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Footwear industry
(Synthesis of the study drawn up by the Romanian
Trade Promotion Centre) Foreword
The leather and footwear
industry plays an important role within the Romanian economy, having in view
that in 2003 it had -
a 1.7 % share
of whole industrial output; -
a 5.3 % share
of the total personnel employed in industry; -
a 9.3 % share
of the country total exports. The leather and footwear industry
comprises three main sub-sectors namely -
tanning and
finishing of hides; -
manufacture of
-
manufacture of
footwear. The main
advantages of the sector consist of -
competitiveness
of the leather articles on the foreign market; -
high adapting
capability of the sector to the market requirements; -
skilled and
cheap labor force; -
competitive
environment within the sector, given the great number of manufacturers. The main shortcomings of the sector
consist of: -
excessive
level of processing-type activity; -
obsolete
technological level of the tanning sub-sector; -
insufficient
financial means for upgrading the production capacities -
inability of
covering the raw materials from domestic sources (quantitatively and
qualitatively) -
high
manufacturing costs in the primary sub-sectors. Productive potential
The number of the manufacturers
within the sector has permanently grown over the last period; from 1,476 in
1999 it reached 1,925 companies in 2003, of which 74.8 % had less than 49
employees, 20.4 % had between 50 – 249 employees and 4.8 % had more than 250
employees. In 2003 the global turnover of the
sector reached 25,624 billion lei, of which the big companies accounted for
10,463 billion lei (40.8 %), the middle-sized companies - for 9,966 billion
lei (38.9 %) and the small ones – for 5,195 billion lei (20.3 %). The total value of the leather and
footwear output over the 1999 – 2003 period registered the following
evolution: Billion
RON, current prices
Source: N.I.S. – Statistical yearbook of Romania 2004 The main feature of the footwear sub-sector
consists of the high level of the lohn – type system production. This type of
contract has been adopted by an increasing number of manufacturers because of
the growing difficulties generated by the decreasing domestic supply of raw
hides, on one hand, and the advantages it offers, on the other. World-wide
known companies like Bally, Versace, Puma, Chico, Orches, Salomon are
producing footwear in Romania. The most of the companies practicing this type
of contract are Italian. Impact of the leather and footwear
industry on the environment Joining the European Union imposes,
between others, the implementation of specific measures aiming at observing
the EU environment protection provisions. In this direction Romania has a lot
to do taking into consideration that the leather and footwear industry,
particularly the tanning sub–sector, is a highly polluting factor, on one
hand, and the fact that, generally speaking, the manufacturers paid a small
importance to the environment protection so far. The management of the scraps resulted
from the production process is closely related to the environment protection.
In this context the Ministry of Agriculture, Forestry, Waters and Environment
committed itself to implement by 2005 a programme of scraps management which
will secure a 30 % recycling rate (compared to only 5 % at present). Taking
into account the high costs implied by the achievement of that goal the said
ministry will finance from the Environment Fund, set up on the purpose, the
programmes aiming at selective scraps collection, recycling and treatment. Investment The
investments made after 1990 in the leather and footwear industry were
oriented towards Ř
the footwear
sub–sector, both for technological upgrading
and new production capacities, which made that at present about two thirds of
the output be compatible with the European standards; Ř
the primary
sub–sectors (tanneries and semi-manufactured for footwear), for technological
upgrading and environment protection. Between 1990 and 2000 the investments
made in the leather and footwear industry amounted to some 176 million USD,
of which 97 million USD by the national companies and 79 million USD by the
foreign companies practicing processing system in Romania. Privatization Most of the 52 big enterprises set up
before 1989 were privatized after 1990. At
present 98 % of the output and 98.5 % of the exports of this sector are
carried out by enterprises having fully or prevailing private ownership. Domestic consumption The domestic consumption registered over
the 1996 – 2003 period a descending trend, determined by: ·
the changes occurred in the structure of the consumption cash
expenditures of the population, namely the contraction of the rate of the
non-food expenditures within the total cash expenditures; ·
the contraction of the rate of the footwear cash expenditures of the
population within the non-food expenditures; ·
the faster growth of the prices of the footwear compared with growth
of the average net salary. Foreign trade The foreign trade balance of the leather and footwear
industry registered a sizable surplus, which increased from 304.1 million USD
in 2000 to 555.5 million USD in 2004 (see the table below) and contributed by
7.5 % to the total exports of Romania in 2004 compared with 8.5 % in 2000. The foreign trade balance of the
leather and footwear articles between 2000 – 2004 Million USD
Source: National Customs Administration In 2004 the exports of genuine leather
footwear amounted to 769.4 million dollars, accounting for 50.9 % of the
total exported footwear, while the imports of this kind of footwear amounted
to 35.1 million dollars (9.1 % of the
total imported footwear). The EU countries are the main trading
partners due to some favoring reasons such as the
size of the EU market, the relatively low transport costs determined by the
geographical positioning, the high level of the EU technology, the
continuity of the presence of the Romanian articles on the market. Between 2000 – 2004 the main countries
importing footwear from Romania were Italy (72.2 – 76.4 %), Germany (5.9 –
8.5 %) and France (5.3 – 7 %), while the main countries importing leather
articles from Romania were Italy (54.5 – 72.5 %), Germany (7,4 – 16.2 %) and
Hungary (3.8 – 11.0 %), During the same period of time the main
suppliers of raw hides and tanned skins to Romania were Italy (81.9 – 85.7
%), Germany (2.5 – 4.7 %) and Austria (3.6 – 4 %), while the main suppliers
of footwear to Romania were Italy (69.9 – 78.2 %), China (7.1 – 10.6 %) and
France (3.2 – 5.3 %), In respect of footwear Romania ranks
first non-EU supplier of the European Union among the
East-European countries and the third, after China and Vietnam, in general, Conclusions The leather and footwear industry will
keep accounting for a prominent component of the Romanian economy basing on
its contribution to the coverage of the population specific needs and to the
Romania’s foreign trade balance by its permanent increasing surplus, It is worthwhile mentioning that the
development on the long run of the leather and footwear industry cannot be
achieved by way of processing system due to some shortcomings it has such as
limitation of access to new markets, limitation of the profit, hindering the
normal development of the sector and so on, Consequently, the steady premise
for the future development of the exports is represented by the creation of
original Romanian brands of footwear, For
the full content of the study, please contact:
The main manufacturers of footwear
1. Hides tanning and finishing
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