site.btaTextiles, Clothing and Leather Sector Is Struggling - Industry Expert

In an interview for BTA, the Executive Director of the Bulgarian Association for Textile, Apparel and Leather (BATOK), Jordan Belovodsky, spoke about the difficulties and challenges facing the Textiles, Clothing and Leather industry.

The industry is struggling

Belovodsky reported that some companies went out of business, while others are forced to cut their workforce, as consumption and their orders shrink. The National Statistical Institute reported a significant decline in consumption in 2023, which Belovodsky predicted will continue in 2024. He has been involved with this industry since 2006, and this is the worst situation he has witnessed since then.

Belovodsky pointed out that export in the pre-COVID 2019 totalled BGN 5 billion, compared to the expected BGN 3 billion in 2023. While the industry did see some improvement in 2022 after the pandemic, it still registered a decline the following year.

The expert said that the main reason was that the products made in 2022 did not sell well enough, which led to decreased orders. Furthermore, the Bulgarian manufacturers are pressured to shrink their prices to the levels from 2018 and 2019, which is hard to do considering the inflation, the soaring energy prices and wage costs. As a result, foreign companies that used to work with Bulgarian manufacturers now choose to cut costs by placing their orders with Turkish, Moroccan and Egyptian manufacturers, who are still able to offer more competitive offers. Belovodsky pointed out that both the quality of Bulgarian products and the country's location are big advantages for the industry.

The BATOK Director reported that several big German companies that used to purchase from Bulgarian manufacturers went bankrupt, which also harmed the Bulgarian industry. While Germany used to be the biggest importer of Bulgarian leather and textile products, it no longer holds that position, as it has been taken by Italy.

The number of companies going out of business is increasing

In industry's best years, some 5,000 companies including sewing workshops used to operate on the Bulgarian market. Since the COVID pandemic, that number has been going down. Some 96,000 people used to work in the sector in 2019 compared to about 70,000 in 2023. There are about 500 relatively large companies that employ more than 50 people.

Export and investments

Bulgaria exports mainly for Germany, France, Italy, Greece, Spain and the UK. Losing Russia as a market did harm the industry.

More than BGN 500 million has been invested in facilities, equipment and human resources over the past 10 to 15 years.

Circular economy

There will be an additional burden on the sector because of the EU Strategy for Sustainable and Circular Textiles, which is aimed at eliminating the so-called fast fashion, as the sector ranks fourth in environmental pollution. The environmental goal of the strategy is positive, but the idea of having the manufacturer, through the retailer, be responsible for the repair of old clothes still has many unknowns, Belovodsky said. It is yet to be clarified who will pay for these repairs - the consumer, the manufacturer or the retailer. In France for example, the state allocates funds for such repairs. BATOK acknowledges the positive effect of the 60/40 measure (having the Government cover 60% of a worker's wage, while the remaining 40% is paid by the employer) that was in effect during the COVID crisis and believes that a similar measure could also be beneficial now. "In any case, the state would find it cheaper to help companies this way than to see job centres get swamped with unemployed people on its payroll," Belovodsky concluded.