Romania is a country counting about 21 million people holding a strategic position in the center of Eastern Europe. Following the cancelling of restrictions regarding the migration of Romanian and Bulgarian workers to Western Europe on the 1st January 2014, Romania is at the heart of all debates: Romas, agreements with Russia for a favorable vote at the next NATO meeting and Romanian health staff invading French hospitals… Many discussions are held about Romania. Yet we owe Romania a certain percentage of our wardrobes, since Romania is the China of the West in terms of textile production. Overview on an industry that Western Europe cannot do without.
Made in Romania
Zara, Steilmann, Hugo Boss, Pierre Cardin, Benetton, Fashionable… Famous brand names, and against all expectations, none of them are “Made in Bangladesh” or “made in China”, but “made in Europe” and more precisely, “made in Romania”. Asian countries may hold the largest number of textile mills and garment factories, but still, these large global brands chose to keep their production sites in Europe. And for good reason: Asia may be competitive in terms of production costs, but Romania has two very powerful comparative advantages on the European market: the minimum Romanian wage amounting to 157 euros and Romania being able to produce and deliver the goods in less than a week, the savings in a logistical and a salary point of view are considerable. Therefore, following the transition to the market economy introduced in 1989, Romania adopted a production system in vogue in the textile industry, namely the “Lohn production system“. This system consists in a production contract between a large company and factory, the company providing the raw materials and ordering for a specific number of parts, for the factory sending the finished product back. It is through this system that Romania has been one of the largest European producers until 2007-2008.
A lack of manpower
However, since its accession to the Union Européene in 2007, things have changed. The costs of living has increased, and the textile industry does not pay enough to ensure Romanian a bright future. On another hand, the migration of 2 millions Romanians to Western Europe (corresponding to 10% of the population) is no stranger to this phenomenon. There are thus a large number of vacant positions in the Romanian textile industry, which amounted to 35,000 jobs to be filled, which forced the country to recruit in a competitor country, namely China. For example, the city of Bacău recently welcomed 10,000 Chinese workers to to refill Sonoma SA’s workshops, since they do not have high salary expectations, the average Chinese wage being $15 per month. Similarly, the great supplier of Benetton and Prada Wear Company, also based in Bacău, already employs 300 Chinese seamstresses. To remain competitive, other companies have opted for another solution: robots. For instance, the company Textila Oltul chose to invest in industrial robots to overcome the lack of labor, and thus avoid losing the company’s export contracts.
The situation is thus disturbing, especially in a country fond of fashion and brands: the Romanian market for clothing, footwear and accessory currently amounting to € 2.5 billion, it is a market that can not be ignored. However, Romania may be a favourable country for the textile production, without labor, the country still finds itself at an impasse and will to focus on innovation to keep its contracts with Western Europe, which could take the form of new, more sophisticated industrial equipment.