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Iasitex: Import of cheap workforce is a solution

Iasitex: Import of cheap workforce is a solution
09.10.2006, 18:52 20

Iasitex, one of the top ten textiles producer in Romania, is facing strong competition from Asian firms, but manages to broaden its export market.
Iasitex in the first six months of this year posted 9.2m-euro turnover, up 102.2% compared with the similar period of last year. During the same period, the company derived net income worth 233,000 euros, 42.7% lower than in the first six months of 2005.
"Turnover went up as the volume of sale orders rose, especially in terms of exports, while income shrank due to rising prices of raw materials, cotton and dyes, higher rates for electrical power and gas and the bigger volume of investments made during the first months of 2006," stated Gheorghe Caescu, general manager of Iasitex.
Exports weigh 90% in the turnover derived by the Iasi-based textiles producer. Iasitex expects to register turnover worth above 20 million euros this year, approximately 15% higher than the figure reached in 2005.
The company's representative forecasts a profitability rate of around 10% for this year, which would mean a minimum income of 2 million euros for the Iasi-based producer. The company hit turnover worth 17.5 million euros last year and 600,000-euro profit. The segments accounting for the largest part of the company's revenues are production and the trading of cotton fabrics and clothes.
Iasitex produces for the domestic and foreign market, with Sweden, Germany, Austria, France, the UK, Poland, Lithuania, the US, China or Malaysia as export destinations.
For the raw material, Iasitex works with both domestic and foreign suppliers. The main foreign suppliers are Otto Stadtlander-Germany (for cotton fibre), Genins Corporations-China (polyester fibre), Clarian AG Switzerland, Dy Star AG, Germany and Ciga AG, Switzerland (dyes and chemical auxiliaries).
"Products from Asian countries compete with our products on the domestic market primarily through the considerably lower prices generated by the much smaller costs related to labour force or the absence of investments in environment protection. On the other hand, I consider the cheaper workforce from the Asian area is a solution for maintaining the Romanian textile industry," says Caescu. Over the past 3 years, the company has invested around 6 million euros, particularly to retool production facilities.
Moreover, the company two years ago acquired the assets of Pitesti-based Novatex company, which owned a textile plant. Now, the firm operates under the name of Nova Textile, with Iasitex as its sole shareholder, and manufactures cotton and cotton-like fabrics. In the wake of this move, Iasitex almost doubled its production capacity. Iasitex is part of Serviciile Comerciale Romane (Romanian Commercial Services - SCR) group, controlled by businessman Stefan Vuza.

Iasitex in figures
Turnover in the first six months of this year surged by 102.2%, while income dropped by 42.7%
This year plans to reach turnover worth more than 20m euros
Derived turnover worth 17.5m euros last year and income standing at 600,000 euros
Is among the top ten producers of textiles in Romania
Has 1,520 employees
Is part of Serviciile Comerciale Romane group, controlled by businessman Stefan Vuza