Some of the five clothing and footwear manufacturers are among the biggest players in the sector in Romania by 2020 revenue, they are businesses with tens or even more than RON100 million revenue and hundreds of employees each.
These companies make H&M clothes and shoes both in their own factories and in subcontracted ones. So, there are a total of 17 factories tailoring and sewing, putting “made in Romania” on the label of H&M products.
That is about half as many as five years ago. In 2019, for instance, the last year before the pandemic, the number of production facilities was 26. This development confirms once again that Romania is becoming too expensive for the manufacturing of clothes and shoes, which is why most of the big names in the mass market industry have decided to abandon a number of local partnerships and turn to cheaper countries in Asia or Northern Africa.
Minimum wage increases over the past decade have also boosted earnings in the sector. But workers in the industry are still earning some of the lowest wages in Romania, often close to the minimum wage. In Asia, however, earnings are still several times lower.
However, the Covid-19 pandemic has slightly changed the paradigm of these contractual relationships, which used to focus on price. Specifically, due to high transport costs and delays, producers are starting to shift to destinations close to headquarters. Hugo Boss, a German company active in the premium market, was among the first to announce such a move recently.
In Romania’s case, the situation is not improving at the moment, with several dozen clothing and footwear factories closing in recent years due to a lack of customers.
(English version by Loredana Fratila-Cristescu)