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IFC INVESTS IN BRAZILIAN SHOE MANUFACTURER


Jannette Esguerra
Phone: (202) 458-5204
Fax: (202) 974-4384
E-mail: jesguerra@ifc.org


WASHINGTON, D.C., March 29, 1999 — An International Finance Corporation loan will help Vulcabrás do Nordeste S.A., a Brazilian shoe manufacturer, to move its manufacturing to the northeastern state of Ceará, bringing jobs and economic development to one of the poorest regions of Brazil.
The US$20 million loan provides long-term financing that will allow Vulcabrás to take on competition from foreign makers of athletic shoes through an investment program to raise productivity, lower costs, and improve the quality of its products. Greater competitiveness will allow the company to fill local demand and export its products, mainly to the Mercosur market.
The company will relocate its manufacturing facilities from São Paulo to the northeast coast of Brazil, modernize facilities with new technology and machinery, and establish warehousing and retail outlets to maximize product distribution. With these improvements, Vulcabrás can produce and distribute up to 7 million pairs of high quality athletic shoes, men's leather shoes, and rubber/vinyl work boots, mainly for the local market. Athletic shoes will be produced under license from Reebok, Adidas, Puma, and Keds.
The project will generate some 1,600 jobs in the state of Ceará, helping to reduce poverty in the northeastern states, said Karl Voltaire, IFC Director of Latin America and the Caribbean. He said the project underlines the importance of small firms, such as Vulcabrás, in contributing to Brazil's economic growth.
The project is sponsored by the Grendene Group which has interests in shoe manufacturing, furniture making and agribusiness.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets and providing technical assistance and advice to governments and businesses.