The Ukraine has hardly left the international news since the ‘Orange Revolution‘. Rarely for reasons other than reports of demonstrations, incarcerations, a new despotic regime, and similar depressing insights.
What, in the bigger picture, however usually is forgotten is the following:
During the former Soviet Union, Ukraine developed as one of the largest centres of textile industry, representing approximately 50% of the entire SU’s textile industry.
And even after the SU fell to pieces, the Ukraine for quite some time remained with its manufacturing power. It was not until the mid 1990 that its decline truly showed its ugly face resulting in huge unemployment statistics and increasingly decrepit factories.
This all said – the country’s textile industry is working its way back to the surface.
Not only has its domestic market continuously grown since 2004 (despite Europe’s economic voes), but also international investment is slowly but surely entering the country and some international (incl. overseas) brands have decided to establish production two of which are:
- Picard: a German manufacturer of quality leather bags established in 1928, announced the opening of a facility in Ukraine in 2012. The factory will produce leather goods and employ more than 80 people.
- Voronin, namesake brand of Ukrain’s most famous fashion designer, specialised in sewing of high quality men’s garments (particularly suits). The brand has a trading network of over 80 stores in various countries, including Ukraine, America, Europe, Russia, and CIS.
In fact: In 2010, the country ranked 30th in the top exporters of textiles to the EU, and 21st for clothing.
Ukrainian Textile Industry: Short Portrait
Western Ukraine and the Kiev region are the most important textile manufacturing areas. This is due to two main factors:
- Wages: Average monthly salaries in the Ukrainian textile industry are about EUR150 a month. Wages in the West of the Ukraine lie, when compared to the rest of the country, approximately 30% below the national average, and as much as 50% lower compared to some regions in the East of the country.
- Geography: its location in the West of the country, and hence the Western geographical border, is relevant for transport. Many clients of textile factories of any kind are based in Western Europe, which means that reducing shipping times is of relevance, particularly given the problematic state of Ukrainian road infrastructure. Transport cost and transit time to Europe are optimised and result being relatively low overall.
Kiev: it being the country’s capital, it has not only a relevant consumer market in its own right – catered to mostly through national brands, but also offers efficient access to an international airport – of relevance for orders to be shipped abroad.
According to the State Statistics Committee of Ukraine, in 2010, Ukrainian factories manufactured 16.7 million underwear items, demonstrating a 28.7% increase vs. 2009 production for the same period; and 62.5 million items of hosiery, a 19.6% increase against the same time line.
The country’s textile industry development has since been subject to steady growth, although the need – and lack of – foreign investment on a large scale keeps being an issue. It goes without saying that the currently ongoing political upheavals do not help to attract potential investors to the country.
Importantly: Ukraine remains one of the primary producer countries for fur coats. It is an industry that has a long tradition and boasts to the day good numbers in both experts and exports.
Pros and Cons
- Pro:
The Ukraine is considered a good sourcing option for:
women’s ready-to-wear, high-end outerwear, men’s and women’s suits, shirts, evening gowns and wedding dresses.
Thanks to the the Soviet heritage, the country has a strong sewing tradition, with highly educated people, well-equipped factories, and a number of small workshops.
Abundance of labour: with an unemployment rate of around 40%, finding – and keeping – skilled labour is not an issue.
The country has started to develop a buzzing national fashion scene, which though is heavily influence by international brands thanks to the globalised lifestyle of the country’s rich and well off. - Con:
Limited specialisation of the country’s factories, with no jeans or high quality corsetry production available.
Overall highly inefficient economy (in fact, ranking at the bottom, globally)
The Ukraine is first and foremost a sourcing place for apparel – there exists hardly any other relevant textile activity in the country (i.e. spinning, weaving, dyeing etc.), specifically not at a quality level. Equally, the country does not produce any useful raw fibre material.
Administrative red tape – for import of raw materials and export of finished goods – is a huge problem.
Tough infrastructural issues hat affect daily lives: lack of sufficient (clean) drinking water being the most important one
Political instability bordering to civil war in some geographical areas.
Aware of the challenges, but also the potential of the country’s textile manufacturing capacity, the Guild of Ukrainian Clothes Manufacturers has launched a mediator service which aims at helping brands and designers sourcing their production in Ukraine.
Conclusion
The currently politically volatile situation aside, the Ukraine is a highly interesting sourcing country, specifically for near-shore quality apparel production.
Although the country’s textile industry is facing substantial challenges – notably inefficiencies – the challenges at hand are not unsurmountable, and are roughly at par with other sourcing destinations. This however, at an overall better product quality level and given a highly qualified work force.
In all this, the actual feasibility of apparel sourcing from Ukraine hinges on – just as the present protests show – on how the social realities within the country can be managed. The vast wealth gap among well off on the one hand, and empoverished citizens on the other, in combination with a government aspiring to own the absolute power in the country, has lead to the currently highly explosive and volatile situation.
For the textile industry, these unrests could not come at a more inconvenient point of time, however. Foreign investment had previously been continuously on the rise in line with the number of incoming orders, infrastructure improvements and a growing international reputation.
It remains to be seen how the political situation evolves. After all, only a more stability environment will ultimately provide the fertile soil for the industry to prosper.
