$110 Million Brazil Plant Part of DuPont's
20 Percent Stretch of Lycra Capacity
With facilities already stretching around the globe, housing 92,000 employees in 65 countries, Wilmington, Del.-based DuPont (www.dupont.com) is expanding yet again -- this time with a new US$110 million plant in Paulinia, Brazil, that's designed to capitalize on the rapidly rising marketplace fortunes of "comfort wear."
The largest U.S. chemical company and No. 16 on the Fortune 500, DuPont is an old South America hand, opening its first facility in Brazil way back in 1937. In fact, the company already has an existing Brazilian facility in Paulinia that manufactures Lycra, the company's trademarked "stretchable" synthetic fiber, which is enjoying a global groundswell in popularity. In addition, DuPont has another South American Lycra manufacturing plant in Mercedes, Argentina.
The new facility in Paulinia, however, is part of DuPont's major upgrade in its Lycra production capacity and manufacturing technology.
"Lycra is the ultimate in the rapidly growing stretch category," said Steve McCracken, DuPont Lycra president and a DuPont vice president and general manager. "It's smart, fashionable and trend-setting."
With New Plant, Brazil Will Become Lycra Export Center
Lycra has proved to be so trend setting, in fact, that the new Paulinia plant will increase DuPont's Lycra production capacity in Brazil by 100 percent. With the new operation's dramatic capacity increase, Brazil will become a DuPont center for exporting Lycra to other world regions, McCracken said. Correspondingly, DuPont expects to able to stop importing Lycra into Brazil within two years.
"We're particularly excited about our increased ability to supply fabric mills and garment manufacturers in Brazil and around the world with the advanced Lycra fiber products they need to take advantage of the global growth opportunities in premium stretch," McCracken said.
The newest Brazilian facility will also mark a substantial increase in the sophistication of the manufacturing technology that DuPont has in place in South America.
Scheduled to come online in early September of 2001, the facility will employ "new-generation technology, which offers immediate capital productivity and operating cost improvements and a platform for quality and productivity improvements," McCracken explained. "It will provide customers with a more diversified polymer and yarn range to better meet marketplace needs."
The new plant in Brazil will join similar state-of-the-art Lycra plants in the DuPont real estate portfolio that are already operating in Maydown, Northern Ireland; Singapore; and Waynesboro, Va. Together, those plants will increase DuPont's worldwide production capacity for Lycra by more than 20 percent, company officials say.
The demand that drove that substantial capacity increase underscores the marketplace transformation of Lycra, which was invented 40 years ago. The once obscure synthetic fiber was originally used as a replacement for rubber in the girdles that were then an integral part of many women's wardrobes. DuPont, though, which also developed Dacron and Teflon, saw a massive market opportunity for Lycra, given its versatility and its ability to stretch up to 600 percent and still spring back to its original strength and shape.
Today, the DuPont brand of elastane is one of the world's most recognized fiber brands, used in an extremely broad range of products, particularly in ready-to-wear clothing, boudoir apparel, hosiery, exercise wear, swimwear and shoes. Lycra, in fact, is cited by Interbrand as the eighth "most valuable textile brand in the world" and was recently cited as a "top fashion innovation of the 20th century" in a consumer poll conducted by the Council of Fashion Designers of America.
Lycra's popularity is reflected in the Brazilian market. More than 90 percent of Brazilian consumers recognize the Lycra brand name. In 1998, 20 percent of DuPont's $850 million turnover in Brazil was generated by the Lycra business. For 1999, DuPont is projecting a 43 percent growth in Brazilian sales.
South America as a whole has registered similar growth in Lycra sales, which have increased by more than 10 percent annually over the past five years.
DuPont's decision to expand its Brazilian operations came only several days before the International Monetary Fund (IMF) issued a report approving of Brazil's economic reforms and forecasting economic growth for 1999 within Latin America's largest economy. The IMF also approved a loan of $4.69 billion for Brazil, which is in addition to the $18 billion loan IMT loan that was approved for the country on Dec. 2, 1998.
Said IMF First Deputy Managing Director Stanley Fischer, "Developments marked in the Brazilian economy since the end of July had been mostly in line with expectations, and Brazil had continued to make significant progress. Economic growth is now expected to be slightly positive in 1999 (compared to the 1 percent decline that the IMF projected in July), and unemployment has continued to decline gradually."
The IMF's $18 billion loan was part of a $41.5 billion international rescue package for Brazil, which has suffered, along with most emerging markets, from a worldwide economic crisis that began in Thailand in July of 1997.
Despite Brazil's progress, its recovery has meant abandoning its long treasured inflation-busting policy of pegging the real, Brazil's currency, to the U.S. dollar. Facing fierce market pressures, the government discontinued the real-dollar peg linkage during January 1999's renegotiations of the IMF's Brazilian loan program.