Textile industry in Albania

MachinesTechnical ArticlesSouth-East European INDUSTRIAL Мarket - issue 3/2021 • 08.10.2021

The strategic geographical location of Albania allows an easy and rapid reach to European markets. Currently Albanian textile production is exported mainly to the Italian market (80 – 90%), followed by Germany, France and the Netherlands.

The Albanian government has signed numerous free trade agreements such as CEFTA, EFTA, WTO membership. The signature of the Stabilization and Association Agreement gives Albania free access to EU markets.

According to a report prepared in 2015 by CSR Netherlands and commissioned by RVO and the Embassy of the Kingdom of the Netherlands annual average growth of Albanian exports to the EU is 13,2% passing from EUR 678 million in 2008 to EUR 1,11 billion in 2012. The report states that the total sector employs roughly 70 000 employees who earn an average gross wage of ALL 22 000 (equalizing EUR 160) for 174 hours work per month (2015). There are 762 garment and shoe factories producing goods for foreign clients and making up 42% of Albania´s exports (2015). Social security and health insurance for new employees are covered by the government for three consecutive years in case of a 6-year term contract.

At the time of the CSR Netherlands´ survey a vast majority of these companies were CMT driven (Cut Make Trim). Besides CMT, there were some companies that offer “full package” (from weaving/design to a ready made garment) and the first and so far only knitting company in Albania with impressive circular knitting machinery. Since CMT is currently the sector´s main activity, it is assumed that the other 90% of the sector is represented by CMT. This means that designs, patterns and cut patterns are imported and that most of the finishing is conducted elsewhere. Since the sector is mainly serving the Italian market the Italian contract providers have full control of pricing, margins, timing and sales. Therefore Albanian companies are highly dependent on the Italian market. The major shortcoming is the low level of added value the sector creates.

Marketing development

Since more than 90% of the garment sector in Albania consists of CMT production, little value is added in the production chain. Albania is an interesting country for Western brands due to its cheap labor, but it cannot compete with the Far East where larger orders can be produced for a lower price.

Therefore Albania needs to get out of “surviving CMT” and grow towards more added value in its core business, as it does not offer a durable prospect for the sector if Albania continues to focus on CMT production. CMT also causes that local sourcing is now impossible. That impedes the sector since it relies on fabrics, designs and patterns imported from abroad. Albania strongly depends on Italy when it comes to clients, technology, sourcing and production. Albania´s own textile industry (spinning, weaving, knitting, dyeing, printing, finishing) is in that sense poorly developed.

There are only few companies involved in the production of woven and knitted fabrics. There is a lot to win in terms of branding and positioning. The label “Made in Albania” is relatively unknown and as a result undervalued. Most companies are willing to obtain a better commercial position, since the lack of commercialization impedes their business. Mostly they are run by one or two owners as family businesses, followed by a large amount of employees.

Middle management is missing, and this puts a large pressure on the owners. There is in many cases simply no time, no back-up by branch organizations or no money for investments in branding for creating an “in-house” brand. Moreover, companies that are ready to hire a skilled and qualified designer or brand developer indicate that Albanian fashion institutes only deliver technically skilled graduates, not creative designers, states the CSR Netherlands´ survey.

As most of the Albanian companies work on a CMT basis for Italian clients their experience with buyers´ requirements heavily depends on their business relation with the Italian customers. The Italian market hardly asks for compliance standards e.g. BSCI or Oekotex 100.

The label “Made in Albania” does not always appear in ready-made garments when the garments are finished in, e.g., Italy. In this case we do not speak of “country of origin” labeling. At present, there is no EU legislation on country of origin labeling for textiles, apparel and footwear products, although some member countries may require the origin to be listed on the label. North West European EU member countries do not require such a label. In case one does mention the country of origin, the non-preferential rules of origin do apply. These rules state the country in which the last substantial transformation of a product took place, is relevant for providing the country of origin. Most countries outside EU require such a statement. Albanian companies are not in the position to decide on this due to the CMT business model. These products are specifically destined to be sold on the Italian market (mainly corporate identity wear). The Albanian company works in this case on the basis of subcontracting for an EU company.


There are more than 100 shoe producing companies in Albania performing only CMT (contract work). All these companies suffer from the absence of finished leather produced domestically because all tanneries and footwear companies depend on foreign suppliers and customers. Finished and crust leather is mostly imported from Italy, but also from America, Russia, Egypt, Bangladesh or Turkey. The hides have to be imported in large amounts. Due to delays the Albanian footwear industry looses European customers.

The footwear industry in Albania offers medium up to good quality shoes very suitable for the North and West European market. Orders could be delivered quickly and working conditions are up to standard. In addition, most factories have the possibility to organize flexible production for small quantities. The biggest shoe producing company in Albania DoniAnna has its own brand that is running alone a total turnover of EUR 40 000 euro in 2014. This company is one of the few producers creating “Made in Albania” shoes, with own designs. The shoes are exported to Italy, Germany, France, the Netherlands and Scandinavia. DoniAnna has 5 factories employing 2400 people. DoniAnna is present at trade fairs (Riva di Garda and Milan) and is ISO 9001 complied but not BSCI. However, the company aspires to become more sustainable. The owner, Mrs Donika Mici, aims to present a completely chromium free edition of shoes for a young target group at Riva di Garda.

The company strives to minimize the waiting time for finished leather by setting up a (sustainable) tannery in Albania that can finish leather from wet blue to crust. It will reduce the overstock, it is estimated that it will save her roughly EUR 4000 on foreign imports, and she will be able to become a quick and reliable deliverer to the European market. Moreover, Albania could hereby create its own integrated leather supply chain from which the whole sector could benefit. “Albanian” leather could be identified and promoted because of full domestic production. Standardization becomes easier so as the implementation of sustainable industry labels (BSCI) required by the Western market.

Recent situation in textile industry

Albania´s garment manufacturing industry, which supplies famous brands in Italy and elsewhere, was heavily affected by the pandemic and the lockdown in many countries, which delayed supply chains and deliveries. As in other sectors like car manufacturing and electronics, which also have complex international supply chains, the clothing and textiles sector suffered sudden demand and supply side shocks in the early months of 2020. The initial disruptions to supplies from China, followed by factory shutdowns in Europe and elsewhere as the pandemic spread around the world, was accompanied by a slump in demand as people stopped going out – and to a large extent stopped buying new clothes – during the spring 2020 – lockdowns. The burden fell especially hard on companies and their employees in lower income countries, among them Albania, supplying western markets.

Nowadays the textile and footwear sector is the single largest category in Albania´s exports. In 2019 exports in this category amounted to ALL 118 billion. ALL 92 billion – almost a third of all exports – was textile and footwear products exported to Italy.

Albania´s strength in this area dates back to the communist era, when textile production and garment manufacturing was one of the most important sectors of the economy, with state factories supplying the local population and producing for export. The Kombinat Stalin Textile Mill in the outskirts of Tirana employed over 2000 people in its heyday. Today, Albania is no longer a major textile producer, and its factories, now privately owned, many of them by Italian businesspeople, import materials that are then turned into partially or fully finished garments or shoes then re-exported. Data on this industry is incomplete, but nowadays Albania is estimated to have around 1000 companies engaged in garment manufacturing, employing up to 90 000 people.

Aside from Albania´s previous history in the sector, the industry developed thanks to Albania´s low costs – this is a labour-intensive sector and Albania has the lowest minimum wage in Europe – and its proximity to Italy, one of the world‘s fashion capitals. Italy, just across the Adriatic Sea from Albania, has a large Albanian diaspora and is the country´s top trading partner. Typically, clothes and shoes are exported almost completely to Italy, where Italian workers add the final touches and packaging, allowing the products to go out to the shops with the prestigious “Made in Italy” label.

In just one example, Kler, a major Albanian CMT company located on the highway between Albania´s capital Tirana and the port city of Durres, supplies high-end men´s shirts for Italian brands including Brancaccio C., Alex Doriani and Cristiana C. Kler´s website says the company “prides itself on its high quality make, quick turn-around capacity, convenient location to EU fabric markets and competitive pricing with a low cost of labour.”

When the pandemic started, it had a quick and extremely damaging impact on companies and workers in producing countries around the world, where many manufacturers already struggled with cash flow and operated on extremely tight margins. As early as March 2020, the Clean Clothes Campaign warned that companies were closing in Albania and elsewhere because of the shortage of raw materials from China combined with declining consumer demand and shop closures, which resulted in major international retailers cancelling orders (including some already completed) and demanding discounts on orders already shipped.

Rights activists around the world focusses on the clothing industry warned that the financial burden of the pandemic was being passed on to the most vulnerable people in the industry, namely workers in low-income countries, many of whose employers were unable to pay them for work already done. A report from the Centre for Global Workers Rights (CGWR) and the Worker Rights Consortium (WRC) said that fashion companies from the US and Europe cancelled or refused to pay for USD 16,2 billion of orders in April-June 2020, resulting in textile workers losing USD 1,6 billion in wages. During this period, fashion companies in the EU took delivery of garments worth 45% or USD 6,5 billion less than in the same period of the previous year.

Workers in Albania´s garment sector – around 95% female with an average age of 31-35 – were already in a precarious situation where they faced multiple labour rights abuses and job security dependent on their factories securing fresh orders. This immediately worsened when COVID-19 started spreading across Europe.

The International Labour Organization (ILO) reported the “immense impact” of the pandemic on the textiles, clothing, leather and footwear industries.

“Quarantine measures, closure of retail stores, illness and salary reductions have suppressed consumer demand. At the same time, this sector is struggling with severe supply-side disruption; as workers are told to stay at home, supply chains grind to a halt and factories close. Women in Albania`s apparel and footwear sector are among the hardest hit by the economic woes associated with the COVID-19 health crisis,” said an ILO report.

The Albania government shut factories down in the initial lockdown in March 2020, but those in the garment industry were the first to reopen after factory owners put pressure on the government to allow them to continue working. Looking at the financial impact on workers, when factories reopened many were operating at a low capacity, offering their workers only a few hours a day, with their pay adjusted accordingly. Others were unable to come to work as closed schools meant they had young children at home, or without public transport they couldn`t get to their workplaces. While the government extended support for workers forced to stay at home by the pandemic, there were cases of factories laying off workers as demand shrank, and once they were removed from the payroll they were unable to access support.

According to a Reuters report, the Albanian government gave a one-off payment of ALL 40 000 to 179 000 workers after 50 000 lost their jobs, including in the garment sector, and approved sovereign guarantees to help pay employees. However, industry insiders told the newswire that most companies failed to secure bank loans despite the guarantee.

By June 2020, 50 000 people from across the Albanian economy had been removed from the payroll and declared unemployed. While some were later taken back as factories reopened. Some companies entered bankruptcy, while others struggled to access support from the government channeled through local banks.

One way that companies have managed to survive the crisis is by switching from fashion apparel to production of face masks and other personal protective equipment (PPE), though this was not in sufficient volume to come close to making up for the shortfall in fashion orders for the industry as a whole.

German international development agency Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) GmbH supported the tailoring industry in Albania during the pandemic. The shutdown of the fashion industry in Italy and other European countries reduced the demand for textiles “made in Albania” immensely. According to studies, in 2020 alone, the potential loss of the sector summed up to EUR 180 million. Given the high demand in Germany, starting the production of PPE kept these companies running.

GIZ advised the producing companies on ensuring the quality standards for protective wear, and also initiated cooperation between Albanian and German companies through its networks with chambers of commerce in the two countries. Among the Albanian companies it has supported are Efa Solutions, which produced hundreds of thousands of gowns since June 2020, that were sold to customers in Germany. “Efa Solutions even subcontracted four other local textile companies to satisfy the high demand for PPE. This helped secure nearly 600 jobs and create 400 new jobs in the textile sector, which has still not yet recovered from the crisis. Alongside their clothing, Efa Solutions still manufactures protective gear despite the decreasing demand for PPE, as they have built a productive system which ensures quality of high international standards,” GIZ spokesperson said.

Another consequence of the pandemic – potentially a positive one for Albania – is that supply chain disruptions, such as those between East and South Asian suppliers and European markets, have caused companies to rethink their supply chains to make them more resilient to such disruptions in future. One of the ways to do this is by “nearshoring” production and Albania, along with the other Western Balkans countries, and other relatively low-income European countries like Moldova and Ukraine, are well placed to do this.