The Brazilian Industrial Restructuring: The Case of Garments and Textile Industry
Robson Rocha and Monica Abreu
Keywords: Brazil, industrial changes, textile and garments industry
Globalization has been understood as the process whereby national economies become integrated and interdependent, and competition is intensified across borders. This international interdependence has triggered changes in established patterns of competition in national industries, which bring renewed attention to processes of industrial upgrading and organizational change as mechanisms of adjustment to the new market conditions. The objective of this paper is to investigate the responses of Brazilian firms to the process of trade liberalization, taking into account recent technological and managerial developments in the clothing and textiles sectors in Brazil. We use the case of the Brazilian textile and garments industry to analyze its ongoing adjustment and to highlight the domestic dimensions of the restructuring process.
Our analysis shows that new forms of competition and cooperation have emerged among firms. We have identified the main features of this change as the deverticalization of major business groups with a fragmentation of the structured supply chain, the upgrading of technologies and organizational templates, and a focus on core capabilities, moving towards the higher end of the industry as a defensive strategy. Firms have intensified their searches for improving products and processes and speeding up innovation, the result being a diversification of products and a concentration in fast-fashion, leaving behind any attempt to compete with imported basic garments and textiles
For the garments and textile industries, the institutional changes which occurred with the end of ISS policies represented the starting point of a two decade-long nightmare, culminating in the elimination of global textile quotas in 2005.. In the last ten years, competition from Asia became a threat to the survival of these industries. For large and small firms alike, the products imported from Asian countries cannot be produced internally at the same price.