Whereas a multinational always has the support of its parent company, Romanian entrepreneurs had a more difficult time absorbing the decline in sales, in profit margins and even the slipping into the red.
However, many of them were quick to look for a solution abroad, to the Arab countries, the neighboring countries and the Western European economies.
Final Distribution, a company controlled by the Mircescu family, which makes metallic roofing tiles, rain gutters and downspouts, started exports to Slovenia, France and Spain in 2012, writes BUSINESS Magazin.
This was a natural step for the company that posted EUR4.5 million-euro revenue last year and built production facilities in Baicoi, Prahova County (southern Romania) in the last two years.
“The idea to try to take our products to foreign markets came naturally once we started manufacturing operations because we wanted to diversify distribution channels instead of being captive to one market,” says Dan Mircescu, general manager and owner of Final Distribution.
He hopes exports will generate at least one quarter of the revenue of 2013. The next markets on its list are the Republic of Moldova, Poland and Ukraine.
Several other construction supplies manufacturers did the same as Dan Mircescu. Few would have given any thought to exports before the crisis, as local demand was rising year by year and shipping costs were much too high to persuade Romanian businesspeople to go abroad, anyway.
Marius Pantis, general manager and owner of Oradea-based Optimedia, a maker of PVC and aluminum doors and windows, decided to start exports in 2007, when the local market was still very busy and it seemed rather complicated to make special types for windows for western markets, which required more work and higher raw material inventories.
“We could barely keep up with local demand. However, we decided it would be best to begin tapping into foreign markets,” Pantis recalls, who says export volumes were low in the first years but helped him learn the rules a Romanian exporter has to meet to sell its products abroad.
Exports currently account for 40% of the company’s EUR8 million yearly revenue. Main customers operate in Belgium, Italy, France, Austria, Switzerland and Canada.
Claudiu Georgescu, chairman of the Association of Construction Material Producers of Romania (APMCR), says that only certain products are suitable for export now and especially those with a high added value.
Cement or bricks for instance, cannot be sold abroad, because shipping costs would be too high to justify selling these products anywhere beyond a 300 kilometer radius from the plants.
“The bad thing here is that we do not have an export-oriented construction materials industry, a high-tech industry in this business,” Georgescu explains.
The local construction supplies market, which accounts for 30% to 40% of the total construction sector shrank by about 10% last year to EUR2.9 billion, as estimated based on the information provided by the APMCR chairman.
There are no concrete estimates about how much exports account for of this figure, but sales to customers abroad are not the most important part of the business for Romanian entrepreneurs yet.
Exports stand at no more than 10% to 12% in the revenue of the major companies in this business, at best.
For instance, Arcon Sfantu Gheorghe owned by businessman Ioan Titeiu, exported EUR3.6 millions’ worth last year, about 11% of the 2012 revenue. Arcon manufactures bituminous membranes, expanded polystyrene and decorative paints and coatings.
AdePlast, whose owner is Marcel Barbut, exported EUR1 million-worth of products last year. The company makes adhesives, polystyrene and paints.
Arcon and AdePlast have reached as far as the Arab countries, a target of choice for many companies in the construction business.
Another company, MCA, controlled by Ciprian Oprea, saw exports reach 14% to 15% of its EUR9 million revenue in 2012. The company manufactures garage doors and rolling shutters.
(English version by Loredana Fratila-Cristescu)