The Garage Firms of Haskovo:A Preliminary Description of an

Apparel District

‘Clothing Europe: Comparative Perspectives on Trade Liberalization and Production Networks in the New

European Clothing Industry’

University of North Carolina: Chapel Hill October 15th – 16th , 2004

• Bob Begg Department of Geography and Planning, Indiana University of Pennsylvania

• John Pickles Department of Geography, University of North Carolina

• Adrian Smith Department of Geography, Queen Mary, University of London

• Poli Roukova Institute of Geography, Bulgarian Academy of Science

• Apparel has deep history in Bulgaria– Dobri Jeliashov 1834 Woolen Mill Sliven

• An integrated apparel chain existed under the command economy

• OPT contracting begins as early as the 1980’s

• The regional distribution and spatial structure of apparel are shaped, in part, by social policy.

Haskovo Oblast

• Part of a heavily ethnic Turkish region

• Center for textiles and apparel

• Svilengrad: 295 kilometers from Istanbul 300 kilometers from Sofia

• Population 275,183 (2002), 3.5%.

NSI Special Run 2002

Apparel Employment

• Sources:

• 1980 - 1990 Statisticheski Godishnik 1991 Page 147, 70• 1991 - 1993 Statisticheski Godishnik 1994 Page 186, 56• 1994 Statisticheski Godishnik 1995,

Page 89, 86• 1995 Statisticheski Spravochnik 1997,

Page 42, 44• 1996 Statisticheski Godishnik 1995,

Page 74, 76• 1997-1998 Statisticheski Godishnik 1999, Page 76• 1999 Statisticheski Spravochnik 2000,

Pages 46-47• 2000-2002 NSI Special Run 2004

Figure 1 Bulgarian Apparel Employment 1980-2002

0

25000

50000

75000

100000

125000

150000

1980

1986

1988

1990

1992

1994

1996

1998

2000

2002

Table 1 Employment for the Haskovo Oblast 1996-2002

Apparel Manufacturing Percent Apparel

1996 3872 20881 19% 1997 4311 19776 22% 1998 5106 19765 26% 1999 4758 21416 22% 2000 4634 23630 20% 2001 6512 22554 29% 2002 6773 24063 28%

Apparel Employment Haskovo

• 6773 Census apparel employees are 5.03% of Bulgaria’s total, 28% of Haskovo’s manufacturing.

• 1016 census firms are 11% of Bulgaria’s total (third to Plovdiv (11.9) and Sofia (13.3), 37.6% of Haskovo’s manufacturing firms.

Firm Size Distribution

Table 2 Size Distribution of Registered Apparel Firms for the Haskovo Oblast 2004 by Output and Employment Classes

Employment Output (Leva) >100 50-100 10-50 1-10 Total

<0.5 Million

1 7 29 9 46

0.5 – 1 Million

5 1 0 0 6

1 – 3 Million

2 2 2 0 6

> 3 Million 4 0 0 0 4 Total 12 10 31 9 62 Haskovo Oblast (state) tax office special run: Summer 2004

The ‘Big’ Firms

• Mir: Old State Firm

• Merich: GAP captive

• Delena: Full-service entrepreneur

• Elmas Tex: Turkish cloth wholesaler and domestic OBM

Mir

• Founded 1940 Shirts for CMEA markets

• Peak: 2,000 workers, 350 Million meters of cotton cloth from Pomutex, Sofia; 12 Million meters of polyester blend from Manuela

• 1970-1980’s Established 5 branch plants throughout the region, many with workshops.

Bulgarian Communist Party

Ministry of Industry

State

Pomukotex Ruen: Knitwear/SportswearRila:Pred a porte

Manuela (Haskovo) P Blend

Mak (Gabrovo) P Blend

Nistra (Sofia)

Orfei (Kurdjali)

Sanya (Pleven)Maritsa (Plovdiv) P Blend

Etava (Kjustendil)

Natalie (Stara Zagora)

Neetex (Devin)

Ruen Fashion (Kurdjali)

Hatex (Harmanli) Syntyhetic

Svila (Karlovo) Silk

Pomotex (Sofia) Cotton

Vitex (Gabrovo) Wool

Brilliant (Plovdiv)

Druzhba (Varna)

Arda (Rousse)

Iris (Russe) Cotton/Wool

Belotes(Zlatograd)P Blend

Chemical Fibers

Sviloza (Svishtov) Rayon

Vidahim (Vidin) Polyamide

Yambolen (Yambol) Polyester

Mir (Haskovo)

Command Economy Organization of Textile and Apparel Industries

Mir

• Privatized in 1992 as joint stock company

• Mid-range (13-31 Euros) men’s cotton shirts under contract for United States, Swiss, Italian, and Spanish firms directly and through middle-men.

• Today: 397 workers, 5-10,000 meters of domestic cloth for lining

Merich

• Sole-proprietor 1992

• Sub-contracts through Ishim, Kurdjali for GAP

• Ishim, Kurdjali is Bulgarian purchasing subsidiary of Bursa, Turkey firm Ishim

• “Has a strangle-hold on producers in this region.”

Delena• Sole-proprietor 1991• Exported food products to Russia, imported

tires.• 1995 purchased 5 sewing machines to capitalize

on rising OPT.• Sales volume 2004 of 3 million lev, 600

employees, 2 factories with 14,000 square meters of floor space

• Sources fabric from Bulgaria and Turkey• Full-service brand production and OBM (Mars

and Alex Athletics) manufacture for Karlstad-Quelle catalogue firm

Firm Size Distribution

Table 2 Size Distribution of Registered Apparel Firms for the Haskovo Oblast 2004 by Output and Employment Classes

Employment Output (Leva) >100 50-100 10-50 1-10 Total

<0.5 Million

1 7 29 9 46

0.5 – 1 Million

5 1 0 0 6

1 – 3 Million

2 2 2 0 6

> 3 Million 4 0 0 0 4 Total 12 10 31 9 62 Haskovo Oblast (state) tax office special run: Summer 2004

Small Firms

• Census list 1016 firms with 6773 employees.

• Survey by Dimitrovgrad market manager found 1700 firms in December, 2003 with 40,000 employees.

• That is 29.7% of Bulgaria’s total apparel employment.

Trader Tourism

• Early 1990’s saw Turkish trader tourists emerge.

• 1994 5,000 tons of clothing worth $100,000,000 (OECD cited in Konstantinov 1996:73)

• Headed for small shops and Open Air Markets

• OEM’s response to rising consumer demand falling consumer income

Dimitrovgrad Market

• Sofia-Istanbul road, 60 kilometers from border

• Pre-existed as part of grey economy

• Grew from 700 to 4000 stalls in 1995

• 40-100 leva charge

• 400 Million to 1Billion leva turnover > 1% of GDP

Dimitrovgrad

• Of 4000 stalls , 3000 sell clothing

• 15-20,000 wholesale buyers

• 30% from Turkey, Greece, Serbia, Romania

• Of 3,000 clothing stalls 1700 are Haskovo family firms

• 22% Haskovo garage firms

Elmas Tex

• One of two ethnically Turkish cloth wholesalers (Dubai, Turkey, Korea)

• Domestic OBM in addition to owning a factory, brothers contract extensively to neighborhood “garage” firms

• Diamond brand clothing and shoes sell in their own shops and in Metro

• Own two hotels and diversifying locl investment

Garage Firms

• Four urban Haskovo ethnic neighborhoods

• 700 – 1,000 firms, Grey economy

• Range from single women stitching to firms of 50 that export

• Market extensively in Dimitrovgrad and Ilientzi markets

• Generate significant portion of domestic sales

Garage Firms• Local suppliers of warranty sewing

machines (e.g. Juki)• Repair shops• Embroidery, pattern design, cloth, buttons,

zippers• Little inter-firm cooperation, some capacity

sub-contracting• From stitching to CAD OBM• Salaries as high as 700 leva.

Table 2 Selected Characteristics of Haskovo Garage Firms Total (27)1 < 20 (18) >= 20 (9) Average Size 16.3 9.2 30.3 Female 90% (26) 93.6% (17) 88.2% Average Number of Machines

15.5 (17) 9.6 (9) 22 (8)

Percent New 73.6% (20) 58.5% (12) 95.8% (8) Own Pattern 86.3% (22) 84.6% (11) 88.6% Dimitrovgrad Stall 55.5% 66.6% 22.2% Own stall or shop 66.6% 83.3% 33.3% Regional wholesaler

44.4% 27.8% 88.8%

Average Monthly Pieces

1388 (17) 762 (10) 2283 (7)

Survey 2004

Table 3 Source of Clothing for Sale in Sofia Ilientzi Markets, June 2004

Source Number Percent

Bulgarian 329 38.3%1

Chinese 224 26.1%

Turkish 205 23.9%

Vietnamese 65 7.6%

Hungary/Poland 18 2.1%

India 11 1.3%

Indonesia 4 0.5%

Thailand 1 0.1%

Greece 1 0.1%

Total 858 100.0%

Survey June 2004 1, Of these 283 or 33% source only from Bulgaria

Table 4 Source of Bulgaria Clothing for Sale in Sofia Ilientzi Markets, June 2004

Source Number

Percent Bulgarian Percent Total

Haskovo 154 42% 18%

Sofia 83 23% 10%

Rousse 27 7% 3%

Other 104 28% 12%

Total 3681 100% 43%1

Survey June 2004

1. Some shops double source creating N>329, Percent > 38.3

Ilientzi Market Sofia

Thoughts

• The role of domestic production in establishing industrial districts and strengthening apparel networks may be important in former command economies.

• OAM should persists for some time, as should small clothing stores and petty production in Bulgaria.

• Although former state firms laid the basis for apparel in Bulgaria, many are adapting poorly and will fade.

• Quota subcontracting for Turkish firms has not been wholly bad and may continue in some form after 2005.

• New forms of entrepreneurship are emerging on the bones of command structures.

• The uniqueness and embeddedness of “industrial districts” remains clear.