Compomade growing in valuable niche market16 November 2010
The furniture sector has benefited greatly from a much needed boost this year after the Brazilian government cut the country’s IPI industrial products tax by 5%. Panel producers, too won some relief from a temporary relaxation of the tax.
That stimulus will have come as welcome news to another related, and increasingly important, sector – the wood components industry. This relatively new supply business, providing a wide range of panel based parts and mouldings, has grown up in Brazil within the past five years in response to changes in furniture manufacturing.
One wood components company which is expecting to expand its sales to the furniture business and to some other sectors in 2010 is São Paulo state-based Compomade Componentes de Madeira of Agudos.
Twelve years ago, Compomade started out as a small hardboard cut-to-size operation serving a range of niche markets. Today, it is an increasingly successful producer and supplier of a wide variety of mainly made-toorder mouldings and other components for Brazil’s large furniture manufacturing groups and the construction industry.
Compomade was originally established in 1998 by executives led by Ademar Martini, a former industrial director of leading Brazilian eucalypt panel manufacturers Duratex SA and Eucatex SA. At first the firm cut hardboard made by Duratex to supply to customers in areas such as heavy duty packaging, toy manufacture and picture frame production.
During much of its short life, the company maintained close links with Eucatex and with Duratex, Brazil’s top wood panel producer, which runs a major two-line MDF plant nearby in Agudos. It was Compomade which was chosen to supply Duratex with accessories for its laminated flooring operation, although the business was relinquished two years ago when Duratex took the parts in-house.
At that point, Compomade was forced to find more clients and fresh markets, so it focused on the growing furniture parts market.
As Brazil’s furniture industry expanded and the companies got more professional, manufacturers sought to achieve higher yields through improved productivity and cost reductions. The cut-to-size panel suppliers realised they could boost their share of the business, and help furniture makers remove a bottleneck, by providing the chain with ready-made components.
“Here in Brazil, the furniture market began to change three to four years ago. The production process changed with the introduction of assembly lines, like in the car industry, with parts bought in and assembled in line.
“The big manufacturers like Bartira in Sao Paulo state; Itatiaia of Minas Gerais state and Aramoveis in Parana state started buying parts in, creating a new components industry,explained Compomade’s executive general manager Henrique Zanin.
The large Brazilian furniture manufacturers decided they did not have the time, or inclination, to get deeply involved in cutting, shaping, grooving and overlaying components. They preferred to focus their time and effort on perfecting their furniture products for a hungry market and began outsourcing parts supply.
Today Compomade, which produces components chiefly from MDF, with some from MDP, operates a single 3,500m2 plant in Agudos and has a nearby 2,000m2 warehouse where it stores wood panels for its moulded products. The firm employs 102.
Compomade buys board from a number of Brazilian suppliers including Arauco do Brasil and, when WBPI visited in July, it was putting new sample board from the small southern panel producer Sudati through its tests.
Its product range includes mouldings for door frames; kitchen cabinet doors; laminate flooring accessories such as skirting boards; and drawer components. Compomade also sells its ‘Lambrix’ decorative wall and ceiling panelling with a series of plain white or wood grain finishes.
Initially, panels from 9-35mm thick are delivered to one of two saw lines to be cut into strips based on the size of the parts required. The plant runs six different moulding machines for shaping the parts, according to Danielo Chiaperini, the young process engineer brought in to work with Mr Zanin.
Compomade’s operation runs two laminating lines employing various decorative papers bought in from different national suppliers; and from Duratex which has its own range. It employs continuous high pressure laminate surfaces, mainly for flooring accessories such as skirting, T-profiles, stair nosing and dilation joint strips, said Mr Zanin.
While most of what it produces comprises made to order components for its furniture and construction sector customers, the company also sells its own brand of wall panel, and other parts, to big stores, large distributors and construction companies.
In the first half of 2010, Compomade saw its sales of its own ‘Lambrix’ products rise by over 19% against the same period last year.
Mr Zanin took over the executive helm at the firm early this year after Compomade’s owners decided last year to withdraw from the day to day running and began hiring professionals from outside to manage the business. They preferred to play an advisory role on the company’s board, he explained.
Mr Zanin, who is better known in the Brazilian wood panel sector as a specialist industry consultant at the firm Organon Consultoria e Engenharia, was approached and agreed personally to head a hand-picked team to run the components operation.
At the time, the general manager explained, he had a number of technical specialists looking after Organon customers on his instructions so he was available to take up the Compomade challenge.
His task at Agudos has been to bring in Organon managers for his team, improve the firm’s performance, and to hire top executives to run the business successfully when he finally relinquishes his managing role.
“I believe I will need to stay say two years from mid-March this year for our people to show [the required] results.
“Sales are now about US$700,000 per month. By this October or November, I believe we will achieve a turnover of around US$1.1m per month,Mr Zanin told WBPI when we visited the plant in July.
He is confident that his team will be able to transform the business by the end of 2010. Since taking over the company operation, Mr Zanin has begun to revamp its commercial management and planned to launch a brand new approach to sales in the second half of the year.
“This has already brought in several new customers and we have found a number of new niche markets for our products,he said in July.
One area Compomade has begun to exploit is that of heavy-duty packaging with promising business opportunities supplying components for packaging – for example for small industrial motors. This has meant targeting multi-national firms and Brazil’s aerospace industry.
The components sector of the business today already comprises up to eight companies, mainly located in southern and southeastern Brazil. It has an annual turnover approaching US$34m and is developing a number of new product areas.