ECONOMY

Greek labor costs far too high for Schiesser Pallas to remain

Lothar Brucher’s words are harsh – as is reality – and no one can ignore this. In an interview with Kathimerini, a board member of Swiss-German company Schiesser Pallas explained the reasons why the manufacturer decided to transfer its underwear production unit in Athens to another country. Only the 500 employees, with an average age of between 35-45 years, can understand the social costs of this decision. Unfortunately, they are the ones to be sacrificed, as the death of the clothing industry in Greece was foretold from the first cycle of the crisis 15 years ago. Hundreds of studies have been conducted on the sector but the State and trade unionists have never coordinated a strategy to retrain workers who are at risk of unemployment. In most cases, solutions for factories that have closed down have been short-term, with allowances for a year or two to those made redundant and to employers to take on sacked workers so they can continue production for a few more years. Brucher’s words are edifying as they show that measures to enhance flexibility are not enough to counter the new terms of competition. In the official announcement on May 5, the parent company mentioned that the factory in Athens had the lowest competitiveness of all its factories in Europe and exceptionally high operating costs. What was the principal reason for the cost increase? Undoubtedly, the basic cost factor in Greece in comparison with Asian countries is personnel wages which come to about 40 percent of total production costs of a product. For example, a month’s wage in Greece is equivalent to 10 to 12 months or more of a Chinese worker. Our competitors are already in China. Our company’s goal is to restrict our activities in expensive countries. We are already thinking of moving away from the Czech Republic as it is beginning to be seen as a high-cost country. Do you have other production facilities in Europe? Our group does not have any production or packaging operations in Europe. In 1998, we closed the factories we had in Ireland and Germany, laying off a total of 2,000 workers. But we maintain the commercial departments. How did the international crisis count in your final decision? The principal reason that led to the closing of the underwear factory in Athens was the drop in orders from Germany, which accounted for 75 percent of its orders. Had there been something the Greek government could have done to maintain the 500 jobs, what would it have been? Tax breaks, lower wages, lifting restrictions on mass sackings? I’m against all kinds of subsidies in principle, as it contributes to unfair competition. Also, no one can close their eyes to the competition. At a meeting with (Labor Minister) Mr (Dimitris) Reppas, he asked if a 10-15 percent cut in wages would help keep the concern going in Greece. But I am not a politician myself. And we should all understand that in a couple of years, the machinery will only be valuable in a museum. Even if we cut wages, the difference with Asian wages would be still significantly large. This gap can never be bridged. We are producers and no matter how capitalistic it may sound, we produce as long as we have sales and with sales we must have profits. If you look at the development of the clothing sector in Europe you will find that the relocation of firms helps them survive. Our turnover in Germany has fallen 10 percent annually over the last three years. Tax breaks would not salvage the situation either. If you look back, what kind of changes do you find in Greece since the day the factory opened here? The problem is not merely Greek. It is a problem throughout Europe; 20 years ago, the cost was 50-60 cents per product unit in Germany and 15 cents in Greece. Today, these differences do not exist, they are elsewhere. In Europe, work time is 40 hours weekly, maximum. In China, however, young girls cover long distances from the interior of the country to the cities to work for peanuts. Firms give them accommodation, breakfast and lunch. They work between 7 a.m. and 9.45 p.m., including Saturdays. Is there a possibility of your reversing your decision? I can’t go to consumers and plead with them to buy my products. It’s a shame, as the Greeks are very good and specialized in their work. In 1998, sales were 40 million pieces. Today, I hope it will not fall below 23 million. At any rate, we intend to hire more people at the knitwear factory in Komotini. But the Athens plant is not viable. Our competitors’ relocation to cheaper markets started 30 years ago.