North Macedonia has a long-standing fashion and clothing heritage. The sector represents the country’s second-largest export industry, which has made a major contribution to its economic growth. The textile industry is one of the drivers of the local economy in terms of industrial production, jobs, and export earnings, according to the North Macedonian Investment Agency. In addition to new foreign direct investment, the country has scope for outsourcing, strategic alliances, and joint ventures with several well-established domestic firms. The industry’s production potential involves the manufacture of clothes, cotton thread and fabric, wool yarn, fabric, and knitted fabric. Short delivery times, the versatility of delivery size along exceptional value for money are among the key advantages of the local economic environment that attract many foreign investors and provide excellent conditions for the growth of local textile manufacturers, a recent study by the research agency states.
Benefits for the investors
Statistics indicate that North Macedonia has a small but open economy that is strongly integrated into the international exchange in products and is market-oriented. The following are additional advantages for the positive development of businesses in the textile and clothing industries: the Balkan country first signed the Stabilization and Partnership Agreement with EN in 2011 from countries in the region; it has an overall structure for regional development cooperation and has defined political and economic conditions for EU integration; it has also signed a Mu Mu Agreement with EN in 2011; Furthermore, since 2003, North Macedonia has been a WTO participant. The textile sector contributes to: 17% of the industry’s GDP; 17% of the country’s total exports; and 35% of the industry’s total number of employees.
The textile and clothing industry of North Macedonia is characterized by: customer focus and orientation; availability of experienced labor; versatility to respond quickly to the requirements of customers. As the key features of the sector, the Invest in North Macedonia report also describes the following: the potential to manufacture small orders at the same prices as large orders (higher productivity); long-term trading partnerships with global partners and experience working for well-known foreign brands; recognized quality for the production of apparel; good transport and logistics services.
The textile and clothing industry is one of North Macedonia’s most developed economic sectors, with over 1100 companies actively engaged at different levels of production, statistics show. The industry employs 35,000 employees and generates exports worth over EUR 400 million. Companies have produced products for a significant number of well-known worldwide brands within this market. North Macedonian textile companies are divided into two categories according to the National Classification of Operation (NCA): manufacturers of textile materials; manufacturers of leather, dressing and dyeing of fur. Textile capabilities are common throughout the entire nation. There is a company linked to the garment industry in every large municipality, but more than half of the total capacity is in the eastern part of the country. In terms of textile capacity distribution throughout the country, there are 11 large regions or zones, and 50 percent of the capacity is located in the eastern part, 30 percent of the capacity is located in the central part, and 20 percent of the capacity is located in the western part of North Macedonia. The town of Stip, followed by Kocani and Delcevo, is the centre of the textile and garment industry. Finished clothing accounts for 90 percent of the textile production of North Macedonia, while textile materials comprise the manufacture of textiles for denim clothing, bedspreads, blankets, bathroom and kitchen linen and wearing apparel dominate the industry. The total production capacity is more than 800. In the manufacture of textiles and wearing clothing, over 1100 registered organizations exist. Of these firms, small businesses are the most dominant (around half).
“Spinning and fabric production accounts for 1.5 percent of industrial production and 11.32 percent of ready-made products,” reports the Investment Agency’s study on the current state of the textile industry in North Macedonia. The output of wearing apparel is the most dominant one. The manufacture of textiles involves the manufacture of textiles for denim garments, as well as bedspreads, blankets, kitchen and bathroom linen. The economic activities in which companies in the sector are engaged to include the preparing and spinning of textiles, the weaving and finishing of textiles, the manufacture of knitted and crocheted textiles, the manufacture of textile products, carpets and rugs, cordage, cords, twines, and nets, non-wovens and non-wovens, technical and industrial textiles, the wearing of garments, leaves, and clothes, etc. About 70% of the production is in the group of not knitted apparel. The main products in this group are: women’s or girls’ suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches, and shorts (other than swimwear); men’s or boys’ suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and shorts (other than swimwear); men’s or boys’ shirts; women’s or girls’ blouses, shirts and shirt-blouses; tracksuits, ski suits, and swimwear; other garments; babies’ garments and clothing accessories. The main products in the knitted apparel group are: women’s or girls’ blouses, shirts and shirt-blouses; t-shirts, singlets and other vests; women’s or girls’ suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear); jerseys, pullovers, cardigans, waistcoats and similar articles; men’s or boys’ underpants, briefs, nightshirts, pajamas, bathrobes, dressing gowns and similar articles; pantyhose, tights, stockings, socks and other hosiery, including graduated compression hosiery (for example, stockings for varicose veins) and footwear without applied soles.
Specifics of the workforce
Qualified labor is one of the principal strengths of the industry, the Investment Agency of the country points out. The sector hires approximately 35,000 workers, which is approximately 32% of all employees in the manufacturing sector, or approximately 6.7% of the total number of employees, according to the study cited above. North Macedonia creates a cost-competitive climate for the manufacture of textiles. Companies operating out of North Macedonia, with almost half of the population under the age of 30, can rely on a wide range of skilled and qualified professionals to contribute to the growth of their sector, the report also notes. North Macedonia also profits, at a reasonable rate, from a sustainable supply of young, highly skilled labor. The average salary in 2018 was EUR 580 per month across all industries, while the average net salary in textile manufacturing was EUR 386 in December 2018.
Advantages of the industry
The North Macedonian textile industry is also capable of manufacturing small orders at the same prices as large orders with high-performance quality and good transport and logistics facilities, along with a short time from order to delivery. One of the major competitive advantages identified by the textile industry in North Macedonia is its close proximity to Western Europe, which represents a wide consumer market. Another advantage is that there is a strong image of local producers on the global market. The country’s companies have been present for decades in the EU and US markets and are renowned for their efficiency and professionalism. The industry is also distinguished by a high degree of versatility and a willingness to respond to international market demands. The readiness also requires the ability to comply with changes arising from new world developments, prompt execution under negotiated delivery constraints, and readiness to adjust to shorter terms due to shorter and shorter product usage periods. The exceptional relationship between product quality and price is one of the key advantages of the North Macedonian textile market, which is essential to foreign investors. “This is due to highly qualified staff with a long tradition of working in the textile industry, as well as relatively low personnel costs,” describes the study from Invest in North Macedonia. The factories located in the country have modern equipment at their disposal and follow all the world’s leading trends in the development of textile machinery and technology for production. “In addition to modern textile equipment, more and more companies invest in computer technologies (CAD/CAM system, plotters, etc.) that provide product models that meet the demands of buyers and can be used as a perfect training tool for introducing own designs”, the research shows. Last but not least, North Macedonia benefits from its relative closeness to EU-markets and traditionally good transportation and logistics networks. Most of the big European transportation companies have privately-owned vehicles and warehouses located in the country.
Export and import of textile products
North Macedonia’s garment and clothing industry exports primarily to EU countries. The CM or CMT (Cut, Make& Trim) method for international markets organizes 93 percent of the production. The Investment Agency adds that full production and own-brand production are partially exported and the remainder is put on the domestic market. Women’s and girls’ blouses, T-shirts, vests, suits, jackets, and blazers are among the main categories of exported items. With over 62 percent of exports, Germany is the most important export destination, followed by Greece, the Netherlands, Italy, Great Britain, Austria, Switzerland, and Bulgaria. The annual imports of garments amount to approximately EUR 50 million. They are primarily manufactured from China, Greece, Turkey, Germany and Italy.
History of the textile industry in North Macedonia
The development of the textile sector of North Macedonia has undergone numerous historical and economic phases. This sector is one of the oldest in North Macedonia and has gone through all stages of development. The Macedonian Center for Research and Policy Making (CRPM) conducted a special study focusing on Shtip, dedicated to the history of the textile industry in North Macedonia. Macedonia was a territory at the end of the 19th century with numerous small towns with an established trade, especially in craftsmanship. The introduction and further growth of Macedonia’s textile industry were mainly motivated by the Ottoman army’s need for different styles of clothing and uniforms. Another explanation for the rise of the textile sector was the study undertaken by the CRPM States to meet the needs of people in urban areas. In the 1880s, in the villages in the Bitola region, Dihovo, Magarevo, Trnovo, the first textile enterprises were founded. Their main operation was the manufacture of items made from wool. Only a limited number of cotton items have been produced in workshops for craftsmen. As Bitola, also known at that time as Manastir, was a significant economic and cultural center in the European part of Turkey, the growth of textiles in this area was natural. Unfortunately, for this sector, the Balkan Wars and the First World War had disastrous consequences, notes CRPM.
Local industrial revolution
The Socialist Federal Republic of Yugoslavia (SFRY) government has agreed to transform the North Macedonian economy from mainly craftsmanship to manufacturing with a five-year planning program. Investments have also been made in many main sectors: energy production, metallurgy, the chemical industry, the tobacco industry, the leather industry, food processing, and textiles. “In North Macedonia, two enormous capacities were established during that period: Teteks (in Tetovo) and Makedonka (in Shtip). The former intended to manufacture woolen yarn and fabrics and cloths; spinning cotton yarn and weaving cotton cloth was planned later. This allowed for balanced textile output, which was disproportionate in the preceding era. The expenditure contributed significantly to the rise in jobs and thus if only 393 people were employed by the textile sector in 1947 (5.3% of total employment in the whole industry). In 1953, after the capacity was installed in Shtip and Tetovo, 9850 people were working in the textile industry, or 32 percent of total industrial jobs,’ the CRPM research explains.