PCCA extended its reach into the apparel industry recently with the acquisition of key assets of Guatemala-based Koramsa Corporation and the formation of a new company, Denimatrix, to produce fashion jeans. It is the first fully-integrated vertical supply chain from raw cotton to finished jeans in the Western Hemisphere.
Almost from the moment PCCA entered the textile industry with its purchase of the American Cotton Growers (ACG) denim mill in 1987, some of the cooperative’s members and other observers expressed a desire to go one step further and manufacture jeans. At the time, it was not feasible for a number of reasons, but as they say, “times have changed.”
“Denimatrix will offer important synergies resulting in new opportunities for our ACG operation,” said PCCA President and CEO Wally Darneille. “We have changed the rules of the game and redefined ACG as a full-package supplier,” he added. “These synergies will give us the flexibility to offer a broad range of quick-response fashion jeans and other apparel to our customers.” Denimatrix will have the finest combination of facilities and capabilities in the Western Hemisphere, and the former Koramsa management team, long known for their strategic market leadership, will oversee the new operation.
“These assets, along with PCCA’s access to raw cotton, ACG’s 34 years of experience in producing denim fabrics for a wide variety of customers, and the creative and experienced management team will make Denimatrix a truly unique operation,” Darneille said. “We are very pleased that we were able to form the company quickly so that we can effectively continue business programs with current customers of ACG and Koramsa,” he added. “We will continue to produce denim at ACG and deliver the fabric to Guatemala which should further shorten the supply chain. Given today’s retail environment, the 60- to 90-day advantage we will have over Asian and Middle Eastern supply chains will provide tangible, measurable value for apparel brands and retailers.”
“We are open for business,” said Denimatrix President Carlos Arias. “We have received substantial orders from two large brands, and we are actively negotiating styles and deliveries with several others,” he added. “We expect to deliver our first units in early May and expect Denimatrix to continue to rely on a well established supply chain for jeans in the Americas.”
“Denimatrix should be a profitable, stand-alone business in addition to helping ACG,” Darneille continued. “We will be able to move excess inventory from ACG to Guatemala and smooth out the peaks and valleys in both operations by making jeans for outlet stores when orders from our traditional customers slow down.” In recent years, ACG has struggled against competition from Asian and other countries as well as a difficult economy.
“We have cut our production costs significantly and may have reached the point of diminishing returns,” Darneille explained. “We have improved efficiencies throughout the denim mill without investing in modernization, and we have worked with existing customers to increase our market share with them while adding new customers,” he said. “Yet, the mill has continued to struggle, financially. Denimatrix will provide an opportunity to move the fabrics we make at ACG.”
By expanding into apparel manufacturing, PCCA is continuing its tradition of innovation, leadership and forward thinking.