Bulgaria's largest sock maker, Delta Textile, is winding down production activities in Ruse and moving to Turkey. The company will only keep its distribution center in the city on the Danube. The decision was taken by the owner, Israel-based Delta Galil Industries, the general manager for Bulgaria Igal Heretz told the Capital Weekly.
The factory produces socks for top brands like Nike, Columbia, Converse, Pierre Cardin and had a turnover exceeding 120 million levs (60 million euro) in 2021. As of January 2023, it employed 480 people, down from 600 a year earlier. The local office of the National Employment Agency has been already notified of the planned collective redundancy of 360 people, who will be dismissed in stages between May and September.
Delta Textile exports all its output, with 85% of the volume destined for Europe and the remainder sold in the United States and Arab countries. Besides production, the Bulgarian company is also in charge of product design, client relations, and development.
"Until a year and a half ago we were operating at full capacity. But the COVID-19 crisis delivered a heavy blow to the entire market. Our main customer had built up stocks and demand declined by 40 to 50%. The company's management made a market assessment and decided to shut down the factory in Bulgaria and keep the one in Turkey. The assessment was based on the economic situation in Bulgaria, which was less favorable than that in Turkey due to the chronic lack of workforce and the high electricity costs; besides, the raw materials are supplied from Turkey," Heretz told the Capital Weekly.
For the past 20 years since it set up, Delta Textile has invested substantial funds in production upgrade. "Our Bulgarian factory was one of the best in the group, if not the best one. We have so far invested 8 million euro in new equipment and automation," Heretz said.
The factory is also equipped with photovoltaic panels that generate electricity for its own consumption. In 2020 it invested more than $1.5 million in new knitting machines and staff training to increase its capacity by a quarter.
Due to the lockdowns and restrictions during the pandemic however the same year Delta Textile temporarily suspended production and saw its revenue drop sharply. Nevertheless, sales jumped by nearly 70% in 2021, topping 129.4 million levs. Profit surged 252% to 14.7 million levs.
"The results are good but the economic situation requires a difficult decision to be taken. More than 500 people will lose their jobs. It is not an easy decision, because it is emotional - the company has been active in this country for 20 years," Heretz commented.
"The closing of the factory is a company decision; for the time being there are no other such signs in the sector. It was probably prompted by the high production costs: energy prices and inflation pressure, which inevitably leads to higher labor costs," Radina Bankova, chair of the Bulgarian Association of Apparel and Textile Producers and Exporters, told the Capital Weekly. "The order books of the clothing factories will be clear in early April. But it is a fact that there is a disturbance in the market."