In a village in the Brazilian rain forest, a mayor speaks in rapid Portuguese while German officials nod in agreement and a translator provides the English rendition.

The big news: German automaker DaimlerChrysler AG's contribution to an Amazonian project to reduce poverty is paying off. Coconut husks are being transformed into parts for Mercedes-Benz vehicles in a multilingual and low-tech example of today's global supply chain in action.

It seems incongruous. DC is a name that conjures up images of high technology on wheels in the shape of a Mercedes-Benz S-Class, or manufacturing efficiency in plants where 6,000 workers can build 1,470 shiny new Chrysler minivans in a single day.

The German carmaker is not normally linked with images of coconut harvests in impoverished areas of the Brazilian rain forest. But that is exactly what DC is funding — low-tech operations in the jungle to supply parts for Mercedes-Benz vehicles.

DC is so proud of this project that it flew reporters to Brazil from around the world to see the work firsthand. They traveled by boat up the muddy waters at the mouth of the Amazon to a village in the northern state of Para, a village celebrating electricity and a water filtration system. The children are free of parasites, and there are televisions in the wooden shacks, courtesy of a market for their coconuts.

DC has invested $1.4 million in the region since it first got involved in 1992 with POEMA (Poverty and Environment in Amazonia). POEMA was formed in the late ’80s to provide basic survival skills to the poor living in the vast rain forest at the corner of the Atlantic Ocean and Amazon River. It is these native farmers who are responsible for much of the destruction of the rain forest as they deplete the soil, burn it, and clear a new area every couple of seasons to feed their families.

POEMA wanted to see if the 200,000 sq. ft. (500,000 sq. km) of altered area could be reclaimed and the destruction halted, while still offering inhabitants a livelihood.

DC was hooked through the ambassador skills of Willi Hoss, founder of Germany's Green Party, and a POEMA volunteer.

POEMA researchers looked for industrial uses for the region's natural materials, experimenting with oils, fibers, resins, dyes and latex as natural replacements for synthetic products.

The challenge to DC was whether it would implement its technical know-how to find ways to process these materials using equipment the natives could work and repair themselves. And would DC buy the products if they were comparable in cost to traditional products?

The commitment from DC spurred the discovery that waste coconut husks are a valuable industrial source. They are incredibly tough and durable — lasting as long as 90 years. The natural fibers are elastic, so they resume their shape after use; the seatbacks and headrests made from them breathe well and contain a natural antibacterial agent.

And it costs 5% less than polyurethane, the synthetic alternative that replaced the use of coconut fibers back in the ’70s. The difference is that today's technology makes the natural fiber cheaper to produce and to dispose of because it is biodegradable.

“Using coconut fibers is, I think, the most advanced project in using natural fibers in the world,” says Manfred Straub, head of purchasing, DaimlerChrysler do Brasil.

“At first, the engineers in Germany were not at all convinced of the viability of this project,” says Wolf-gang Scheunemann, DC technology and environmental communications. “Now they are.”

In July 1993, a coconut fiber plant on the island of Marajo started making 200 headrests a month as a pilot project. To ensure success, the cleared area had to be reforested, a permanent water supply established, and the harvest had to have a guaranteed market.

It worked so well, a non-profit body, POEMA, was created in 1998 to carry out similar projects in other areas of the rain forest.

Today there are a number of plants of assorted sizes and degrees of automation making seats, headrests and sun visors for Mercedes-Benz vehicles assembled in Brazil.

The jewel is a new $3.7 million factory in Ananindeua, an industrial area of Belem, the capital of Para. The plant, which began mass production March 14, is expected to employ about 600 people by the end of 2002 when it reaches capacity of 80 tons of components a month. It already is producing 30 tons a month, providing parts at a consistent price, quantity and quality that the auto industry needs. Currently, 60% of output is sold to DC, the rest to the furniture and gardening industries. Other interested automakers are Volkswagen AG (seat backs), Honda Motor Co. Ltd. (motorcycle seats), General Motors Corp. and Fiat SpA.

The coconut fiber arrives at the plant as coils of rope. It is separated, softened, cleaned and dried. The smooth hair-like strands are braided again into rope and pressure cooked to give them elasticity so the seats will have the necessary give, explains Wilson Roberto Moura, administrative director of POEMEtec Ltda., the private company created three years ago to oversee the business operations that grew from the pilot projects.

The cord is unraveled and the fiber rolled into mats, sprayed with natural latex, baked in a kiln, pressed and cut. More latex is sprayed on, and chunks of mat are put into a mold and stamped into a part. The latex is imported from Malaysia, but by year end about 35 tons of latex will come from a nearby source. An abandoned Goodyear rubber plantation about an hour away has been taken over by a cooperative of about 220 households, creating another source of wealth within the region, says Thomas Mit-schein, a professor at the University of Para and coordinator of the POEMA program.

DC buys 4,200 seat backs and cushions a year for Mercedes A-Class cars assembled in its Juiz de Fora plant in Minas Gerais, Brazil. A truck assembly plant in Sao Paolo, Brazil, receives 5,000 seats, 6,500 headrests, 550 sun visors and 350 driver beds.

A less modern facility in Praja Grande, on the Amazon island of Marajo, makes 8,000 headrests and 1,000 sun visors for commercial vehicles a month, taking baked sheets and cramming them into molds that resemble old waffle irons.

The plants in Belem and Praja Grande receive fiber from another 400 Brazilians working in eight processing plants in the interior of the Amazon region. These community cooperatives are often crude buildings without windows or doors. Husks are fed into antiquated shredders and then spun into rope with the crank of an old truck differential. The workers live in shacks along the riverbank, or are students of the agricultural trade school. “It is very low-tech, appropriate to the people in the region,” says Mr. Mitschein, explaining that is key to their acceptance of their role as a semi-industrialized part of a supply chain. These rudimentary operations employ about 100 and produce 100 tons of fiber a month.

There are another 900 farmers supplying the coconuts at market value (from 15 to 60 cents each). The market price fluctuates, but the market is guaranteed, and 70% of the farmers' income now comes from sale of the coconut husks. In return, they practice sustainable agriculture: planting limes and other products to enrich the soil so it can be reused. It's a carrot and stick approach, says Mr. Mitschein. The farmers not interested in sustainable agriculture are crowded out of a guaranteed market.

The end result is about 5,200 Brazilians earn a living from cultivation to factory. It “shows it is possible to develop Amazonia without devastation,” says Dr. Almir Gabriel, governor of the state of Para.

And DC is happy. “We wouldn't do it if it lost money,” says Ben Van Schaik, chief executive of DC's Latin America unit.

Mr. Hoss, still volunteering at age 72, says German public policy is “generally bad,” but “this project is very different,” in that the results are very visible and they are tied to the desires and demands of the people.

So far, output is restricted to supplying Brazilian Mercedes assembly plants, but the use of natural fibers (flax, hemp, sisal) has taken root in Germany and South Africa and continues to grow in acceptance, says Mr. Scheunemann.

DC also is involved in research into use of curuau, a member of the pineapple family. The fibers in the leaf are the strongest in the world. It can be used for rope, or lacquered to a smooth finish for a bumper or hood stronger than one made of fiberglass.

“The whole world now believes in natural fibers for cars,” says Mr. Scheunemann. So it's only a matter of time before others (manufacturers) follow suit.”