Colortex, a leading textile company in Argentina, invested nearly $3 million last year to diversify into workwear fabrics after years of making sheets and towels. Denise Karagozlu, a director, says the company can produce these fabrics competitively against importers because the process involves using local cotton and less labor than sewing sheets.
The move to diversify isn't simply to boost profits — it's about surviving in a volatile country. "Argentina is always at one extreme or the other," Karagozlu says. "If you don't change as the situations change and understand that you have to keep changing, then you won't achieve anything."
Colortex, like other businesses, has learned this after more than 80 years of economic and political crises in Argentina. Karagozlu's grandfather started Colortex in 1955 and took advantage of tax breaks to open a factory in La Rioja in the northwest. That kept its pricing competitive despite the cost of transporting finished goods more than 1,100 kilometers to Buenos Aires, the country's main consumer market with a third of the 44 million population. But an elimination of the tax incentive in 2012 squeezed margins and pushed the company to diversify. It's now looking at high-tech fibers.
Argentina wasn't always so unstable. In the late 1880s and early 1900s, ample fertile land made it a breadbasket to the world - and an economic power. Dictatorships and poor economic management in the subsequent years, however, curtailed progress. In 2001, the country defaulted on $100 billion, sparking one of its worst economic downturns ever.
Mauricio Macri, the country's president, wants to end the volatility, and much of his strategy is based on reeling in investment for long-term economic growth.