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Last Updated: Tuesday, 2 January 2007, 23:09 GMT
Made in Romania for the style elite
By Ben Richardson
Business reporter, BBC News, Timisoara, Romania

Romanian fashion firm ModaTim, its factory and workforce.

The Romanian town of Timisoara is probably not the first place that springs to mind when you think of Savile Row tailoring and top-quality clothing.

However, the next time you pick up a raincoat from Gieves & Hawkes, or even buy some women's wear from Jaeger or Reiss, there is a good chance that it will have come from the family-managed factory of ModaTim.

Run by Ovidiu Sandor and his sister Animona, the company believes that the "Made in Timisoara" label can match its more prestigious rivals in Milan, Paris and London, especially after Romania joined the EU on 1 January.

"People have an image of Romania as a place with no future, where workers are forced to make clothes," explains Mr Sandor. "I don't think they understand the amount of work and skill that we put in."

Many of the world's main clothing companies have already cottoned on and firms including H&M, Zara, Lacoste and Dolce & Gabbana have all shifted manufacturing to Romanian producers.

This has helped turn Romania into one of the largest suppliers of clothing to its new EU partners, with exports worth more than 3.5bn euros (2.4bn) a year.

'Quality garment'

ModaTim's factory is a short walk from Timisoara's regal main square, and its squat concrete outline harks back to a Communist past that forced local tailoring businesses to merge and then nationalise their operations.

Despite a cold exterior of chipped paint and industrial grey, the inside of ModaTim is a whirl of noise and colour, as more than 1,100 mostly female workers cut, stitch, press and package.

Many of the workers have been with the company for decades rather than years, and this is where Mr Sandor believes his edge will be when taking on larger and cheaper producers within the EU and in emerging nations including China.

Ovidiu Sandor and his sister Animona
I am not sure how much the consumer really cares about where their goods come from, as long as they are made well
Ovidiu Sandor, ModaTim

"It takes years to get the skill and experience needed to make a quality garment," he explains as one of the longest-serving line managers embraces his sister and starts telling a story of how the two executives used to run around the factory floor when they were children.

"When people think of a price for clothing, they think of it as a measure of cloth quality," Mr Sandor explains.

"What they don't understand is that fabric is only part of a package that includes cut, sizing and technique."

For example, a key part of any jacket or overcoat is how the original design is sized for production. The more complex the sizing or grading, the better the fit and the more expensive the product.

"At the moment, Asian goods can't match us on this front," Mr Sandor says.

Another factor is the marketing costs of the top brands, especially when you consider that manufacturing usually only accounts for between 5% and 10% of the retail price paid by consumers on the UK High Street, he explains.

Tighter fit

Romania has a long tradition of supplying European clothing firms. Even during the Cold War years, ModaTim sold goods to Western Europe and the US, although that market diminished towards the end of the 1980s.

Timisoara, meanwhile, has always had close links to Western Europe, thanks to its proximity to the Hungarian and Serbian borders, as well as its ethnic German, Hungarian and Serb minorities.

Go for lunch in the centre of town today and you are likely to hear diners speak in Italian or German or bump into executives from companies such as Procter & Gamble, Draexelmaier, and Nestle.

The international nature of Timisoara has helped prepare ModaTim for the challenges of life within the EU, Mr Sandor says, although he admits that the firm will have to keep boosting efficiency as the price of labour rises.

Rolls of fabric
Romania's textile industry may be set for a period of upheaval

Another problem is that with Romania's economy expanding quickly, there has been a decline in the unemployment rate and a squeeze on available workers.

"If I could take on another 100 workers tomorrow, I would," Mr Sandor says in the shadow of the business centre he is building on a plot next to ModaTim.

"But I just can't find them."

More worryingly, and despite Mr Sandor's confidence in the quality of ModaTim's products, industry figures showed that total Romanian textile exports declined between 2004 and 2005.

Analysts are worried that this trend may continue into 2006 and 2007, as fashion firms look for cheaper markets and Asian producers close the quality gap with their European rivals.

Some industry observers predict that EU membership and increased competition may lead to the closure of as many as a quarter of Romania's 8,000 clothing and garment companies.

Fashion split

While doubts may hang over Romania's textile industry as a whole, Mr Sandor believes the EU will help rather than hinder him in carving out a profitable niche for ModaTim.

He explains that most of ModaTim's fabrics come from Italy, the UK or Spain, and the company will now have less paperwork to complete when sending the finished clothes back to its clients.

Simplified border controls will also mean that it can ship a lorryload of 2,000 jackets on Friday and know that it will arrive in Germany on Monday morning.

At the same time, the company should be able to get access to cheaper financing as Romania's economy and interest rates converge with the EU.

"Fashion has split down the middle," says Mr Sandor. "It's either very cheap or very expensive, which is why we have shifted our business to focus on the top end of the market."

"I am not sure how much the consumer really cares about where their goods come from, as long as they are made well."

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