While shoe production in the Czech Republic is decreasing every year, neighboring Slovakia has experienced a manufacturing boom since 1999. The country’s total production grew from 8.7 million pairs in 2000 to 12.8 million pairs in 2003 – an increase of 47 percent. Three single foreign companies – ECCO, Gabor and Rieker - and Riko Sport, whose footwear is produced at the Rialto Partizanske plant, indicate that their combined output accounted for 9.9 million pairs last year, or nearly two-thirds of the total volume.
Gabor and ECCO made greenfield investments in Slovakia partly because labor costs there are about 40 percent lower than in the Czech Republic. The average net monthly wage of factory worker in Slovakia still amounts to only €175 as compared to €250 in the Czech Republic. Furthermore, skilled or trainable workers are abundant as Slovakia’s unemployment rate is high. It reached 18.5 percent in the second quarter of this year. In some regions, especially in the Eastern part of the country, the jobless rate is as high as 40 percent.
According to Juraj Vodicka, the general manager of Gabor’s plant in Slovakia, the monthly salary of a Slovak shoe worker is not very different from that of a Chinese, although the shifts are longer. The Chinese will work for 230 hours a month compared with 168 hours per month in Slovakia. Productivity rates and distance are other important factors, however.
Low labor costs lured German-based Gabor to Slovakia in 1996. Last year, the production plant employed 1,900 people and grossed revenues of €50 million, making more than one million of pairs of shoes and 1.5 million pairs of uppers. The Slovak plant produces 90 out of 280 brand’s models. Slovakia’s location near Gabor’s traditional and new European markets is advantageous. The brand’s sales in the Czech and Slovak Republics reached approximately €2.5 million last year.
The presence of local manufacturing skills, which were first established by the late Tomas Bata in Slovakia as well as in what is now the Czech Republic, did not have much to do with investors’ decisions. ECCO built its own factory in Martin, which employs 900 workers, a town located 230 kilometers north of Bratislava in a region that has never been a shoe manufacturing hotspot. ECCO’s managing director in Slovakia, Jozef Valach, says the choice to do so in 1998 occurred because its labor force is not only cheap but also well-educated.
None of the four largest manufacturers expects to close shop in the near future, but Elefanten did close its only manufacturing operations in Slovakia last Sept. 30 following Clark’s decision to liquidate the whole company. Elefanten operated in the country since 1995 and produced 850,000 pairs last year.