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An industrial unit cannot be open and closed at the same time. After 15 days of partial lay-off, Maria de Belém Machado chose to call all employees and return to work. “Those who are not present are quickly overtaken by the competition. This way, customers know for sure that they have not been abandoned”.
id the pandemic have more impact on the doctors or on the businessmen who produce tradable goods?
The danger is greater for doctors – they are real heroes. Entrepreneurs are not heroes. For me, this industry is an adventure…
An adventure which starts in a year that turned out to be very difficult?
It was a difficult year but despite everything, we held on. We had a production line on lay-off for 15 days, but we wanted to be there for our customers and our projects.
What measures were taken to counter the pandemic?
I bought the company in July 2019…
A small company that buys a much larger one…
No, it wasn’t SMBM that bought it, I bought Tearfil. After buying it, the year ended almost immediately: we arrived, the summer holidays came, and we mapped our budgets for 2020. We were meeting budgets when Portugal closed, on March 2020: in April, we invoiced 60% less. In May, the normal course was to close doors because things were not flowing. One of our production lines closed for 15 days, but we had to call all employees right away because we are either in or out of the market. May was very complicated, but in June we started to reach our goals again. March, April and May were very difficult months – but despite everything we achieved our main goal, which was to balance the company. This year we are not only meeting the budget, but exceeding it: in the first quarter we were above budget.
In terms of invoice, did you reach your goals in 2020?
The main goal was to achieve positive results, and we were able to do that.
How much was last year’s turnover?
We exceeded the 11 million mark, even taking into account the three months of very low business, due to the pandemic.
Is this year going better?
For this year, we made a bolder budget. At the end of the first quarter, we were already above the business plan predictions. We are comfortable and confident.
Is the budget’s ambition the 15 million mark?
No, we are more modest: 13.7 million. Personally, I believe we are going to exceed 14 million.
When you bought the company, you had planned to invest 3.5 million.
We didn’t invest at that level: in order to invest, we have to have solid accounts and, at this moment of great uncertainty, we have to be very cautious. We are constantly revisiting the investment plan and when the time comes, we will invest. We have to cement the accounts first; otherwise we won’t be safe. 2020 was a good year for the evolution of the textile industry, considering the Covid-19 effect.
Most of your clients are Portuguese. Is the company’s exposure to exports still small?
Indirectly, more than 90% of what we produce is exported. Nonetheless, we are betting a lot on exports: last year we admitted another commercial agent, and we are going to grow substantially in that area. When I bought Tearfil, the company had a slightly degraded image: those who were going to sell knew they were going to sell, so they didn’t invest in the business…
But it took a number of years to buy the company…
Yes, since 2013. Well, I don’t know if they didn’t want to sell, or if there were a lot of people wanting to buy – which are different things. The trick is to never give up. We signed the sale agreement in September 2018, but I was only allowed to b
When you bought the company, exports were worth 12% of the 12 million turnover. Have you been able to increase this quota?
Yes. We are close to 15%. It’s been very difficult – the customers themselves are holding back because they also have few orders, so there’s risk. However, almost everything we do results in indirect export, even because we belong to the group of suppliers approved by Inditex – we were audited.
Does the Netherlands attract you directly?
It was a region that was not covered by Tearfil. The Netherlands and northern France have large industrial zones, and customers who ask us for the most unexpected yarns.
Does that mean that the company is focused on sustainability?
We are focused on sustainability and on zero waste production: we are reusing, recycling and innovating with our own waste. We are launching a brand – it is about to be registered at a European level – called Eco Heather, a yarn 90% made from the company’s waste, which is very good. Recovering, recycling, and reusing is very important to us, in addition to the other recycled fibres, which we use a lot. This way, we are lessening our environmental footprint, and contributing to a healthier planet. And the yarn is of very good quality.
Would one of the planned investments be the purchase of photovoltaic panels?
Yes, we are studying possible locations. It won’t supply the entire factory, but we are happy even if it only supplies it partially. It should have already been done, but the uncertainty caused by the pandemic is delaying the investments. Everything has to be done very carefully – we employ 200 people, which rely on us. Just out of curiosity, when we bought the company, the first thing the unions asked was “how many people are you going to fire?”. We called the unions to let them know that we wanted to keep everybody. Without people, we don’t work. I continue to believe that Portuguese spinning mills can be very important to the industry.
How much money would you have to invest in order to install the photovoltaic panels?
Around 350 thousand euros.
Do you foresee the possibility of developing your own brands, even for exports?
We now have Eco Heather. Tearfil is a highly regarded brand, the brand itself sells. We are working with the University of Minho and Fibernamics on anti-bacterial and anti-viral yarns – on projects that have to do with Covid-19. We have projects, we want to evolve, but we mustn’t forget that we’ve only been here for a year and a half.
Will there be any collaboration between your two companies?
I made it clear to the boards of both companies from the beginning: they are competitors in the market. Each one is completely autonomous from the other. Then, when the time is right, we’ll see if that is the best strategy or if we should make adjustments to it.
Are the two companies complementary? Does it make sense to unite them?
It could do: SMBM could never handle large volumes, Tearfil can handle large volumes.
They can be each other’s customers…
Competitors, at this point are pure competitors. However, they could be complementary.
Which means that you have an integrated investment plan?
We have, but we also have priorities.
How much will the total investment be?
About four million.
After making the investments, how do you anticipate Tearfil’s dimension? Are 20 million possible?
Although our medium and long term plan is not so audacious, I’m very optimistic, and I believe a lot in my team. Even because we have big projects with strategic partners, and several developments that will create a lot of value downstream. We currently have between 300 to 400 customers.
How much does Inditex weight?
Directly, none. Indirectly, it reaches 30%.
Is that comfortable for you, or would you prefer less exposure to a single buyer?
I wish it was smaller. However, the pandemic forced all companies to restructure, and value the proximity of the supply chain in favour of eastern geographies. This happened to everyone and to Inditex even more: they cannot be dependent on a single supplier, and Portugal brings flexibility through proximity.
For the textile industry in general?
Yes. The made in Portugal label is good, for textiles in general, but also for many other things. We have good designers, we have good manufacturers, so we are good.
Would the tradeshows’ full return help?
Yes, they are extremely important. Tradeshows are the place where we meet new partners, new customers, and new raw materials. No one goes on holiday to a fair pavilion, so everyone who is there is important and wants to do business. There is always someone who brings us ideas, new products, who challenges us… There is always someone who is of great interest to us. We will always bet on fairs, both at Tearfil and SMBM.
After a long engagement, Maria de Belém Machado, owner of SMBM, bought, in July 2019, Tearfil – which was located on the other side of the wall of the company founded by her father. The seller, ECS, a venture capital and restructuring fund management company, had no place for Tearfil in Moretextile’s world. The priority is, therefore, to reorganize production, bet on sustainability and innovation, and keep moving forward.
What are your expectations for 2021?
We want to continue to innovate responsibly and work alongside our customers and partners towards mutual growth. We also want to motivate our employees who are, without a doubt, the driving force of our success.
What are the priorities outlined to ensure the company’s competitiveness?
We will focus on responsible innovation, and on sustainable products and manufacturing processes. We do not intend to produce more, but to produce better, increasing efficiency, productivity, quality and our margins, while reducing the energy bill. We will also continue to invest in our human resources’ skills and ensure knowledge transmission between generations.
How is the relationship with the financial partners?
Nowadays, companies are stuck with a rating notation. From that notation, banks decide whether to support companies. Tearfil has felt great support and interest from some banks, essential to help us achieve the growth that we need.
How do you see the role played by the Portuguese textile industry in creating wealth for the country?
Despite all the employment, taxes, exports, and contribution to the country’s wealth, the textile industry is forgotten by the government, who does not protect us as it should. During the pandemic, a large part of the country stopped, but the textile industry immediately adapted and continued generating wealth. This resilience is very interesting and is not valued as it should.