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The Plains Cotton Cooperative Association has purchased the assets of Guatemalan denim manufacturer Koramsa, renaming the company Denimatrix.
The acquisition turns the Lubbock, Tex.-based PCCA into a vertical company with operations based solely in the Western Hemisphere and providing everything from raw cotton to fabric and finished product. Denimatrix will focus on higher end fashion jeans and is targeting a capacity of 150,000 jeans a week within two years.
“We came up with a way to purchase the assets at Koramsa, keep the installations, development center and talent, and start a new venture,” said Wally Darneille, president and chief executive officer of PCCA, a farmer-owned, cotton marketing, warehousing and denim manufacturing cooperative.
Carlos Arias, president of Koramsa, will hold the same title with Denimatrix and will keep the existing management team.
Arias and Darneille believe rising costs in China and the advantages of Denimatrix’s proximity to the North American market will provide immediate opportunities for the company.
“Market conditions have gotten worse and worse,” said Arias. “We came to the conclusion that an integrated vertical entity has never been done successfully [in the Western Hemisphere].”
Darneille said brands and retailers are facing greater pressure to lower inventory levels and turn product faster.
“Some of the things that retailers are being asked to do right now play into our strengths,” he said. “What’s the right product and how do you develop great product quickly so you don’t have the huge liability of producing six to 10 months in advance.”
Denimatrix’s facilities are based in Guatemala City and include development, wash and production capabilities. The company will use denim fabric from PCCA’s American Cotton Growers denim mill, which produces enough denim to make 20 million jeans annually. The denim mill, in operation for more than 30 years, has provided denim fabric for the likes of Lee, Gap, Old Navy, Levi Strauss and Calvin Klein.
Arias said production time can be cut to 30 to 45 days compared with the 90 to 180 days it can take to manufacture in Asia. He also feels Denimatrix is launching operations at a time when it can capture the market on an upswing.
“I think retailers are hoping to gauge their inventory positions and look at their buys very carefully,” said Arias. “As they have reduced their buys so significantly, we feel at some point they’re going to have to come back. We expect some correction of inventory levels in the market in the next few quarters.”
Two large brands have already placed orders, according to Arias, declining to name them, with the company’s first product slated for delivery in early May.