ASSINTECAL: NEW PATHS FOR COMPETITIVENESS

The Associação Brasileira de Empresas de Componentes para Couro, Calçados e Artefatos – Assintecal (Brazilian Association of Products, Footwear and Hide Component Organizations) represents more than 300 associated companies and is one of the links of the hide-footwear chain that is most committed with the added-value exports. In Brazil, there are approximately 1,551 industries of components in production and most of these (60% are micro-organizations) that are concentrated mainly in the States of Rio Grande do Sul (51.7%) e São Paulo (34%) around two strong centers of footwear manufacturers: Vale do Sinos/RS and Franca/SP).  The segment is being directly affected by the crisis that the footwear industry is experiencing, thus, according to the president of the entity, Luiz Claúdio Amaral, the sector is focusing this year on the increase of exports and continue investing in the local market.

Installed in office last April, the new president is playing in the team of those that see China as a large opportunity. This is the reason for the growth in sales of 45% experienced by the Brazilian components, reaching the amount of US$ 18,4 millions. Luís Cláudio Amaral highlights that to survive to the China phenomenon other competitiveness models should be identified. In the component segment the option is: investments in design , innovation and technology, specifically in projects that have the support of Apex-Brasil oriented to export. These and other interesting opinions are in the interview that follows hereunder.

COUROBUSINESS : Which are the challenges for the component segment in 2006?

AMARAL : We are working with the objective to achieve a growth in the export area and maintain the performance in the local market which is undergoing a drop in the footwear production. These goals represent significant challenges due to the difficulties being faced by the footwear industry and by the exchange rate factor, which drastically interfere in exports. Additionally, in April we have started a new administration as head of the Assintecal and we have assumed the commitment to maintain the work already under way, and also to strengthen the full integration between the different segments that comprise the Brazilian footwear-hide chain. Integration and growth these are our main challenges.

COUROBUSINESS : Other segments of the footwear-hide chain, such as machines and shoes are complaining of the drop in exports mainly due to the low exchange rate of the dollar. How does the issue related to valorization of the Real affects the component segment?

 

AMARAL : We have not as yet experienced a drop in the export amounts, but we have faced a significant reduction in growth level. In 2003 and 2004, always with the support of APEX-Brasil (Agência de Promoção de Exportações e Investimentos )(Investment and Export Promotion Business Office), we have expanded the exports in approximately 20% a year as compared to the previous period. In 2005, this increment was of approximately 7%, a percentage that was experienced during the first four months of 2006. In additional, valorization of the Real is affecting the production of footwear designed for export, and this affects the demand for components in the local market. Thus, losses are felt in Brazil and abroad.

 

COUROBUSINESS : Last year, sales of the Brazilian components to China grew 45%, achieving US$ 18,4 millions. Is this a reaction strategy against invasion of the Chinese products in the market?

AMARAL : The component segment actuates with a global market vision. Within this vision, we are trying to identify business opportunities that are present in different markets, and accept the hypothesis that, at several moments, our market will also be an opportunity for other manufacturers, however this does not mean that we are standing still before the international competitiveness. We are looking for a permanent competitiveness through innovation design, added-value, technology and aggregated services. As related to China , independently of the opportunities that the country identifies in Brazil , it is a desired market for any industry. Only in the footwear segment, China is the major worldwide manufacturer with approximately nine billion pairs per year. Thus, for the component segment, this is a significant opportunity. We are identifying some space for trading of high quality and value added products, or products technologically differentiated, such as hide soles, vegetal tannin for hide tanning, stiffeners. It is an international actuation strategy, supported by APEX-Brasil, which is searching for large markets and good business opportunities for the Brazilian industry.   

COUROBUSINESS : The footwear sector, for example, has been adopting the strategy to sell to high added-value markets, where the Chinese products are not included. Do you believe that this should be the path adopted by other links of the chain, this means, did the "China Factor" came to change definitely the directions of export? 

AMARAL : I believe so, because they have a great advantage in scale production and thus, they offer extremely low prices, although many times this differential is followed by a poor quality product. Thus, it is important to identify other competitiveness models and we are already in this path in the component segment. Our design, innovation and technology projects, developed mainly in cooperation of APEX-Brasil and of SEBRAE (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas) (Brazilian Service for Support to Micro and Small Size Companies), are developed having in mind this focus. It is important to highlight that other factors also contribute to our presence in the international markets. The aggregated services, the differentiated information, the assistance provided in relation to the small quantities per purchase order, are some of the factors that place the Brazilian components in advantage, in different markets.

COUROBUSINESS : How is the interaction between the component segment and the other segments of the chain? Is there a partnership aiming to promote production at a higher added-value?

AMARAL : This interaction is growing more and more each year, and our goal is to work in a close manner. The entities are discussing their problems, the difficulties faced by their segments to produce in Brazil and the alternatives needed to continue in the market. Practically, all the segments work with the idea of the added-value and this represents an agreement among the entities. But we should go further and we believe that this is also the vision shared by all entities, and this facilitates the search for better results.

 
COUROBUSINESS : Brazil is becoming more and more important in the design area. How does the component segment transfer this value to the product? And what is the weight of design abroad?

AMARAL : The component segment has been developing the design theme during the last six years. Although it looks like a repetition, it is fundamental to highlight the role of APEX-Brasil and of SEBRAE in these projects, because both entities are betting on the design as one of the main competitiveness tools for the Brazilian product. In the component sector, we are developing new materials, innovations, new forms, technologies, this means a set of differentials that contribute to the valorization of the end product. This is a way that was identified to transfer value to the footwear produced with Brazilian components. In addition, we have been working with Brazilian cultural references, searching inspiration in this cultural diversity that Brazil produces. And all these elements are reflected abroad, because these are the cultural differentials of our country, factors that really make our products different from the others. In several markets, including in China , this aspect is being valorized and is facilitating the access of our companies to potential customers.

COUROBUSINESS : This year it is an election year and ending Luiz Inácio Lula da Silva's mandate, with expectation of a new election. Which themes does Assintecal elect as priorities in a future mandate, independently of the winning candidate?

AMARAL : These are old themes, but unfortunately they were not taken into consideration by several different governments. The tax load is the main issue because the Brazilian production looses important opportunities due to the heavy taxes being applied. The exchange rte is another factor that needs special attention, so that the Real does not continue highly valorized, jeopardizing segments such as the footwear sector. Ant the country needs urgently and wide development project that really leverages the growth, similar to what is happening in other countries, which are growing much more strongly when compared to Brazil .