“Romania’s EU accession has led local producers to realize that 100 percent lohn production is no longer possible, as foreign companies are looking towards countries where costs are not so high,” Britain-based Jessgrove producer’s Manager, Richard Slator, told Business Standard.
Lohn production, or foreign companies bringing raw materials to a local company for the production of items for export, boomed in Romania in the 90’s, because of very competitive labor and production costs, predominantly in the area of textiles. In the past few years, however, salaries have risen in Romania, and skilled workers are becoming harder to find, especially in the textile industry.
Jessgrove owns a production unit in the eastern city of Iaºi and a raw material distribution center in the Czech Republic. Slator says he does not intend to continue investments in Romania and that he is only interested in contracts for raw materials.
Local producers agree lohn alone is no longer an option for them. Women’s clothing producer Moda Arad indicated it is considering more of an equal share between lohn production and the sale of items it manufactures. “We are going to be increasingly less competitive as far as salaries and exchange rate are concerned,” according to Moda Arad’s Manager, ªtefan Fufãzean. The company’s production is 90 percent lohn, while the remainder is sold in local stores and hypermarkets. Among the company’s export clients are international companies such as Betty Barclay, Marc Cain, Hauber, and the German Oui Gruppe.
