The only way to evolve is to always be one step ahead, anticipating the customers’ needs. We know we can’t keep focusing our energy in easily replaceable products – warns João Mendes, 38, the administrator of A. Sampaio & Filhos, a leading knitwear company that closed 2018 with a turnover of 23 million euro
n this century you have already faced several critical moments: China’s admission to the WTO, the 2008 financial crisis, the IMF intervention in Portugal… How have you dealt with that?
There are things out of our control, but if we’re able to read the signs and anticipate the challenges, we can be prepared. In 2005, while the top brands started outsourcing in the East, we had already evolved to more technical products, with a higher added value, where it wasn’t easy to replace us.
When you put it like that, it almost sounds easy…
It wasn’t easy. By the end of 2004 the orders gradually slowed down, and nobody can forget what happened next: with the loss of numerous jobs and companies. An industry like our needs critical mass. It was a very dramatic period, but altogether the Portuguese Textile and Clothing Industry (TCI) eventually turned the situation around, in a process where the best companies adapted quicker.
Was that the case with you?
Yes, because we did our homework, and had the necessary financial autonomy to sail through that storm. We were on the right track and never stopped investing. We realized beforehand what was coming, along with the challenges we would face. And we prepared, manufacturing competitive products in our country.
What about the crisis that was ignited by the bankruptcy of Lehman Brothers and that lingered in our country with the intervention of the so-called Troika (IMF, ECB and EU)?
The most important thing was to control the credit risk. In other words, to manage very well the balance between the sale opportunities and the non-payment risk. It was a tough time, but for us it wasn’t particularly critical. We overcame both situations without any loss.
And now, are the storms over? Is the ocean quiet while you follow the right strategy?
I hear many entrepreneurs saying: “In my days, we had the whole production sold for the entire year”. I don’t know what that is. I feel a growing turbulence, a change taking place. He who believes that following an apparently winning strategy will set them up for success for the next ten years, is in for a big disappointment.
How do you manage this new normal, where uncertainty is the only certainty?
Never stop innovating. We can’t settle when the atmosphere is all but comfortable. We’re always researching new fibres, finishes and equipment. The only way to evolve is to be one step ahead, anticipating the customer’s needs. We know we can’t keep focusing on easily replaceable products. That’s not the way.
What is the way then?
There’s no recipe for success. Instead, we have completely embraced change and innovation, by diversifying business segments and products – the fashion industry is at a crossroad and I see opportunities in sportswear, workwear and protective clothing –, and by constantly searching new processes and solutions that surprise our customers. Our goal is to have happy customers and a team of competent and motivated workers.
What are the trends?
Fashion is becoming more polarized, with the medium giving way to the high and low ranges. We are focused on the mid/high and high market ranges.
How did the company survive unscathed through three generations? Are there any written rules?
We still have second-generation members in the company and in the administration… The most important in family businesses is people’s will to get along with each other.
Your brother Miguel once said that if you were only relying on the price to be competitive, the company would crash…
We would, and so would everybody else in the Portuguese Textile and Clothing Industry 🙂
Is the price still a determinant factor?
The price is always important. It’s not worth the work if we don’t present a price that our clients see as fair and adequate to the products’ value. To be competitive, we must know how to communicate the value of our product.
What does it take to be more competitive?
To provide an even better service to our clients, to offer solutions that they haven’t seen anywhere else, to present them new products that solve the problems they didn’t know they had.
Is innovation the key?
Oftentimes innovation is in transferring or combining technologies. Innovation is the key if you have a market and a way to communicate your value.
How do you do that?
We carry features of sports knitting to fashion, without stripping the product of its essence. For example, at Milipol we added active thermoregulation, which comes from sports, to a knitted flame retardant fabric. Usually, we experiment and develop synergies that we believe will have demand.
Does the country’s external reputation disturb the companies’ competitiveness?
No doubt. The country’s image is extremely important and influences our activity, regardless of our capabilities. During the Troika intervention, many customers were apprehensive. Now, Portugal’s international projection has helped us boost our sales.
How does being in Portugal affects competitiveness?
The main problem is the struggle in finding specialized and experienced labour, capable of safeguarding a quality generational transition. The Portuguese TCI has an accumulated know-how, an invaluable heritage that should be preserved and perpetuated.
How do you assess the business atmosphere in the first trade fairs of the year?
In hallway conversations, the weight of uncertainty was notorious. Many people are unmotivated, very concerned and apprehensive.
How about you?
We will not grow at a 15% rate as we did in 2018. However, we won’t shy away, or live in fear :-). We’re on the right track and we won’t change a thing. We’re going to 14 fairs this year. There’s no crystal ball to tell us the future. If a hurricane swoops in, we will face it head-on. We have already proven our ability to adapt to change.
Is Brexit troubling you?
We don’t have any important clients that sell exclusively in the UK. They are in the worldwide market, and they have prepared for Brexit.
Which are your main competitors?
They’re very diverse since we’re in completely different business segments. We have four product lines: the Ready to Wear, for fashion, the Sport Active – an area of continuous innovation where we bet on performance and comfort, without overlooking aesthetics – the Protection +, our safety and protection clothing, and the Pure Life, a line exclusively made of sustainable products.
Is it feasible to have a separate line of sustainable products?
Sustainability is present in all our fields. We use more and more recycled and organic raw materials. However, we insist on presenting a brazenly sustainable line that only uses renewable materials.
Is sustainability not a temporary fad, but rather something that it’s here to stay?
We feel that it is full swing right now. The clients that left sustainability behind are now counting their losses, whereas we were aware of this trend for a while. We have had a line of sustainable products since 2007. It’s our contribution for a better future.
How is your relationship with customers? Do you come up with more proposals or do you receive more requests?
It’s more us to them. Every year, we present from one to two thousand new knitted fabrics. However, it’s not rare to have clients asking us for solutions.
Are there many clients requesting for knitted fabrics made in Portugal?
Several brands see Portugal as an excellent point of the supply chain. If they come here, in a small radius around Porto they find everything they need: fabrics, knitting, manufacturing and even footwear. The craving for Portugal’s integrated solutions is evident.
Do you feel like you need to grow?
If the question is about production capacity, the answer is no. We have just the right size. The investments we have carried out were not placed on expanding our production capacity, but rather on know-how, in the laboratory – we outsource the product certification, but we test them here – and in the ability to make ground-breaking products. We purchase machinery we don’t have and replace the machines we do have with more efficient ones. We also invest much in our network and servers.
What have you been investing in?
In the improvement of our technological infrastructure. We renovated the entire optical wiring, bought lab equipment, installed a data centre and acquired strategic looms. The logic is invest-as-you-go, continuously, instead of in waves. And not just in hardware, but also in brainware, bringing in more talent and knowledge.
Where do you stand regarding digitalization of processes?
At a time when more and more people buy their clothes without ever even touching them, and a new generation has gotten used to see the world through a screen, we’re getting ready to communicate our product to a new generation of deciders.
We are pretty advanced in terms of process automation. The interaction with our machines and customers is becoming more digital. However, this is an issue that will never end. Every day, we take steps towards being quicker and more efficient.
Are the fast fashion days numbered?
It depends. If you’re referring to disposable and low-quality fashion, I believe so, due to consumers’ growing concerns about sustainability. However, if we’re talking about how fast we present our products, it will only become faster, with the proliferation of capsule collections to keep the consumers interested.
João Mendes, 38 years old, born in Porto, but calls Santo Tirso his home. He’s the youngest of António Oliveira Sampaio’s, who in 1947 founded the company who later became A. Sampaio & Filhos, four grandchildren. Having completed primary school at Santa Teresa de Jesus School, he finished high school at Tomaz Pelayo and got his degree in Engineering and Industrial Management from the University of Aveiro – just like his older brother, Miguel, who completed the degree in the same year João was admitted. He’s the father of Carolina, seven, and João, five.
What is the core value of the company?
I like to think the company’s core value is reliability. If we evaluate the way we interact with our collaborators, our clients, our suppliers and our partners, there is a common denominator of trust. Besides, we strive to treat all the above-mentioned with the same degree of respect.
Where do you see the company in five/ten years?
For starters, I would like that our current partners remain with us, in a path of joint evolution and growth. In addition, I would like to see our company achieve in new markets the same degree of notoriety that enjoys in its current ones.
Do you see any extra challenges due to the fact that A. Sampaio is a family-owned business?
No extra challenges, but an extra responsibility. We feel as if the decision-making impacts both the company and, to a certain extent, the family itself. Working as a family not only leads to a more united team, but also to a consciousness of the impact we have on each other.
What message would you like to pass on to the 4th generation?
Two things, essentially: the same values that have been guiding the former generations until our days and, naturally, a solid company with a future.