Innovative exporters lead Portugal

Innovative exporters lead Portugal into the black

Black toilet paper is one of the many “innovations” cited by Reuters news agency in an in-depth article on how eager export businesses are placing Portugal on the commercial world stage.
Entitled “Innovative Portuguese exporters boom despite bust at home”, writers Andrei Khalip and Sérgio Gonçalves stress how businesses have taken advantage of one of Portugal’s greatest weaknesses – low wage levels – to build towards strength.
“Painful reforms demanded by the EU and IMF have improved competitiveness mainly by cutting labour costs.
“Employers can now hire fire and hire more easily, and pay less for overtime hours. Portuguese also have to work more days per year.
Pay is low and falling to levels lower even than Greece, say the writers, which “leaves Portugal firmly as the poorest of the countries that formed the EU before ex-communist countries began joining in 2004”.
But the flip-side is that Portugal is “outpacing Spain, France, Ireland, Italy and even Germany” when it comes to expanding overseas markets.
As the EC said in a recent paper: “Portugal is gaining competitiveness.”
The Bank of Portugal expects only “very reduced” rise in labour costs “consistent with projected productivity growth” at least until 2015, and “with unemployment at 15.6% in the third quarter last year, employers still have a ready supply of workers for when they expand.
“This will help to keep their costs down even as the economy recovers, although staff can look forward to little improvement in their low pay,” warns the article.
The “good news” would seem, however, to outweigh wage-woes. Portugal’s small and medium-sized export companies are making inroads all over the globe, from China to Angola, says the article.
“It’s a one-way trip. If we stop growing exports, we dig our own grave,” footwear designer Luis Onofre is quoted as saying. During the depths of Portugal’s crisis in 2012, Onofre’s firm raised its foreign sales by 40% to about €11 million.
Underused factories stalled by the collapse of the home-market are being harnessed by exporters, and as the government starts to concentrate on the economy, the chance of business investment loans are appearing on the horizon.
Nonetheless, exporters have to keep looking for new opportunities, to stay ahead of the game. Pedro Galhardas, a partner at the Roland Berger global strategy consultancy which coaches Portuguese exporters, said companies have accepted that the domestic market is “too small and they no longer count on the expected economic recovery as something that will allow them to grow”.
The article visits the Inarbel knitwear maker in Agrela, near Chaves, which has been working at “full capacity for the past two years” and has managed to raise the value of its sales by 10% by selling higher value products mainly to new destinations like Mexico.
Computerised looms “easily switch between materials from acrylic to cashmere, tailoring to clients’ immediate needs and specific contracts”.
“You need to be versatile and seek new export deals non-stop to stay alive,” Inarbel’s chief José Armindo explains.
“Portuguese firms are much more flexible and adapt better to the realities of the foreign markets as they address particular market needs, integrate locals into management teams and partner with local companies,” adds Roland Berger’s Galhardas.
Paulo Pereira da Silva, CEO of the Renova paper company that exports to 60 countries, says even larger Portuguese firms are usually dwarfed by foreign rivals, meaning they “have to innovate radically to get noticed”.
His answer is to move Renova’s toilet paper range beyond the traditional white and pastel colours. Now rolls are available in red and even black.
“If I do what multinationals do, I’ll be dead – I need to be different,” he told the reporters.
The very positive bottom line of Reuters’ comprehensive research is that Portugal, at last, if only when it comes to its exports, would be appear to be gaining ground.