The Garage Firms of Haskovo: A Preliminary Description of an Apparel District

1. 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

2. 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

3. 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.

5. 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%.

6. NSISpecialRun 2002

7. 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

8. 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.

9. Firm Size Distribution

10. The ‘Big’ Firms • Mir: Old State Firm • Merich: GAP captive • Delena: Full-service entrepreneur • Elmas Tex: Turkish cloth wholesaler and domestic OBM

11. 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.

12. Command Economy Organization of Textile and Apparel Industries

13. 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

14. 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.”

15. 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

16. Firm Size Distribution

17. 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.

18. 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

19. 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

21. 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

22. 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

23. 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

24. 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.

25. Survey 2004

28. Ilientzi Market Sofia

29. 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.