Textile industry in North Macedonia

IndustrySouth-East European INDUSTRIAL Мarket - issue 1/2019 • 21.03.2019

North Macedonia has a long-standing tradition in clothing and textiles. The sector represents the second largest export industry in the country which has a notable contribution to its economical development.

According to the North Macedonian Invest Agency the textile industry is one of the drivers of the local economy in terms of industrial production, employments and export earnings. The country has potential not only for new foreign direct investment, but also for outsourcing, strategic alliances and joint ventures with many well established domestic companies.

 

The manufacturing capacity of the industry includes producing garments, cotton thread and fabric, wool yarn, fabric and knitted fabric. Among the main advantages of the local economical environment which attract many foreign investors and provide excellent condition for the development of local textile manufacturers are short delivery periods, flexibility of delivery size together with exceptional value for money, a recent research by the Research Agency states.

 

Benefits for the investors

Statistics show that North Macedonia has a small but open economy which is market oriented and highly integrated into international trade of goods. Additional advantages for the positive evolvement of businesses in the textile and clothing industry are the following: the Balkan country first from the countries in the region signed the Stabilization and association agreement with EN in 2011; it has an overall framework for development regional cooperation and established political and economic criteria for EU integration; it also has signed multilateral and bilateral free trade agreement with the EFTA countries, CEFTA countries, Turkey and Ukraine. In addition, North Macedonia has been a member of the WTO since 2003.

The textile sector contributes for: 17% of the industry’s GDP; 17% of total country exports and 35% of the total number of employees in the industry.
The North Macedonian textile and garment Industry is characterized by: customer focus and orientation; availability of experienced labor; flexibility to quickly respond to the customers’ requirements.

The report of Invest in North Macedonia also outlines as main specifics of the industry the following: capability to produce small orders at the same prices as big orders (higher productivity); long-term business relationships with worldwide partners and experience in working for well-known international brands; recognized quality for garments production; good transport and logistics services.

 

Textile capacities

The textile and garment industry is one of the most developed economic sectors in North Macedonia, with over 1100 companies actively involved at various levels of production, statistics show. The industry employs 35 000 workers and produces over EUR 400 million worth of exports. Companies within this sector have manufactured products for a large number of well-known worldwide brands. According to national Classification of Activity (NCA), North Macedonian textile companies are divided in two groups: manufacturers of textile materials; manufacturers of wearing apparel, dressing and dyeing of fur.

There are textile capacities widespread throughout the entire country. Every large municipality has a company connected with the garment industry, but more than a half of the total capacity is located in the eastern part of the country.

There are 11 large regions or areas in terms of textile capacity distribution throughout the country, and 50% of the capacity is placed in the eastern part, 30% of the capacity is placed in the central part and 20% of the capacity is placed in the western part of North Macedonia. The center of the textile and garment industry is the town of Stip, followed by Kocani and Delcevo.

“Finished garments contribute to 90% of North Macedonia’s textile output, while textile materials are comprised of the production of textiles for denim clothing, bedspreads, blankets, bathroom and kitchen linen and wearing apparel dominates the industry.

The total number of production capacities is over 800. There are over 1100 registered entities in the production of textiles and wearing apparel. Of these companies, the most dominant (around the half) are small enterprises.

 

Production range

Spinning and fabric production account for 1,5% of industrial production, and ready-made products account for 11,32%”, a report by the Investment Agency, dedicated to the current state of the textile industry in North Macedonia, states. The most dominant is the production of wearing apparel. The production of textiles consists of production of textiles for denim clothing, as well as bedspreads, blankets, bathroom and kitchen linen.

Among the economical activities, in which the companies in the sector are engaged, are: preparation and spinning of textile, weaving and finishing of textiles, manufacture of knitted and crocheted fabrics, manufacture of made-up textile articles, carpets and rugs, cordage, rope, twine and netting, non-wovens and articles made from non-wovens, technical and industrial textiles, wearing apparel, leather clothes, workwear, underwear, articles of fur, knitted and crocheted apparel, etc.

About 70% of the production is in the group of not knitted apparel. The main products in this group are: women’s or girls’ suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear); men’s or boys’ suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and shorts (other than swimwear); men’s or boys’ shirts; women’s or girls’ blouses, shirts and shirt-blouses; tracksuits, ski suits and swimwear; other garments; babies’ garments and clothing accessories.

The main products in the knitted apparel group are: women’s or girls’ blouses, shirts and shirt-blouses; t-shirts, singlets and other vests; women’s or girls’ suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear); jerseys, pullovers, cardigans, waistcoats and similar articles; men’s or boys’ underpants, briefs, nightshirts, pajamas, bathrobes, dressing gowns and similar articles; pantyhose, tights, stockings, socks and other hosiery, including graduated compression hosiery (for example, stockings for varicose veins) and footwear without applied soles.

 

Specifics of the workforce

Skilled labor is one of the industry’s main strengths, the country’s Investment Agency points out. The sector employs about 35 000 workers which is approximately 32 per cent of all employees in the manufacturing sector, or about 6,7% of the total number of employees, the cited report says.

“North Macedonia offers a cost competitive environment for textile manufacturing. With nearly half of the population under 30 years of age, companies operating out of North Macedonia can rely on an ample source of trained and qualified professionals to contribute to the growth of their business”, the report also states.
North Macedonia also enjoys a sustainable supply of young, highly skilled labor at a competitive cost. The average salary in 2018 was EUR 580 per month across all sectors, while in textile manufacturing in December 2018 the average net salary was EUR 386.

 

Advantages of the industry

Together with short period from orders to delivery the North Macedonian textile industry is also capable to produce small orders at the same prices as big orders with high quality of performance and good transport and logistics services.
One of the biggest competitive advantages that describe the North Macedonian textile industry is its close proximity to Western Europe, which represents a large and consumer market.

Another advantage is the fact that the local manufacturers have a good image on the global market. Companies from the country have been present in the EU and US markets for decades and are known for their quality and professionalism. The industry also is characterized by high flexibility and readiness to adapt to the demands of foreign markets.

That readiness also comes with the ability to comply with changes that comes as a result of new trends in the world, punctual execution within agreed terms of delivery and readiness to adapt the shorter terms that come due to the product consump­tion cycles that become shorter and shorter.

One of the main advantages of the North Macedonian textile industry, important for foreign investors, is the exceptional relation between product quality and price. “This is a result of highly qualified personnel with a long tradition of working in the textile industry, as well as of relatively low person­nel costs”, the report by Invest in North Macedonia explains.

The factories, located in the country have modern equipment at their disposal and follow all leading world trends in developing textile machines and production technologies.
“In addition to modern textile equipment, more and more companies invest in computer technologies (CAD/CAM system, plotters etc.) that provide product models that meet the demands of buyers and can be used as a perfect training tool for introducing own designs”, the research shows.

Last but not least, North Macedonia benefits from its relative closeness to EU-markets and traditionally good transportation and logistics net­works. Most of the big European transportation companies have privately-owned vehicles and warehouses located in the country.

 

Export and import of textile products

The textile and garment industry in North Macedonia exports mainly to EU countries. “93% of the production is organized by the CM or CMT (Cut, Make& Trim) system for foreign markets. Full production and own brand production is partly exported and the rest is placed in the domestic market”, the Investment Agency adds.

The main groups of exported products include women’s and girls’ blouses, T-shirts, vests, suits, jackets and blazers. The most important export destination, with more than 62% of exports, is Germany, followed by Greece, Netherlands, Italy, Great Britain, Austria, Switzerland and Bulgaria.
The annual imports of garments reach the amount of about EUR 50 million. The imports are dominantly made from China, Greece, Turkey, Germany and Italy.

 

History of the textile industry in North Macedonia

The growth of the North Macedonian textile sector underwent diverse historical and economic phases. This industry is among the oldest on the territory of North Macedonia, and passed through all the stages of development. The Macedonian Center for Research and Policy Making (CRPM) conducted a special research, dedicated to the history of the North Macedonian textile industry with a focus on Shtip.

At the end of the 19th century, Macedonia was a territory with numerous small towns with a developed trade, especially in craftsmanship. The introduction and the further development of the textile industry in Macedonia were mainly induced by the needs of the Ottoman army for various kinds of clothing and uniforms. Another reason for the emerging of the textile sector was to satisfy the needs of the citizens in the urban areas, the research by the CRPM states.

The first textile enterprises were established in the 1880’s in the villages in the region of Bitola – Dihovo, Magarevo, Trnovo. Their main activity was production of woolen products. Only a small number of cotton products were produced in craftsmen workshops. The growth of textiles in this region was natural as Bitola, at that time also known as Manastir, was an important economic and cultural center in the European part of Turkey. Unfortunately, the Balkan wars and the First World War had devastating results for this industry, CRPM informs.

 

Local industrial revolution

With the five year planning program the Socialist Federal Republic of Yugoslavia (SFRY) government has decided to change the North Macedonian economy from primarily craftsmanship to industry. Therefore investment in several key sectors was made: production of electricity, metallurgy, chemistry industry, tobacco industry, leather industry, food processing and textile.

“During that period two huge capacities were built in North Macedonia: Teteks (in Tetovo) and Makedonka (in Shtip). The former planned to produce woolen yarn and fabrics and cloths; the later was planned to spin cotton yarn and weave cotton cloth.

This provided for balanced textile production, which in the previous period was disproportionate. The investment highly contributed to increase of employment and thus if in 1947 the textile sector employed just 393 people (5,3% of total employment in the whole industry). In 1953, after the capacities in Shtip and Tetovo were built, the employment in the textile sector amounted to 9850 people or 32% of total industrial employment”, the research by the CRPM explains.

Sources: Invest in Macedonia, State Statistical 
Office, North Macedonia (MAKSTAT Database), Macedonian Center for Research 
and Policy Making (CRPM)

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