Figure: Cotton Production in Macedonia 1974-1997

As the production decreased after 1973, less regions were producing cotton so that by 1992 Veles produced 7, Kavadarci 12, Gevgelija 4, and Valandovo (Strumica region) 6 tons, while from 1995 to 1997 Valandovo was the only region where cotton was produced in the country. In 1998 cotton was not anymore grown anywhere in Macedonia.

Another of the core problems was the over-employment in the factory as a result of party influence on the economy. The massive industrialization in the post war period was undertaken without much concern over the actual need of employed persons. More persons were employed in the new factories than needed, and the productivity was lower than the optimal one.[lxxxi] Already in the early 1960’s for example the economic logic for establishing weaving plants and apparel producers using the “Makedonka” fabrics proved wrong as the satellite factories in Berovo, Sveti Nikole, and Delchevo, began making losses. Yet these and other plants, derogatorily referred to as “politichki fabriki [political factories]” had to be opened in order to absorb the high number of unemployed persons in this region.[lxxxii] The yearly losses of the Berovo factory for 1965 were estimated at 50 million Yugoslav dinars. The second factor influencing the economic decline of the factory was bad management. The third factor causing the decline of the “Makedonka” is located in the Yugoslav economic difficulties throughout the 1980’s and the early 1990’s and the collapse of the market caused by the wars of the dissolution of the federal republic. In the 1980’s the company was not making profits but the system had to pay the wages of the workers. To pay the salaries the management obtained funds through loans from various banks, even from the mining company Sasa from Makedonska Kamenica. The oldest two production facilities, the spinning and the weaving one (predilnica and tkaechnica) made losses and a possible solution was to split the factory into smaller units. However, the senior management led by the manager Panche Brashnarov in the period 1989-1992 refused any changes of the structure of “Makedonka” even if they would have helped the economically healthier parts of the factory survive the pending transformation easier.[lxxxiii]

The wars and the disintegration of Yugoslavia negatively affected the working of the factory, as in the early 1990’s not only there was a collapse of the Yugoslav market for which the company was positioned but more importantly, “Makedonka” could not realize its financial claims from firms throughout the former Yugoslavia.[lxxxiv] In 1992 Delcho Lazarov became the new manager (generalen director) and he was ready to start active bankruptcy proceeding in cooperation with the government. According to the liquidation program prepared by Macedonian government, the same year, the two most problematic units the spinning and weaving plants were supposed to be liquidated and sold to interested parties.

The Decline: Parts of Makedonka Today

 As “Makedonka” continued to make financial losses in the early 1990’s, it was included in the special restructuring program of 25 biggest loss - making companies in the country.[lxxxv] The government aimed at a reorganization of the company and tackling the over-employment issue through a program of the World Bank. The funds provided by this program as a let off money for the over-employed in the "Makedonka" amounted to US$ 1.8 million. [lxxxvi]  Zivko Tolevski, the union leader of “Makedonka”, did not agree with this solution, and organized a new strike. There was a commotion and the process of liquidation was postponed while production went on for a while despite losses. The salaries were paid by loans for which the collateral provided were parts of the non-essential property of “Makedonka.” Such a situation was unsustainable and the workers were forced to take a leave and receive 70% of their wages.

The laying off was conducted in two phases, so that in March 1995 in the Employment Bureau in Shtip a financial compensation and layoff money to a second group of 650 dismissed workers  from "Makedonka" were paid. The 650 workers have been declared technological surplus in "Makedonka".[lxxxvii] In October, 1995, the government decided to initiate the process of privatization.  According to a decision of the Government Commission for Transformation of Public Enterprises, which have considered the reports of the process to date of transformation of 13 (of 25) low-producing enterprises, seven such firms received the “go-ahead” for privatization, one of them being "Makedonka" from Stip.[lxxxviii] The following year, the Agency for Privatization decided to transfer the debts of “Makedonka” to eight separate legal entities which were evolved from the separate departments of the factory. However, the eight new entities also made losses and continued with poor economic performance.

Since the reorganized separate entities did not work well in the following years either, in 2000 the government initiated a bankruptcy procedure. The winner of the international tender was Zoran Krstevski, an Italian with a Macedonian background. He planned to reorganize the factory step by step, to replace the old machines by new Italian ones and to reemploy “Makedonka” workers. He wanted the legal proceedings of buying the company completed as soon as possible but was faced with organized protests by the workers who did not even allow him to enter the premises of the factories he was to buy. Upon such a welcome Mr. Krstevski decided not to invest in “Makedonka” and the first attempt of privatization failed. Later on there were also unsuccessful efforts to privatize the company through the model of manager-workers buyout.[lxxxix] 

Although privatization seemed as the most viable solution by 2001 none of the units of “Makedonka” was yet privatized, due to as some maintained, “the government's undefined attitude towards companies that have been making losses and which should have been sold or closed long ago as required by international monetary experts have prevailed.”[xc] The main problem with the privatization of “Makedonka” was the fact that since the changes of the political system and the beginning of the decline of the company the machines, the other equipment and the facilities have not been maintained regularly and any buyer had to make huge investments to repair them and restart production.[xci] By the end of the year the government decided to liquidate “Makedonka” selling it piece by piece. At the time of liquidation, in 12/2001 the company had 3.009 workers registered.

By 2003, one by one the new legal entities springing from the different Makedonka’s units had been privatized as follows. 

Much of the space of in Makedonka was bought by different owners are rented out. Politeks, a company producing terrycloth, towels, beach towels, bedding, and bathrobes (frotir), is owned by Slave Ivanovski and is situated in a small space within former AD Tkajacnica. In June this year the company was liqudated and is offered for sale together with the machines and the premises. At the moment there are 20 machines bought in the 1970’s from which part of can be renovated and used for production. Before the transformation 254 persons worked in this unit of AD Tkaechnica. When Mr.Ivanovski bought “Politeks” there were 100 workers of which only five were employed by the new owner. The workers hope that the new owner of “AD Jeans” the selling of which is scheduled for 6^th of September 2005, will take interest in “Politeks” and buy it too.[xcvi]

A big part of the “AD Tkaechnica” of about 6000 m2 was rented out on a ten year lease to the Greek company “Proteks As.”[xcvii] This company’s primary activity is the production of wool yarn from raw wool, intended for carpet production. According to the manager Petar Dimitrovski currently the number of employees is 5, but after one year of preparation they are planning to start with the production in the summer and employ another 50 people, former “Makedonka” workers.[xcviii] For the beginning of production, they plan to import raw material, wool from Greece, but also to buy such from Macedonia in the future. The installed capacity production is about 50/60 tones per month and the plan is that the entire production is sold at foreign markets, UK mainly, and Germany and Denmark. The machines for production are twenty years old, made in Italy and Belgium, moved to “Makedonka’ from the other company of the owner based in Larissa. The maintaining of the machines and the transport is provided by the Greek owner.  By the end of August “Proteks As” started with trial production of wool yarn, employing 10 people.[xcix]

Yet another part of AD “Tkaechnica” was bought by the Shtip apparel producer “EAM”. According to the owner of AD Tkaenini, Slave Ivanovski it is most profitable to rent or sell parts of this former “Makedonka” unit.[c] He would like to make “Makedonka” a duty free zone and to attract foreign investors. Another idea he has is to turn the “Makedonka” complex into a university. Although he has different ideas what to do with this property he is sure not interested in opening an apparel producing unit there fearing cheap Chinese imports.

In the AD Jeans & Denim there are 2 textile companies that produce today: “Textil Invest Denim” (with 140 workers) producing cloth for a Turkish company, and ”Tekstil Invest Jeans” producing lohnveredelung clothes. The apparel producer “Mikoteks” rents out the former AD “Postelnina.” In the former AD Transport i Spedicija the apparel company “Kit-Go” is situated, while the shoe producer “Bargala” has rented the former AD Predilnica. The apparel producer “Maksima” rents out the  former AD Opshtestveni Standardi. The company that bought AD Opshtestveni Standardi, “Preciz” is now also the owner of the hotel ”Makedonka” on the lake Dojran; the kindergarten, the restaurant; and three shops. Furthermore, in October 2004, Blagoja Temelkovski became new owner of the former “AD ROS” establishing a new company ECM to run this unit.[ci] Their primary activity is reparation and maintenance of electric machines transformers and production of mechanical parts. The new owner inherited the old machines, and until now, did not invest in buying new and modern machines. Finally, Riste Micev, is the owner of the former AD Energetika does not want to rent the locality because this unit supplies energy to the other firms and makes profit out of it.[cii]

            During the liquidation of “Makedonka” much of the equipment was disbanded and stolen. During the privatization process when the trustee was Dimitar Adzhiev, eight of the newer machines were relocated to the textile factory “Astibo” from Berovo.  There is no document testifying if the machines were sold or rented out.[ciii] Although the police was informed no investigation was initiated. Many people from Shtip know that part of the machines from “Makedonka” are in Berovo it is a public secret. The other machines from “Makedonka” were left to the new owners to decide what to do with. Some of them were quite new. In 1997 in the “oblagoroduvanje/ finishing” unit 4 new machines were bought from Switzerland worth around million Euros. These were up to date models and no other company in Macedonia had such machines. The new owners of AD “Tkaechnica” however, did not find much use of these machines and disbanded them and sold them as scrap metal in Macedonia and Bulgaria. In the “AD Predilnica”, the faith of the machines was no different, bulldozers coming in destroying them before being sold as useless metal. sostojbata ne bila poinakva. Only the machines from “AD Ros” survived the transition and are still used for production.

The Decline and the Transformation of Astibo

In the early 1980’s “Astibo” had problems with sales on the domestic markets. As payments from wholesale retailers were regulated to be made within a time framework of 90 days the rampant Yugoslav inflation at that time depreciated much of the money received at the actual time of payment. Therefore, the management decided to step up exports instead.[civ] So once in the early 1980’s “Astibo” faced financial difficulties it began working on the basis of the “lohnveredelung” production. This job was easy to do as the foreign partners, mainly German ones, provided all the necessary materials and “Astibo” had to do only stitching and sewing. Unlike the 1970’s “Astibo” now did not need anymore to develop own products and sell them to foreign partners; neither it had to purchase the materials for manufacturing.[cv] Already at that time about 60% of the Yugoslav apparel producers worked with contract manufacturing producing pre-ordered apparel by Western companies,.[cvi] In 1982 about 85% of all the “Astibo” exports were with the lohnveredelung system. Exports amounted to 40% of all production, and were worth 1.2 million USD, 80% of which made on the Western markets. [cvii] To facilitate the process in April 1985 “Astibo” becomes part of the “Inteks” conglomerate.[cviii]

Meanwhile, the number of workers of “Astibo” grew to the record number of 4800 in 1987.[cix] 

At this time 80% of the production was exported. By 1989, “Astibo” had grown into an independent business operating seven independent factories on a single site which, during the 1990s, before the company ran into financial difficulties, produced an estimated 2.5 million finished garments per year. At that time, over 90% of production was lohnveredelung-work/contract manufacturing exported to Western Europe (including Germany, the Netherlands, Denmark and Belgium) and the USA. The own production was sold through the chain 28 retail stores throughout former Yugoslavia. In general, “Astibo” was a relatively successful company before the collapse of the old system.

After the dissolution of Yugoslavia in February 1991, in independent Macedonia, the units outside of Shtip became independent firms while “Astibo” became a joint stockholding company (Akcionersko Drushtvo).[cx] In the period of transition the management founded a number of new limited liability companies (drushtva so ogranichena odgovornost), such as “Astimpeks”, “Astiprom”, “Astigros”, “Astibo-turs”, and “Astibilans”. A number of factors lead to Astibo’s collapse in the 1990’s:  one of the most important related to the regional turbulences and the wars of Yugoslav succession which disrupted trade contacts with Western buyers of apparel. “Astibo” also could not realize its financial claims from firms throughout the former Yugoslavia.[cxi] On the other hand, over-employment was a great problem as the company had way too many employees than needed in the 1990’s.[cxii] Over-employment was a burden of the past, due to the massive employing of youth in the 1970’s. At that time the management boasted that “we will hire new employees because we have plenty of orders…what will happen when there will be no more orders- we will think about this when such times come.”[cxiii] The management was not much concerned about long terms effects of employing huge amounts of workers. In the late 1970’s and early 1980’s the company faced a negative trend and began accumulating debt.[cxiv]

If during socialist times the issue could be put aside following the changes of the political system the problems came into surface. The ratio between workers and administration was not helping efficient work either, as for example, in the end of the 1990’s out of the 2.000 workers, up to 700 were employed in the non-manufacturing section of the company.[cxv] In addition, bad management decisions and surplus capacity also influenced the break down of the profitable business and led to the company’s insolvency.[cxvi] In the second half of the 1990’s, “Astibo” had run up 30 million euros’ debt to the state institutions and various private firms while the contributions for the social and health insurance had not been paid for a number of years.[cxvii]

Losing the Yugoslav markets in the early 1990’s the factory unsuccessfully attempted to enter the Western markets selling its own brand. According to Branko Georgiev, deputy manager (zamenik director) of TLM Canda and former director of “Astibo” although the company registered a brand of its own in Germany, “Astibo-De” it failed to find partners to buy their products. The lack of good contacts contributed to the fall of this initiative. As Mr.Georgiev put it “it is difficult to ‘conquer’ Western markets, we did not have the right person in Germany and failed, that it is how it works in the so-called open markets.”[cxviii] The economic difficulties of “Astibo” led the government to initiate in April 1994 a transformation of the company by founding a Council for transformation, and preparing a program of action. The then general director Mr.Panche  Nasev, together  with his  associates,  unsuccessfully negotiated with the Government the possibilities for the  current managing  team of  "Astibo" to buy the majority shares.[cxix]

The company continued to make losses from 1995 onwards. In 1997, the company’s value was estimated at 14 million Deutschmarks, but the question how to privatize the company remained as the workers were against managerial buyout and organized strikes to assert their opinion. Only in May 2002 the government consulting the management of the company decided to initiate bankruptcy proceedings in “Astibo”. The company was liquidated in a speedy procedure on 10^th of July 2002 and a tender was called. At this time Astibo had 2.056 workers in the following units: (the apparel factories are bolded).

 At the time of the sale, “Astibo” was estimated by the government to be worth 4,000,000 million Euros much less than the first assessment of value. Characteristically, in the 1990’s the value and the price of the Macedonian public companies offered for sale decreased as the time passed and the privatization was kept postponed. The loss making enterprises not only made losses but also their assets suffered depreciation, so also “Astibo”.  The winner of the the tender was Mr. Kocho Mocan who was to buy the company for 2.125.000 Euros. He, however, failed to pay the money in the legal timeframe and the tender and the sale were cancelled. In the end of 2002, a new tender was opened. There were no contractual conditions of sale concerning re-employment of workers or future investment in the plant in either of the tenders. The only criterion for the selection of a purchaser was the price offered for the assets. In addition, the government covered the unpaid social contributions and paid severance pay to the laid off workers, depending on the amount years in service. The debts to the different parties were to be paid by the proceeds from the sale of the company.[cxxii] The company was bought by a consortium of nine companies which paid 1.704.000 Euros. Each member of the consortium paid a share according to the size of the objects bought, the sum ranging from 110 000 to 280 000 Euros.[cxxiii]

Companies that have bought the formerly socialist enterprise of “Astibo”:

 Over 1.000 workers began to work in the new enterprises based in “Astibo”, about 650 of them former “Astibo” employers. The new owners have also renovated the factory, investing more than Euro 2 million. They compensated the local government the accumulated debts for water usage by leaving to them the local Astibo hotel, while the two shops in Shtip were given as a compensation for accumulated debts to the electricity provider and to the bread and pastry maker “Zhito-Leb.”[cxxiv]

The Situation in the Apparel and Textiles Production in Shtip Today

What is the situation in the textiles and apparel sector in Shtip today?  Let us start with the basic question, how many such producers exist nowadays? It was very difficult to ascertain how many textile and apparel enterprises are there in Shtip. In conversations, people from Shtip often claim that there are 70 to 80 “konfekcii” (apparel producers), 100 even, but this number showed to be highly exaggerated. In fact CRPM was able to identified only 58 apparel and textile producers in the town of Shtip. This number might not be absolutely correct as some firms, especially small ones, work outside of the system, while others might have gone bankrupt by now (Viteks) but this number can be considered quite reliable under current circumstances. See the full list of the textile and apparel producers from the town at the end of the paper Table A.[cxxv] Interestingly only 3 apparel producers have newly built facilities: Vivendi, Albatros and Vabo; while many use buildings of former socially owned enterprises (SOE). Shtipko for instance is situated in facilities of former SOE Progres – factory for metal products, Mavis works in an old building of the tobacco company “Jugotutun”, Angroteks, Gracija, MK Vera Mond, Shtipteks, and MK Briteks are situated in depots of the former SOE “Nova Trgovija”, Beas-S is situated in “Metalna.” We mentioned the companies that work in the facilities of Astibo and Makedonka. Furthermore, Stilteks, Anateks, and Tomas stil are located in private houses, Nana in a shopping center (old SOE) while Longurov works in a depot of “Makpromet.” Thirteen companies are located in the premises of Astibo and Makedonka. The machines of the apparel producers are typically being serviced by former technicians from “Makedonka” and “Astibo” only a handful companies actually employing a person responsible for this activity. Most of the machines are usually bought from Turkey, and are YUKI type made in Japan.[cxxvi]

Picture Apparel Production Line

In the mentioned 58 companies there are 5610 workers which imply that the percentage of persons employed in the apparel and textiles sectors within the Shtip economy is quite high (about 45% of the Shtip employed). If one considers that there are a number of persons from Shtip that work in industries that are related to the apparel and textile sectors such as transport and logistics, catering for the workers, etc. it is easy to the significance of the sectors on the Shtip’s economy. Moreover, Shtip is the biggest center of apparel and textile production in Macedonia. It has more workers employed in these sectors than Skopje with 3851 workers, Tetovo with 3563, Gevgelija 2985, Bitola with 2541 and Strumica with 2316.[cxxvii]

Apparel and textile production is in Shtip companies very much focused upon “outward processing production" as only one (EAM) has its own production marketed through own export channels, while 2 (Tomas Stil and Stilteks, small firms with 5 employees sewing pants) have own products for sale at the domestic markets. Additionally, a number of companies produce a small share of their products for domestic markets, or for own export: Gracija (with about 5% own production) Mond (10%) Beas-s 20%, Briteks 20% Milano/Modena 40%, Zen/Vivendi, 20% and Sthipko 30%.

A vast majority of Shtip apparel and textile producers manufacture “light apparel (casual)” such as shirts, blouses, t-shirts, etc. production, that demands very little fixed investments and therefore is vulnerable to market shifts and Asian competition with much cheaper labor costs. A smaller number of producers (11) such as: Anateks, Kit-Go, Starteks, Beas-s, Star-teks, Shtipko, Do-na, Stilteks, Ziziteks, Makteks, and Galija manufacture only or predominantly jackets, coats and other more sophisticated semi-heavy and “heavy apparel (tailored)”. This production is less exposed to market vulnerability due to higher transport costs, needs more skilled labor, and more capital investment. Zen-Vivendi and Mond, too produce heavy and semi-heavy apparel, but only in addition to light textiles which is still their dominant activity.

A number of Shtip based companies produce a small share of their products for domestic markets, or for own export: Gracija (with about 5% own production) Mond (10%) Beas-s 20%, Briteks 20% Milano/Modena 40%, Zen/Vivendi, 20% and Sthipko 30%. . This leaves the industry in Shtip lagging behind the world trend in designing and branding which is a new economic activity everywhere in the region from Serbia (Nikola’s, MONA, St George etc.), through Bulgaria (few companies produce under own brand for domestic market only: Daphne, Odeta, Albena Style and etc.) to Turkey (Little big, Mavi jeans, Tac and etc.) and Romania (where the government through investments stimulated the industry to produce their own collections for the domestic market and for export such as Xandra and Anrolf). Shtip has few value added products and currently does mostly ‘sewing and stitching’. Most of the companies are small and mid-size and the workers are skilled in simple cut and make techniques needed for the production of “light clothes”.

The Losers of the Transformation

The clear loser of the transformation of the Shtip textile and apparel sectors are the workers in these industries. While the owners and the managers of the apparel companies enjoy better live their fortunes have not been as bright as those in the new and quickly developing branches of these sectors, such as logistics and intermediaries. The winners of the transformation are those managers and sector leaders who have invested in the most valued added type of activities including marketing, logistics and transport.

Mihajlo Nikolovski[cxxviii] worked as a tailor during socialist times, starting from 1973. He graduated from a two-year technical school for tailors and worked in “Astibo” from 1973 to 2002. He has had numerous awards in the communism: he was twice “Yearly Udarnik[employee of the year]”, twice “Monthly Udarnik”, also receiving the “1st May” Award from the trade union. During the 1980’s he earned about 350 euros per month and bought an apartment of 58 square meters with a credit from the local bank. His wife worked as a tailor as well, employed since 1972 with a similar salary. With their earnings they could cover all of the life expenses and went frequently on holidays. The most visited destination for them was Dojran, and they never went outside the state. They had both time and finances for partying, restaurants, etc. Mihajlo was satisfied from the public health system. His mother was assistant chef in a state restaurant and his father was a policeman. It was easy for them to get a credit from the banks. Mihajlo is very satisfied with the political system at that time and thinks that the inter-ethnic relations and the security situation were stable. He has had no “obstacles in the communist system” and believes that he could have easily planed for the future, due to the prosperous economic circumstances. He was satisfied with the relationship employer-employee in the communist system. The unions were very strong and it was difficult for the companies to make someone redundant.

 Today, Mihajlo is a tailor in a private apparel producing company. His spouse works in another company from the same sector. His daughter was born in the early 1970’s and is married today, while his son was born in the late 1970’s. His daughter is a graduate from the Faculty for Economics in Skopje, and his son is a graduate from the secondary textile school in Shtip unemployed for eight years now. Mihajlo nowadays has a monthly salary of 10000 MKD while his wife has a monthly salary of 12000 MKD. The family has worse living standards in comparison to before and has problems with the covering of all the life expenses. In the supermarkets they shop basic products only, primarily food. They spend very little on cloth, and the main parameter for his buying decisions is the price not the country of production. Mihajlo. Dimitrov describes the family perspectives as uncertain and not very promising. Today, they rarely go on holidays, and when they do it is usually in Ohrid and never outside Macedonia. His daughter currently lives in Skopje in apartment with her husband, and his son lives with the parents in Shtip. He has had problems to meet all the educational expenses for his daughter due to the limited family finances. His working hours are from 07.00 in the morning to 15.00 in the afternoon. Although he still has his old friends, he does not meet with them as frequently as before. His son plans to migrate outside of Shtip and possibly outside of Macedonia in search for employment.  The interviewee was dissatisfied with the political situation in Macedonia today. The same is true about his opinion for the security situation in the country; he argues that he does not feel as safe as before. He believes that the inter-ethnic relations in the country are very unstable and unpredictable. Furthermore, he feels general discontent towards all of the state institutions and the judicial systems. 

While Mihajlo, a tailor has a difficult life Andon Mihajlovski[cxxix] a manager of apparel producing company lives not much better. He has graduated in 1991 from the secondary-economic school in Shtip, but he has no university education. His father was a manager in communist times, with a nice salary. They could have easily received a loan for a house, and his monthly salary was around 500 euros. Andon’s mother was a clerk in a bank, and had with an average monthly salary of 400 euros. The family used to go on vacations pretty often, the most notable locations visited being Ohrid, Greece and the Adriatic Sea. All the family members had state health insurance. The family had a car, Lada at first, and Zastava 101 later on. Today they have apparel and a transporting company. Andon has a spouse and two children his wife being the director of the transportation firm. They have annual profit of about 10 thousand euros and Andon complains that the expenses of the business have been perpetually increasing in the last few years. Nevertheless, he satisfied with the profit, which leaves the lack of free time their only inconvenience at the moment. . His family lives in the house he inherited from his father since they are not yet in a position to build a new one. The family does not go on holidays frequently; they prefer the weekend trips instead. Most of the times Andon’s family goes for holidays to Ohrid, and rarely in Greece. With his earnings, he is able to meet all of the expenses for the children, primarily education, food and clothing. Currently he drives Fiat Punto from 2000 and that’s the only car the family possesses.

Marko and Jovanka Tomovski are a couple in their late 60’s. Jovanka is a former worker of “Astibo” while her husband used to work in the public administration. Both agreed that before the transformation the salaries were quite good.[cxxx] They have built their house just saving money from their wages. One salary they used for living while the other they used to pay for the construction of their home. Every summer they went on holidays, once they were in Romania they felt like Americans, rich and powerful. Ohrid lake, Bulgarian Black Sea Cost, or the near by Dojran were regular on their summer list of locations to spend their break. In the late 1970’s they also bought a car, the classical Volkswagen. Everything was much better organized in socialist times according to the Tomovski couple, “Astibo” had a kindergarten for our daughter, we ate at the restaurant, and those who had no living dwelling were given credits, and so on. Their nostalgia for the good old times is confirmed by the difficult live they have today, with expensive prices and low pensions.

Even worse is the story of the former “Makedonka” worker Milancho Manev, who donated blood 130 times helping others in difficult times. However, this summer he could not find a single soul ready to help him pay his debt to the water supply public enterprise.[cxxxi] To pay back the debt Milancho had to do public work on the behalf of this enterprise. He complains that these are the times when there is no job available. Similar situation happened to Slobodan Mishikj, long time employee of the Shtip printing house “Ilinden.” Slobodan had to work in the public swimming pool all summer for a daily fee of 60 to 80 denars (1 to 1.3 Euros) and for the Electric Supply Company in order to pay his debts for the electricity bill. In Shtip, about hundred citizens worked this summer in public enterprises to pay back their bills. The faith of the former goalkeeper of “FC Bregalnica” Stojan Stojanov, 51, is also disturbing.[cxxxii] Born in a village in a near to Shtip region Stojan’s parents left the rice field in Kochani and came to work in “Makedonka.” Stojan and his wife also worked in this company, although he is more known as a football player. Both of them got laid off in 1999, she after 33 years of experience, and he with 28. They have three daughters, one of them a student in Bulgaria. Stojan’s spouse got a job in a private apparel producer. Her salary is what they live on. According to him, most of the laid of “Makedonka” workers have a difficult life nowadays. A number of workers from the liquidated SOE’s in Shtip have organized themselves in an informal association pressuring the government to help them find jobs. Stojan comments that life is very difficult, “the state officials do not care if you have or not have money, they take home appliances instead, if we do not make now we shall undertake radical measures, because our is not a life worth living.”[cxxxiii]

The Big Winners of the Transformation

 Logistics and Transport

To export their final product to foreign markets apparel producers need a clearance from the custom authorities. In order to get a custom clearance one needs a bank guarantee of 5,000,000 MKD (about 83,000 euros) certifying financial liability. This is a job of shpedicja (a custom clearance house- sluzhba za carinsko deklariranje) and there are 27 of them in Shtip with 300 employed persons.  Only three apparel producers have own shpedicii, Albatros, Mavis, and Asteks, the rest paying other shpedicii for the service. The biggest 10 shpedicii in Shtip are: Birkart, Canda, Fershped, Makoshped, Kamilshped, Montanashped, Bakshped, Visashped, Inteksshped and Asteksshped. Besides these there are about 20 smaller shpedicii. In this segment of the market in Shtip Birkard has a dominant position. Birkard, works with 80 apparel companies in total, 30 suppliers from Shtip, and 50 retailers based in West Europe. The biggest apparel companies from Stip that Birkart cooperates with are Beas, Briteks, Elena (Labod), Eskada, Mont trejd, Vivendi and V&E. Besides providing custom clearances the main activities of Birkart are the transport of finished products, work with CAD and CAM systems, and final logistic and products preparing for the final clients. Working on the transport of finished goods Birkard manages 60 vehicles, that belong to other Macedonian transport companies (from Stip, mainly). For the transporting activities Birkart charges 5 % provision.

Many Shtip apparel producers use the logistic services of Birkart for the transport of their final products to Western markets. Birkart combines orders from several apparel producers and transports their goods. One truck can take between 17-20,000 light apparel or 10,000 light apparel and 5,000 heavy apparel items. Having no large depots to keep larger quantities of their products, Shtip apparel producers typically make small series of about 5,000 items for export which are immediately forwarded to retailers in Europe. On the way back to Macedonia Birkart transports various kinds of commercial products not necessarily related to the textiles and apparel industry. Each week about 30 trucks transport goods to Western Europe. This equals a minimum of 500,000 pieces, so that Birkart alone is moving 25 million pieces? If we take an average of 1,500 pieces per worker (see remark up), then about 16,-17,000 workers would be needed to produce this. The company also owns a customs depot (carinski sklad) of 1000 m2, where it does custom clearance for the apparel producers. In any case this company is very important trend setter because besides Birkart, there is only one other logistics center in Shtip, the Canda International Germany branch office Textile Logistic Makedonija (TLM). It is worth mentioning that at the moment these are the only logistic centers in all Macedonia.

Birkard, dominates the logistics in the Macedonian clothing sector. It works with 80 apparel companies in total, 30 suppliers from Shtip, and 50 retailers based in West Europe. Besides providing custom clearances the main activities of Birkart are the transport of finished products, work with CAD and CAM systems, and final logistic and products preparing for the final clients. Working on the transport of finished goods Birkart manages 60 vehicles, that belong to other Macedonian transport companies (from Stip, mainly). The company also owns a customs depot (carinski sklad) with around 3,000 sq. meters, to handle up to 300,000 pieces, where it does custom clearance for the apparel producers.  They provide services like labeling of clothes, packaging, sorting and they prepare all paper work for the final transport and export to European markets.

A close company to Birkart is “New Trend Center for Textile Technology” founded in the beginning of the year as a joint venture between “Zmaj Promet”, and E-biz. “New Trend” is a completely modernized European looking company. The offices are fully equipped with modern computers, and software to automatically adjust designs to different sizes. Trajan Angelov is the manager of Birkart and co-owner of Zmaj Promet. It is not difficult to confuse the three companies since the manager of “New Trend” is Suzanka Angelova the wife of Mr. Angelov. At meetings and in interviews Mr.Angelov often speaks in the name of “New Trend” adding to the confusion.[1] Since the three companies, “Birkart”, “New Trade”, and “Zmaj Promet”, are located in the same premises they could be seen as one larger enterprise.

Before investing into textile/garment sector “E-biz” has conducted thorough analysis of the market realizing that there is an urgent need for investments in modern ICT technologies. In the summer of 2004 “E-biz” called a tender for establishing the “New Trend” and from the four participants “Zmaj Promet’s” offer seemed most attractive and economically viable. The business plan for establishing the “New Trend” was approved at the beginning of November of 2004. The investment in “New Trend” was 400.000 USD, with “Zmaj Promet” investing 53% and “E-biz” 47%.[2] According to the business plan the “New Trend” should became financially self sustainable in three years, after which a re-definition of the ownership relations will occur. “E-biz” does not intend to set up another center such as “New Trend” stating that this single company is currently sufficient to cover the Macedonian market and establishing another one would mean duplication and unnecessary dispersing of existing potential and knowledge.

New Trend provides CAD and CAM services to interested Macedonian apparel producers. They began with promotion of the CAM in May 2005, and the Shtip apparel producers are increasingly becoming to use the service. The CAD system is being used in two shifts whiles the CAM in one shift. Currently the CAM is used in 70% of its capacity hoping to reach 100% until the end of the year. “New Trend” has currently 50 customers, 26 of them from Stip. The number of “New Trend’s” customers is increasing every month. The machines are both located on the ground floor of the main building. Companies in Germany only have to send the design per email, and the raw materials, and “New Trend” then prepares the clothing pieces for the companies using sophisticated software. “New Trend” provides quality control of the materials and Trend” supplies clothing companies, like Milano for example, with the accessory materials intended for CAD and CAM services importing them from Italy. They closely cooperate with the intermediary company Global from Skopje. For New Trend/Birkart it would be great if there are more companies moving to full-packaging, using their global networks. The company’s future priorities are to attract more clients because there is luck of confidence in this kind of business and to become the major raw material suppliers.

Textile Logistics Macedonia-Canda was actually the first logistic center in Macedonia. It was founded by Textile Logistic Bulgaria (TLB) in March 2003, and today it works with about twenty apparel producers from Macedonia from Kochani, Kavadarci, Bitola, and Skopje, and five from Shtip, Lars, Mavis, Metro-Premier, Beas, and Labod MK (Elena).. A dozen other companies have signaled already their additional interest in cooperation.[3] TLM works for CANDA which is subcontracted by the multinational chain C&A. In its operations TLM is de facto autonomous in relation to the TLB. Still, while more than 90% of technical and logistic operations of TLM is coordinated directly through Germany (Canda). Alike Birkart, TLM also works with CAD and CAM systems, and final logistic and product preparing for the final clients. For transportation, TLM uses mainly the services of the German company Meyer & Meyer and their associates (Grdovjanka). TLM is a significant customer of Birkart’s depot.

           TLM rents a store belonging to Angroteks which used to be a furniture department store. In 2003, TLM subcontracted companies produced for CANDA Germany 1 300 000 pieces of clothing, 2 400 000 pieces in 2004, with the expected growth in produced items of 10-20 % for 2005. (including products from 3 new companies producing heavy clothing). For transportation, TLM uses mainly the services of Meyer & Meyer (Grdovjanka) and their associates. The average annual number of trucks driving TLM goods is around 300, while in high season there are 30 trucks monthly. The average number of clothing units per truck is 8.000. In the interview Mr Georgiev explained that Birkart is somehow copying the TLM logistic model. He does not consider Birkart to be a dangerous competitor and he thinks they can complete each other. Mr. Georgiev said that TLM is practically the only significant customer of Birkart’s depot and almost 90% of goods stored there belong to TLM. He is satisfied with TLM’s position on the Macedonian market, with the relations with Canda and indirectly C&A being the biggest asset and advantage over Macedonian rivals.

Finally we should also mention the transport sector. There about 300 people employed in the transport (forwarding) sector in Shtip. The two largest companies in the market Gradovjanka and Zmaj Promet are related to the logistic centers Birkart and TLM. The prices are dominated by the offers of Birkart, and TLM.  “Zmaj promet” works since 1993, and does international transport of goods with 37 workers, and 13 trucks. About 90 % of the time they drive apparel from all over Macedonia to Germany, Benelux, Greece and their business is going on well.[cxxxiv]  The transport company “Gradovjanka” was founded in 1989/90 and in 1996 become a branch-office of the German Transport Company Mayer & Mayer for the Macedonian region concentrating on forwarding apparel. “Gradovjanka” is not the only company that provides transport services for the Mayer & Mayer as currently there are also 4 other companies doing this. At the moment, they have 16 trucks and cooperate with the following apparel producers from Shtip: Lars, Vabo, Eskada, Shtipteks, Canda. The total number of employees is 24, together with drivers and they have eight trucks. Mostly, they are transporting in Germany, Belgian and Holland.  Their business premises are in the former enterprise Staklara 29 Noemvri from Skopje which they bought 5 years ago. Currently, the company has storage area of 7 000 m² of non-covered land which it plans to enlarge. It is important to know, that there is no real maintenance or service for trucks in Macedonia. In the republic it is only possible to do repairs, but spare parts are not accessible at all. For major repairs Macedonian companies send their trucks into the EU – to Greece.

According to Liljana Puncheva- Chief of Customs in Shtip (Shef na carinska ispostava) besides Birkard (13 trucks) and Mayer & Mayer (8 trucks) the other most active transport companies are: Metro Premier with 7 trucks; Divna with 3 trucks; and DM Preciz with 3 trucks. She mentioned that the average number of trucks that export goods each month through the Shtip Customs is 1250, the busiest days being Friday and Saturday.[cxxxv] On average five apparel producers use one truck to export goods. Many exporters from Skopje also use terminal in Shtip, and many have their offices there, including the intermediary company Global from Skopje. There are 18 forwarding companies in the Custom direction building[cxxxvi] while, 3 are located elsewhere.[cxxxvii] 

The Role of the Intermediaries

The sale intermediaries or agents had a very important role in the textile and clothing industry in the SFR Yugoslav period. At that time in Macedonia there were two intermediary companies: Inteks and Makoteks. Dealing with export of finished products and import of raw materials and fabrics, Inteks was a trade representative of a large conglomerate of 25 factories/producers from Macedonia. “Makedonka” and “Astibo” were members of Inteks.[cxxxviii] In fact, the government of socialist Macedonia urged the smaller apparel producers to join “Inteks.”[cxxxix] Inteks organized representations of the Macedonian textile and clothing producers at international fairs and provided its members information about new machines and technologies.  Within Inteks there was a part which follows fashionable trends, machines and went regularly to fashion fairs in Moscow, Leipzig, Düsseldorf, Belgrade, Zagreb and Ljubljana where they had a stand together with other producers from SFRY.  In the 1980’s “Inteks” had 58% of the total turnover and 47% of the profits of the textile and apparel producers in the republic, and made exports worth 22.8 million USD in the Western markets and 30.7 in the socialist block.[cxl] In 1986, it had 28,000 employees with export for the first half of 1986 worth 13.8 million USD in 1986, 64% of which sold in the Western markets.[cxli] In the same year “Inteks” had problems getting payments from companies from the socialist block of countries, especially from those from the Soviet Union, and the German Democratic Republic.[cxlii] In 1987 there were about 29,000 employed in the Inteks consortium with 90 % export production.[cxliii] They used to import 15000 tons of cotton not only for the 27 producers from Macedonia but for all SFR Yugoslavia. In the beginning there were 150 employed in Inteks, then 70, today 15. The company has lost its intermediary position and the owner Zoran Azmanov lives of renting the real estate of the company.

Former managers of Inteks have however, continued doing the business of intermediation between Western buyers and Macedonian manufacturers. The two directors and partners of Texico, a leading sales intermediary, Mr. Grukevski and Mr. Vaskov, are an example. Texico exists since November 2002 and employs six persons. It works with 10 foreign partners mainly from Germany, but also from Italy and Belgium. Texico is intermediary in the annual sale of one million pieces of apparel. Their way of business is to negotiate deals with the foreign buyers, together with the local producers. Texico’s profit margin is five percent. The annual turnover of Texico is around two million Euros. While Lavishbelt, INT, Polaris and Etra have about the same annual turnover as Texico the biggest company in this business nowadays is Global, with an annual turnover of about EUR 12 million. Global’s 80% of its customers are from the EU, particularly from Germany, Netherlands, Italy and England, and 20% are from the USA. They are gradually abandoning the US market and focus more on European Markets due to the possibilities for achieving lower transport costs and greater flexibility in production. Global has partner cooperation with the well established German clothing company Steilmann Group. The owner, Mr.Vladimir Ichokaev has built a logistical centre in Skopje with a customs depot, and CAD and CAM machines and plans to invest in a laboratory for washing clothes. Apart from Global’s own clothing facility with about 60 workers, 60 other companies throughput Macedonia manufacture for Mr.Ichokaev.

Date: November 29^th, 2005

Place: Skopje, Macedonia