Reconfiguring Economies, Communities, and Regions in Post-Socialist Europe: A Study of the Apparel Industry

Principle investigators:
Professor John Pickles, Department of Geography, University of North Carolina, USA
Professor Adrian Smith, Department of Geography, Queen Mary, University of London, UK
Professor Bob Begg, Department of Geography and Planning, Indiana University of Pennsylvania, USA

Slovak partner: Professor Milan Bucek, Department of Regional Development and Geography, Economics University, Slovakia
Bulgarian partner: Dr Poli Roukova, Institute of Geography, Bulgarian Academy of Sciences, Bulgaria.

Since 1989, apparel production in Central and Eastern Europe (CEE) has undergone three major and concurrent changes. First, there has been widespread and rapid recession and plant closure. Throughout CEE, economic recession in the early 1990s had a devastating impact on industries such as apparel that were primarily oriented toward national and Soviet markets and were also not prioritized under the system of central planning. Second, limited persistence of firms has occurred among some producers able to hold onto and add to existing contracts and buying arrangements. Much of this persistence centers on restructuring and privatization of state enterprises utilizing existing managerial networks. Third, and more recently, a ‘rebirth’ of activity in apparel production has occurred in some regions. This resurgence is so rapid, it is referred to in one region of Bulgaria as being of ‘Klondike’ proportions. This signals a major restructuring of the geographies of apparel manufacturing throughout CEE, in which apparel production and exports especially to the European Union, but also elsewhere, increased substantially during the 1990s.

For many, the primary dynamic for these changes, particularly a burgeoning growth of apparel production since the early 1990s in Poland, Hungary and Romania, is the competitive pressure on productivity and wages in ‘high cost’ economies in Western Europe and North America resulting in the relocation of production to lower-wage regions. For Gereffi (1999) this process in Europe parallels that in which North American buyers and retailers have increasingly out-sourced production for U.S. markets to low-cost regions in Asia and Central America. In this argument, apparel industry restructuring is part of a process of buyer-driven restructuring in global commodity chains in which U.S.-based clothing marketers, retailers and branded manufacturers “play the pivotal role in setting up decentralized production networks in a variety of exporting countries, typically in the Third World…. Production is generally carried out by tiered networks of Third World contractors that make finished goods to the specifications of foreign buyers” (Gereffi, 1999: 41–42; see also Kessler, 1999). In European Union countries, similar processes are at work with apparel retailers and buyers establishing sub-contracting relations with producers in CEE under Outward Processing Trade (OPT) arrangements negotiated in the 1980s. Production links with CEE have intensified since the collapse of state socialism largely as part of the process of accession to the European Union (EU). Indeed, between 1990 and 2000 countries in CEE and the former Soviet Union increased their share of EU apparel imports from 15% of the total to 21% of the total (calculated from Eurostat Comext database).

This project focuses on these dramatic shifts in the organization of the European (and global) apparel industry over the past 10 years, and seeks to analyze and explain the emerging geographies of apparel industry in CEE at a variety of interrelated scales and in four related ways.

1. The first deals with the emergence of new geographies of apparel production and outward processing throughout Central and Eastern Europe in which we will document and map the scope and forms of the newly emerging geographies of apparel production in CEE, situated in a broader pan-European and global context.
   
2. The second issue focuses on the important role of buyer-driven supply chains in sourcing and controlling producers under conditions of intensely competitive pricing, resulting in pressure to relocate to lower-wage regions and the globalizing of contracting networks.
   
3. The third issue focuses on two cases studies (Slovakia and Bulgaria) in order to begin to problematise this story of buyer-driven commodity chains and to examine and document the complex and multiple forms emerging in post-socialist Europe under these conditions of strong contracting and buying control. Specifically, the research will examine the existence and endurance of CEE markets, the role of national buying chains in CEE, and the ways in which firms are simultaneously locally articulated with regionalized production networks.
   
4. The fourth and final issue to which this research attends is an investigation of the ways in which new apparel production is variously articulated with existing social and institutional conditions in different regions of Bulgaria and Slovakia, or what we refer to as the domestication of newly emergent capitalist production.
   

This research, therefore, seeks to both map and analyze the changing regional and organizational structures of apparel production in CEE and to show how the argument that competitive pressure and low-wages are driving this global shift must itself be situated in terms of the complex geographies of post-socialist production, the diversity of industrial forms emerging, and the specific social conditions within which export processing firms are embedded. This is in part a question of new firm creation, in part it has to do with the structure of buyer-chains in a highly competitive environment in which buyers are out-sourcing and subcontracting to ever new low-wage regions, and in part it is a story about regional integration in the wake of WTO and EU removal of and reduction in quota and tariff barriers. Therefore, the research is concerned with the parallel geographies of post-socialist European and international integration.