Catarina specialises in circular knitwear, table linen, batch towels, and gowns. Amongst its producers is Döhler, Brazil's seventh largest textile producer exporting around a third of its production to more than 40 countries and employing 3,200 direct employees. Vertical in operation and utilising 560 looms, 8 printing machines and 60,000 spindles it produces 1,000 tons of yarn per month, and over 6.8 million square metres worth of clothes. It has an annual sales volume of over R$120 million to the domestic market and R$45 million in exports.

Knitwear firm Malwee is another example, employing 3,500 people producing 2.5 million items of knitwear a month from three units.

Ranking number one amongst Brazilian knitwear companies, Hering Textil SA, the largest T-shirt producer in the world, is also situated in Santa Catarina. Hering employs 4,148 people and outputs 5.5 million items per month, of which 60 per cent are produced internally, the rest out-sourced. It consumes around 1000 tons of yarn per month, and in 1997 celebrated the sale of its five-billionth T-shirt.

Teams add distressed looks Staroup jeans

Local government grants and incentives are attracting garment producers to the north east of the country. Labour costs in the north east are 30-40 per cent lower than the more industrial areas. Around Sao Paulo, for example, the average sewing machinist would earn around $165-195 per month, while in the north east this figure is more likely to be $125. The country's minimum wage is around US$55 per month, with on-costs doubling this figure.

Eyeing exports

Rosa Cha spring/summer 2003

Due to the closed nature of Brazil's fashion industry, many brands have established 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 brands aimed at the AB market and which have started to export.

Some companies are gearing themselves up for both design and contract work. Marisol has a range of well established brands for men, women and children, as well as franchise stores, and is also setting up one of its sewing units purely for contract.

Expert Analysis

World Textile & Apparel Trade & Production Trends
US textile output was down by 2.6% in January-August 2002 while apparel output declined by 7.4%. Exports fell, despite a weaker dollar, and weak demand in the domestic market forced down clothing prices to a four year low. US imports surged-especially from China - as quotas were liberalised. Softer demand and Chinese competition have also hit exports from Mexico. This new report gives details of the global trend in textile and apparel trade and production.

 

Launched in 2000, TexBrasil is a strategic export promotion program operated by ABIT, the Brazilian Textile and Apparel Industry Associatio (www.abit.org.br ), which addresses the entire textile supply chain. Encouraging designers, manufacturers and technology centres to work together, its aim is to offer the best Brazilian products to the international marketplace. TexBrasil helps with market research, commercial promotion and trade fairs, as well as international negotiations such as the recent removal of quota from the EU.

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 and quick response.