Valença is probably the oldest textile factory operating in Brazil. Famous clothing brands such as Forum and Mormay, among others, make use of Valença’s fabrics as raw material for their designer’s stunning creations. Gisele Ribeiro unthreads this company’s secret for growth.
During the 1850s, Valença was responsible for about 35 percent of textiles produced nationwide. It was such a prominent company that it was visited by Emperor Pedro II more than once, giving birth to a city named after it.
The company is also known by its pioneer and innovative approach to the industry. At a time when Brazilian economy depended on slaves, Valença, decided to hire women to work at its factory. For 44 years, it competed with other businesses that still utilized slaves, creating the first day nursery in the country and improving labor relations inside the industry.
In 1930, it introduced the first debentures convertible to shares in the international market. By the 1980s, it had caught the attention of one of the largest investment banks in Brazil: Opportunity Bank group had decisive involvement in privatizations in the country that occurred between 1996 and 2007 and subsequently bought Valença. But its operations soon faced closure. That’s when the owners of Têxtil União, one of Valença’s most important cotton thread suppliers, decided to grow vertically and bought the company in 1997. Têxtil União still maintains its headquarters in Fortaleza, also in the northeast of Brazil. The region is a major player in the textile segment in the country.
“One of our main concerns regarding the textile industry is customs and traffic control, since prices can vary drastically and jeopardize legal business,” says Clécio Eloy, executive director at Valença. “This can be seen both in quantitative or qualitative degrees. Sometimes, numbers shown by Cacex (entity responsible for supporting imports and exports in Brazil) indicate that the volume imported from a certain country was 1,000 pieces but in that very country they reported 2,000 exported pieces. Where did 1,000 pieces go? On the other hand, imported products such as silk might be recorded as plain cotton, but later sold with silk price tags on it.”
Today, the textile market is extremely competitive and countries that offer low local production costs have ammunition to run the extra mile and garner more pieces of the market, regardless of their employees’ work conditions. In order to better compete and deal with unfair market conditions, Valença started a big cycle of investments in 1997. Over US$12 million were invested in specialized machinery in order to increase the physical production area. The company doubled its size between 1996 and 1997. In 1996, it had 4,000 square meters, which jumped to 8,000 square meters in the following year, increasing the producing capacity to one million meters each month.
Valença’s self-sufficiency comes from two sources: electric and thermal power. It owns five farms with 4,000 hectares planted with eucalyptus, which constitutes an important differential when compared to competitors. Valença maintains a meticulous cycle regarding wood production, knowing that what is planted today can be utilized six years from now. Its consumption is rational and environmentally responsible. “What happens now is that everyone uses trees for construction and cellulose, taking from native forests, and are not replacing what is taken,” reinforces Eloy. This way, Valença is investing in its self-sufficient energetic power and on wood, which tends to keep increasing in value.
Eloy says that if wood consumption keeps growing in a much higher rate than reseeding and planting, soon the world will suffer from a “forest apagão,” or deficiency. “Today, besides generating enough electric and thermal power for our own consumption, we produce 10 times more wood than we need.”
When the Araripe family bought Valença in 1997, one of the main concerns besides modernization was creating hydroelectric power utilizing natural resources from the nearest river. “The river Una is able to supply four megawatts each hour, which is enough to cover Valença’s electric power needs,” says Eloy.
In 2007, the company started a new updating and expansion cycle, with 50 percent of increase in productive area and 30 percent in total built area. Today, Valença occupies close to 10,500 square meters and drastically increased production capacity. From 2006 until today the production jumped to 1.5 million pieces. In 2006, Valença produced one million pieces. It expects to keep growing 20 percent each year. It no longer needs to be supplied with out sourced cotton threads, not even from Têxtil União, which belongs to the same ownership. Têxtil União continues as a strong cotton thread supplier in the market.
“Besides production, there is a crescent concern with IT,” explains Eloy. Valença is proud to have implemented iSaav systems on Internet searches. It also utilizes high tech followup software applied to production, operations and management, including a financial tool similar to SAP specific to the textile segment.
THREADING THROUGH TIME
“Valença wants to keep it simple, transforming the cotton thread into fabric, dying it and delivering the final product on time. We focus on the clients’ needs and keeping a great relationship with them. We are not as involved in fashion as our clients, and we understand our limitations. Our commitment is with what we do the best,” says Eloy.
The company’s main product is flat cotton fabric. It buys the cotton in Bahia, which is the second major producer in the country. Cotton from Bahia is considered one of the best in the world. “We follow strict national and international quality standards. Our fabrics are rigidly tested for rupture, washing and dying using “tensorapid” to guarantee thread resistance. We are also equipped with a photo sensor system which allows us to make sure that the fabric’s colors will be manufactured exactly according with our client’s specifications,” Eloy explains. ISO: 9000 and 14000 certifications are expected by September 2008. The company also performs color studies into fashion trends to get a sense of what stylists are planning for the near future.
Because exports are not favorable at the moment due to exchange rates, the company plans to expand in the national market. According to data made available by ABIT (Brazilian Association for the Textile Industry), textile consumption increases at exponential rates to any increase in buying power. “If the salary has an increase of 10 percent, people tend to buy twice as much,” exemplifies Eloy. “Studies developed by associations such as Students of the World state that if US$4,500 is made as income per person each year, that person will buy about 8Kg in clothes.”
After concluding one more investment cycle, Valença, among the top six textile companies in Brazil, is preparing itself for a major increase in production capacity. It will be producing two million meters of fabric by the end of 2009. “The idea is to maximize the utilization of full production capacity, balancing market seasonality and making top quality cotton fabrics,” concludes Eloy.