The final savings figure will be realized through the introduction of improved working practices (60%), gains of scale (22%) and the elimination of overlaps (18%).
In addition, the group will benefit from selfsufficiency in raw material and geographical diversification, according to the new group.
What has been described widely as an industrial marriage made in heaven has created the largest wood panels group in the Southern Hemisphere, with joint capacity of 1.9 million m3/year each for MDF and MDP (medium density particleboard).
The formation of the merged group came just as Brazil was experiencing the worst effects of last year’s global economic crisis. But the Brazilian economy has bounced back strongly since then, helping Duratex to increase its net revenue in the second quarter of 2010 by 34%, with its profits up against the same period in 2009 by a healthy 134%.
Duratex reported that product volumes shipped in Q1 this year were up by 34.9% compared with the same quarter in 2009.
Like the rest of Brazil’s panel sector, the situation for Duratex was helped by a fiscal boost from the government. To stimulate consumption, it dropped the 10% IPI (industrial products tax) altogether for five months from November 2009 to March 2010, to benefit the furniture sector and its suppliers.
Initially, the merged group laid off people from its commercial and administration teams, but Brazil’s rapid economic turnabout saw it eventually add 200 net to its overall workforce, which is now approaching 10,000. Hiring was chiefly on the forestry and industrial sides.
“The economy recovered in this period and we needed to increase our team to produce more during the second half of 2009 and first semester of 2010,’’ explained Alexandre Coelho, commercial executive director of the new group’s wood products division.
Since the merger, the industrial workforce has focused on implementing the new management policy and approach to maintenance, equipment etc in the group’s plants. While changes will inevitably reflect much of the style of Duratex as the merger’s senior partner, priority is being given to completing the smooth ramp-up of production on new lines, including Satipel’s year-old MDP plant in Taquari in Rio Grande do Sul state.
In July this year, when WBPI visited Duratex in Sao Paulo, the group had two sites where the ramp-up of project lines was still incomplete.
In Taquari the 700,000m3/year Siempelkamp MDP line, launched in June 2009, was operating at 70% of capacity, while Duratex’s giant 77m-long press MDF II line at Agudos in Sao Paulo state, also supplied by Siempelkamp, was running at 85% of its 750,000m3/year capacity, said the group.
Meanwhile, Satipel’s first MDF line, further north at Uberaba in Minas Gerais state, was fully operating and had reached its capacity of 350,000m3/year, Duratex confirmed.
Another advance in July, and a symbol of success in the company’s integration process, was the launch of its group-wide SAP control system. Going live with this system across group departments, from forestry and transportation through production to sales, will smooth operations throughout the merged company.
Since the August 2009 merger, Duratex has also concluded some existing investment projects. Apart from the important US$150m Agudos MDF II line, the company had planned to reduce raw material costs with the construction of a 180,000tonne/year urea formaldehyde resin plant at the Agudos site.
The group started up this Perstorp facility at the end of last year and chemical production began on schedule this April. The plant is due to serve not only the adjacent panel lines, but also Duratex’s Botucatu site 60km away.
However, Duratex remains flexible about its future resin supply and will continue to buy from the market as necessary, said Mr Coelho.
With an eye to its increasing raw material needs, and clearly aware of a tightening squeeze on wood resources across Brazil, Duratex group is continuing to bolster its forest lands. Earlier, it had acquired 18,000ha of the Lencois Paulista plantation land close to Agudos to secure enough eucalypt wood for its MDF II line.
This time, the group announced in July it was investing around US$84.3m to acquire seven farms with an area of 8,671ha with planted forest in Sao Paulo state. That purchase has taken the new Duratex’s land holding to a total of 224,000ha; 52% of it owned by the group and the rest leased.
Although corporate integration and capturing planned synergies remain uppermost in the minds of the new Duratex management, executives are clearly looking ahead to map out a new growth plan for the coming five years.
“We are discussing new ideas and views of our future and studying [potential] new investments,’’ admitted Mr Coelho. “The economy in Brazil is going very well at the moment, but we’re only discussing the future internally.’’
Mr Coelho, who this year took up the presidency of the Brazilian wood panel manufacturers association ABIPA, is bullish about the prospects of a new economic boom in Brazil. “The cycle of growth in Brazil will, in our view, be very good over the next five years,’’ he told WBPI.
The country has certainly escaped the worst of the lingering global recession and the Brazilian economy, buoyed up by a sustained rise in popular consumption, is expected to achieve GDP growth in 2010 of 7.5%, said Duratex’s commercial operations manager Giovanni Grossi.
Although that figure is projected to moderate to nearer 4.5% during 2011-12, the executive remains confident that Duratex, along with other panel makers, will find new opportunities in a vibrant domestic market.
A year ago, as the merger was announced, the new group’s owners made clear they wanted to boost its export business to combat the ill effects of the economic downturn. But continued recession elsewhere in the world, not least in Europe and the US, on top of Brazilian taxes, recent adverse currency exchange conditions and logistical difficulties, have now all but closed that exit, short-term.
Historically, one of Duratex’s strongest export cards has been its enduring wet process hardboard range. But a combination of local environmental pressures and a lower market price led it to shut down its three-line 150,000m3/year, Jundiai hardboard plant in 2009. The group still has 200,000m3/year hardboard capacity elsewhere.
However, with greater numbers of poorer Brazilians joining the formal economy and becoming consumers of furniture and other household goods for the first time, the domestic market is now the obvious target for national manufacturers.
“We are talking about growth of at least 4.5% [in Brazil] over the next three years, so it’s impossible to ignore the domestic market. That doesn’t mean that we’ll withdraw from exports. Duratex will continue to build on its brand recognition abroad.
“We can never forget that we have been exporting for 50 years. We should never get out of foreign markets. It’s part of our overall corporate strategy,’’ stressed Mr Grossi. But, he acknowledged, the group has reduced its export volumes a lot recently.
Last year’s merger has certainly provided Brazil’s new ‘super group’ with the scale and capacity that it will require to serve the booming domestic market. It has also confirmed a place for Duratex among the country’s top panel makers.

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