Sales: $46 Million
Description: Plant Location
São José dos Pinhais-Paraná, Brazil
Milan Starostik, chairman, Ana Seles Starostik, commercial director; William Starostik, marketing director, Romeo Bregant, industrial director; Vicente Batista de Lima, financial and administrative director, Wagner Carvalho, sales manager
Spunbonded, SMS, melt blown
Hospital, agriculture, bedding, towel and coverlet, table mat, hygiene, baby diapers
With worldwide roll goods sales totaling $46 million, Companhia Providência, Curitiba, Paraná, Brazil, is the only South American roll goods producer to earn a spot in this year’s Top Company ranking. The company experienced a drop in sales from last year’s total of $110 million due to lighter basis weights of its spunbond material. “Our clients were used to consuming one million square meters of nonwoven material at 17 gpsm, but with the new S+S+S line, they continued to consume one million square meters, but used 13 gpsm instead of 17 gpsm,” said company chairman Milan Starostik. “Obviously, this favors the client over the company; however, our clients are very satisfied and will not buy spunbond material from another supplier.”
This consumer loyalty coupled with the efforts of Mercosur, the South American trade customs union, served as initiative for Companhia Providência to increase exports of its spunbonded nonwovens to Central America and the U.S. Mercosur comprises Argentina, Brazil, Paraguay and Uruguay. According to INDA’s Vision 2002: Part 2 report, Mercosur is a market with 219 million people and produces a total of 88,000 tons of nonwovens per year, with 68,400 tons coming from spunbonded material. Mercosur plays an important role for Companhia Providência because it tends to be more active in Brazil and Argentina, according to Mr. Starostik. “The other countries that are included in Mercosur—Paraguay and Uruguay—have little income derived from nonwovens sales,” he explained. “Mercosur can generate more sales, especially to Argentina. Unfortunately, with Argentina’s current economic crisis, it is impossible to export to them. Before this crisis, we were exporting more than $3.5 million worth of products to Argentina. But now our exports to Argentina are nearly at zero. We are exporting about $400,000 to Argentina.”
Twenty-six percent of the company’s products are exported, with 20% distributed throughout almost all countries in South and Central America and 6% to the U.S. The company sells its roll goods throughout different locations in Brazil; São Paulo and Rio de Janeiro comprise 70% of the company’s sales, while 20% are distributed throughout Southern Brazil and 10% in Northern Brazil. With a capacity of 32,000 tons, Companhia Providência has six current operating Reicofil polypropylene spunbonding lines, according to Mr. Starostik. Additionally, 60% of the company’s sales comes from its spunbond technology while 40% comprises SMS material. The company’s largest target market is medical, making up 70% of its roll goods sales, followed by bedding with 20% and agriculture with 10%.
The company’s capacity of 32,000 tons will soon be boosted with the addition of a seventh Reicofil line. Production is expected to begin by the end of this year. The new Reicofil SSMMSX line will allow the production of breathable film and textile laminated film and will offer advantages to customers. “The new line will benefit the clients that use more resistant products and will make it easier to produce products with lower levels of thickness,” said Mr. Starostik. “This new line can bring us 100% sales results by increasing our production from 1800 tons per month to 2000 tons per month.”
Speaking more broadly, Mr. Starostik is uncertain as to what the future has in store for the nonwovens industry because of pending trade agreements that may change the company’s exporting policies. Companhia Providência is hoping that the pending ALCA (Area de Libre Comercio de Las Americas), part of the Free Trade Area of the Americas (FTAA), will help support the future economy, especially in the Northern, Southern and Central American regions. “The ALCA agreement may make exports and imports between the three Americas easier,” Mr. Starostik opined. “We do not have any specific information on the ALCA agreement yet. At the moment, we do not have export restrictions to the U.S., because today the U.S. customs tariffs are at a low price with our products.” Companhia Providência executives will have a while to wait and see how the ALCA agreement pans out—it is projected to be completed anywhere from 2005 to 2015.
In the meantime, the sluggish economy combined with the uncertainty of the future with trading agreements give executives at Companhia Providência wavering thoughts of the nonwovens industry’s future success. “Right now, the nonwovens industry is stable and growing at a rate of approximately 8% a year, for our company. This was mainly because of our exports to Argentina earlier in the year, but we believe that the nonwovens business’ big moment has already passed,” Mr. Starostik said.