Czech Republic outsources to lower-cost countries
14/08/2008
Textile manufacturers in the Czech Republic are cutting jobs and moving production to lower-cost economies in other parts of eastern Europe.
Textiles have played an important role in Czech industry since the mid-1880s, when Bohemian textile manufacturers began to export wool from Brno and linen from Prague.
Now a strong local currency and competition from Asian imports are forcing textile exporters to re-think their manufacturing strategies.
The latest high-profile company to announce cutbacks is Odevní podnik Prostejov (OPP). The central Moravian textile producer cut its workforce from 3,500 to 2,500 this year, and announced plans at the start of August to lay off an additional 500 employees as it moves most of its production to East European and Asian countries.
“We’ve moved the lower and middle levels of production abroad,” said the company’s production manager, Jindrich Korycan. That includes a factory producing jeans in Macedonia and a fabric factory in Ukraine. The company will retain higher-level production at its factory in Prostejov, south Moravia, which produces as many as 6,000 custom-ordered garments per day.
Jirí Grund, chairman of the Czech Association of Exporters and chief executive of textile manufacturer Grund, said most textile manufacturers see outsourcing as a last resort. However, an influx of Asian imports into the European Union puts enormous pressure on Czech companies to use every means at their disposal to cut costs, he said.
Share this story:
