Tailors and shoemakers make way for new export stars: engineers

The cheap workforce has turned Romania into Europe’s No. 1 tailor lately, but the trend taken by exports this year shows that machines, devices and equipment – the products of engineers – are also gaining ground on the Western markets.
Just take a look at Honeywell Garrett SRL, the Romanian branch of one of the divisions of U.S. industrial group Honeywell: $74m exports in 2002, up from the $2 million posted in 1998. The company is making auto parts and subassemblies in Romania, for the companies belonging to the same U.S.-based group.
Krupp Bilstein, Delphi Packard and ContiTech – the companies having invested millions of dollars in plants making components, subassemblies and equipment, are now boasting exports worth dozens of millions of dollars.
In fact, machines, devices and electrical equipment outpaced the total export increase in the first eleven months of last year, as they grew 28%. At the same time, exports of wearing apparel climbed 17%, while footwear gained 18% and total exports increased by 20%, according to the National Statistics Institute.
The lohn system rules in the garments and leather industries, which have been ranking first in the top of exports over the past few years. In fact, one in three dollars cashed from exports practically comes from these economic sectors, which have been growing since 1997. They seem to be growing tired this year, though.
The new stars of exports are “devices, subassemblies and equipment” – high added-value products, which still account for a tiny share of exports.
In fact, the modest value of the exported products has cast a shadow over the past years’ exports boom (from $8.5bn in 1999 to more than $13bn in 2002).
“We are getting signals that the lohn may no longer post the same evolution, in fact it may even go down. Other countries also have cheap workforce (the Ukraine, Russia, the Republic of Moldova, i.e.), so that investors may very well migrate there. This growth of machines and equipment exports is a good sign. At any rate, the 20% annual increase in exports is great,” says Lucian Liviu Albu, head of the Prognosis Institute of the Romanian Academy.
Machines and equipment have thus come to account for 15.8% of total exports, up from last year’s 14.8% and the 9-10 percent logged five years ago.