Cia Hering

Cia Hering

Rua Hermann Hering 1790 Blumenau, Santa Catarina 890 10-900 Brazil Telephone: ( + 55) 47 321-3544 Toll Free: ( + 55) (800) 473-114 Fax: ( + 55) 47 321-3434 Web site: http://www.ciahering.com.br

Public Company Incorporated: 1880 as Hering Têxtil S.A. Employees: 3,588 Sales: BRL 336.59 million ($114.88 million) (2003) Stock Exchanges: Sao Paulo Ticker Symbols: HGTX3 NAIC: 313210 Broadwoven Fabric Mills; 448140 Family Clothing Stores; 551112 Offices of Other Holding Companies

Cia Hering is a Brazilian holding company whose units are engaged in the production and sale of textiles and casual-wear clothing. These clothing items consist of intimate apparel, pullovers, and other general textile products, including T-shirts, pajamas, shirts, jackets, jeans, and fashion clothes. Hering subsidiaries are licensed to produce, sell, and export clothing under the Disney trademark. The company also operates and franchises retail clothing stores in Brazil.

A Century of Textile Production

Hermann Hering was a German immigrant to Brazil who settled in the small southern state of Santa Catarina, which was also home to many other migrating Germans. In 1879, he acquired a circular loom, and the following year he and his brother Bruno opened a cotton-textile plant in Blumenau. The products of this family enterprise were well received, and as a result more looms were acquired and installed. The machines were originally driven by steam, later by waterpower, and still later by electrical energy. Hering began doing business outside Santa Catarina in 1900, when its first agent was sent to Porto Alegre in the neighboring state of Rio Grande do Sul. The company began selling systematically in Sao Paulo between 1908 and 1910 and later in Rio de Janeiro. By 1914, the company, now called Hering & Cia., was able to import its first spinning mill, enabling it to become one of the first textile companies in Brazil to make its own cotton yarn. By 1929, it had adopted its present name, Companhia Hering.

In the course of time, Hering established another cotton-textile plant outside Recife, in Brazil's cotton-growing belt, far to the north of Santa Catarina in the state of Pernambuco. Hering's apparel was well-suited to a poor, tropical country. Its simple unadorned T-shirts, worn by generations of Brazilians, were so unremarkable that they later became "in" for young people. Hering was among the largest of the textile firms, and in 1929 the company employed more than half of all Brazilian workers engaged in manufacturing. In the late 1960s, textiles were still supporting 300,000 people directly and 600,000 indirectly. By this time, however, the industry was in trouble due to obsolescent machinery, poor management, and inadequately trained labor. For many years, in an inflationary climate, easy credit had been repaid in devalued currency. Customers quickly spent their money before it lost still more value, and the profits were put into real estate and other such outside investments instead of new machinery.

This situation ended in 1964, when a military government assumed power and stabilized the currency, leading to a crisis in the textile industry but also to a restructuring opportunity. By the early 1970s, new equipment had been installed in most of the largest mills, and the quality of finished goods improved. Hering's spinning and weaving operations had sales of $25.4 million in 1973 and were producing such garments as pajamas, underwear, and sports shirts as well as T-shirts. The company also began making Wrangler jeans, under license, in 1983, and selling them in stores.

Hering's annual sales from textiles and clothing came to about $300 million in the late 1980s. In the trade journal Knitting Technique, a visiting group of German and Austrian manufacturers called the company "one of the largest textile manufacturers in the world" and described the size of the Blumenau plant as "well above those appertaining in Europe" and exceeding "even the most imaginative expectations." Of the large numbers of circular knitting machines, almost 500 had been built by the company itself. The group was surprised to find that hundreds of workers were still color-printing fabrics manually—a practice that had ceased to exist in Western Europe—and that the company employed ten doctors and paramedics to tend to workers around the clock. The group continued on to Recife, where they visited the Tecanor circular-knitting plant and described the manufacturing hall of the Hering do Nordeste factory as one of the largest textile-manufacturing buildings in the world.

Food Production Foremost: 1972–97

By this time, however, Hering's fortunes had taken an unusual direction. Soybeans had become a major crop in Santa Catarina, and Hering decided it could make money by crushing the beans into meal and oil and marketing these products abroad. For this purpose, it formed a company named Ceval Agro Industria S.A. in 1972, establishing its headquarters in Gaspar, a town about 25 miles from Blumenau. Two years later, Ivo Hering, president of the Hering group and a great-grandson of one of the founders, appointed Vilmar de Oliveira Schürmann to be Ceval's general manager. Under Schürmann's capable leadership, Ceval Agro Industrial, which later became Ceval Alimentos S.A., grew rapidly, becoming Brazil's chief processor of soybeans and its fifth-largest exporter. However, after a government-imposed freeze on the Brazilian currency's rate of exchange resulted in an unexpected $3-million loss in 1986, Hering decided the company should diversify its activities and exploit the domestic market. During the late 1980s, Ceval became a major producer of foods for the Brazilian retail market by spending more than $200 million to acquire 17 companies in six states. Its annual revenues rose from $149 million to $1.2 billion in the decade, eclipsing the amount that Hering derived from textiles and clothing.