The Little Guys from Brazil Who Made Big in Furniture

Training of the businessmen and investments in production and in design. These are the three pillars that sustain the expansion of the furniture hub in the region of Ubá, in the southwest of the Brazilian state of Minas Gerais.

Factories from the region have been exporting since the year 2000 to the United States, Europe and Latin America. Starting in 2003 the United Arab Emirates and Qatar were also included in their list.


In the most important city of the hub, Ubá, there are 310 micro and small companies, 132 suppliers and 45 shops, generating 7,000 direct jobs – 74% of the city’s employment positions.


The Minas Gerais hub is the third greatest in the country – losing only to the Rio Grande do Sul mountain range and to the north of the state of Paraná, both in the south of Brazil.


The monthly production is of 5,000 pieces. The factories respond to, approximately, 70% of the city’s tax revenues.


The successful story of the entrepreneurs from Minas, however, started with an adversity: the closing down of Dolmani, a furniture company, in the 1970s. Part of the 1,200 employees who had been fired used the knowledge gained at the factory and opened their own companies.


The result: at the end of the 1970s, an economics report from the Brazilian Institute for Geography and Statistics (IBGE) accounted for 25 new businesses. In 1980, there were 72 companies.


The expansion of the hub was driven mainly by small companies that worked in a family scheme. The father manufactured chairs and would open a new factory with his son to manufacture upholstered furniture, augmenting the production. This movement lasted until 1995.


The difficulty in competing with greater companies, which had the capacity to invest in new technological processes and industrial sites, made the number of factories drop in the following years. It went from 470, in the mid 1990s, to about 300.


In 1998, the Brazilian Micro and Small Business Support Service (Sebrae), the Brazilian Export Promotion Agency (Apex) and the state of Minas Gerais formed a partnership to train the businessmen.


Courses showing the manufacturers how the international market works, the tendencies in design, etc. were held. The entrepreneurs could also travel to the main furniture trade fairs in the world.


Two years later, the businessmen from Ubá took another important step. Thirteen of them associated themselves and started exporting, forming the Movexport, a consortium of Furniture Export Associations from Ubá and Region.


Currently, the group is formed by nine companies, and exports to countries such as the United Arab Emirates, Qatar, Chile, Angola, the United States, Mexico, Spain, Uruguay, Costa Rica and Venezuela.


Last year, the Movexport generated revenues of US$ 1.2 million. The value is small if compared to the exports revenues for Brazilian furniture in 2004 – US$ 940.6 million – but the consortium believes that, this year, they will conquer a greater share of the foreign market.


“The minimum expansion estimate for 2005 is of 30%,” believes Michel Pires, president of the Movexport and owner of the company Modecor. To achieve this, each company of the consortium must direct 20% of their production for exports. Today the consortium companies direct an average of 2% for sales abroad.


In the Arab countries, exports increased after the participation of Movexport at the Index trade fair, in Dubai.


“In the first year the consortium participated in the event – 2003 – we sold one container. Last year, it was seven,” states Pires.


The entrepreneur believes exports to the region, which added up to US$ 150,000 in 2004, should increase with the showroom Movexport will keep all year round in Dubai.


Pires says the main products sold to the Arab nations are bedroom furniture, which have been adapted to the buyers’ tastes.


“The beds have greater dimensions and the wardrobes don’t have internal divisions,” he explains. He highlights that the quality of the products from the hub makes the rate of recurring clients high.


The profile of the Ubá hub is similar to the furniture sector in Italy, one of the main furniture producers in the world and famous for their design. The micro and small sized companies predominate with great investment in production technology development of new models.


“The difference is that every factory there produces a part of the furniture and there is one company that assembles the final product, here the factories do the complete process alone,” compares Pires.


In the census prepared by the Sebrae with the region’s profile, the small companies represent 30% of the sector and the micro companies, 65%. There is only one factory in the consortium, Itatiaia, which has more than 300 employees.


This year, the Ministry of Development, Industry and Foreign Trade promised US$ 4.6 million to the Ubá hub, where US$ 1.5 million have already been released.


The money is part of the program for Local Productive Arrangements, kept by the ministry, and is directed for investments in design, logistics and infrastructure.


One of the priorities, for the remainder of the budget, is the construction of the airport of Goianá, city 69 kilometers away from Ubá. The objective is to optimize foreign sales even more.


ANBA – Brazil-Arab News Agency
www.anba.com.br

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