Guarapes – Innovation and Growth

The history of Guararapes dates back to 1984, when the company started operations as a small lumber company. Twenty years later, after consolidation in the international market through the export of plywood panels, Guararapes expanded its product portfolio to serve the growing local demand. Its latest investment has been the new MDF line in Caçador, in Santa Caterina state. This has been added to the existing production line in Caçador and to the company’s two plywood plants, located in the city of Palmas and Santa Cecília. Guararapes has over 1,900 employees, a hightech industrial facility and clients in over 50 countries.

"We started construction of the new MDF line in December 2014," says Ricardo Pedroso, the company CEO. "We did it only after thorough consolidation of all the feasibility studies. The first panel in the new line was produced in April 2016 and the project has evolved as expected in terms of costs and time." In all, investments have so far exceeded R$320m (US$100m) to triple the yearly production capacity for MDF panels from 200,000m3 to 600,000m3 a year. Guararapes has now become one of South America’s largest companies in the sector.

However, back in 2013 when the studies were conducted for the project, Brazil faced much more favourable overall economic conditions. "We are now living in a far more challenging scenario. There is an ongoing economic and political crisis. A full year of stagnation and two consecutive years of GDP reduction have caused high unemployment levels. Despite all those unfavourable conditions, we carry on believing in our country’s potential," says Pedroso. "Some indicators have already shown slight signs of improvement – figures for 2017 show more positive expectations due to the impeachment process of former President Dilma Rousseff, who was officially removed from office on 31 August 2016.

"The new line is now operating at 50% of its capacity – and we are in the learning curve. We hope to grow production gradually, following market conditions. In our opinion, the most acute phase of the economic and political crises has already been left behind. However, plenty of uncertainty still hovers over the market, and we do look at the effective growth in the domestic market carefully," says the CEO.

This is not the first time Guararapes has had to overcome challenging conditions. In 2009, soon after the sub-prime crisis, the company launched its first plant in Caçador. "Each crisis has its own dynamics, but experience has shown, both in 2009 and now, that we acted at the right time. When everything does eventually get better again we will be fully prepared," says Pedroso.

Exports

Unlike the domestic market scenario, Guararapes’ export business is leveraged thanks to its wide portfolio. The company offers a complete product range in its new MDF line. "We are expecting to export at least 20% of our total available capacity to regions where we have existing clients for our plywood. Businesses in foreign markets have grown steadily – also because exporting is part of the company’s DNA," reaffirms the CEO.

Company data reveal that nearly all the production – 98%, no less, totalling 280,000m3/year – of both plywood lines is for export. "Because of that, we sincerely hope not to be threatened by the uncertainties of the US elections. Should Donald Trump eventually become president, a Trump victory has been analysed by the press worldwide as a global threat," explains Pedroso.

In Brazil, with a challenging scenario which has had a major impact on consumption of MDF, the focus has now been shifted to high added-value products. This is a niche that has maintained a very high profile in Brazil.

Portfolio, Technology, Perception

The new MDF plant has increased significantly Guararapes’ product portfolio by adding new panel thicknesses, sizes and special products – as well as extending and improving its surface finishing capabilities. "We have also invested heavily in low pressure melamine MDF by offering new colours and textures," adds Guarapes’ marketing manager, Humberto Oliveira. "After all the investments have been made, we have shifted our focus now to MDF, with a production capacity of 600,000m3/year. This year alone, the company is expected to sell around 300,000m3 due to the ramp-up of the new line. For plywood, sales are expected to reach 280,000m3, out of a total production capacity of 300,000m3.’

Guararapes has one of the world’s most modern MDF plants and state-of-the-art melamine processes. "We have invested heavily in textures, research and product development. We have a very up-to-date product portfolio with different textures, wood designs, textiles, solid and metallic colours and a brand new synchronised pore portfolio. The Brazilian market is widely receptive to trends, colours and new products," says Oliveira.

"Per-capita consumption of wood panels in Brazil and South America remains relatively low compared to more mature markets. As an example, there is a housing deficit of more than five million dwellings, which could be converted in an excellent catalyst for our business," says the CEO.

Guararapes’ products are sold under the California Air Resouces Board (CARB2) certification, whith sets maximum values for the emission of formaldehyde in woodbased products, including MDF. The highest environmental standards are therefore met, thus being compatible with the legal requirement set in the US. The company is also certified by the FSC (Forest Stewardship Council), which warrants the production of wood in forests kept under the highest standards for social, environmental and economic criteria, and from other controlled sources.

Guararapes’ MDF panels are coated with the exclusive NanoxClean® - a product that warrants anti-microbial protection with natural action, specifically for germs, bacteria and other micro-organisms, thus ensuring that surfaces are permanently free from everyday threats to hygiene.

The product has been developed with the most recent technologies and processes, is non-toxic and helps ensure healthier environments.

Guararapes therefore is a company that has not been afraid to expand despite the difficulties that face Latin America. It would seem well-positioned to meet the improving conditions, the first signs of which have already begun to appear.