Armenia increases its textile export potential
Armenia reported on increasing its textile export in 2022
Fashion brands energization challenges and transformations
Like any other manufacturing industry, fashion manufacturing heavily depends on energy. The production of textiles, garments, and accessories requires significant energy for spinning, weaving, dyeing, printing, and finishing.
Since 2022 the fashion industry has been shaken by economic and energy shocks. As a result, the world’s leading textile brands are searching for ways to save money and stay competitive. To address these issues, some fashion brands are exploring ways to reduce their energy dependence and shift towards more renewable energy sources. For example, some companies invest in on-site renewable energy generation, such as solar panels or wind turbines, to power their manufacturing facilities.
Others are partnering with suppliers and manufacturers who prioritize renewable energy and have set targets to reduce carbon emissions.
But many textile giants cannot put high manufacturing cost solutions on the back burner. Their profitability does not tolerate delays and requires quick adjustments to the market. The rapid response to challenges becomes the main advantage to competitiveness in the busy world of the fashion industry.
In terms of reducing the risks of market volatility and dependence on the commodity base in the product’s final cost, many brands choose manufacturing relocation to the more attractive production cost areas.
Main destinations for fashion manufacturing outsourcing for 2023-2024
Manufacturing outsourcing to countries with lower energy and labor costs, such as Uzbekistan, Armenia, and Bangladesh, is a popular option for brands looking to increase profit. In addition, there has been growing concern in recent years over some manufacturers’ labor and environmental practices in outsourcing destinations. That has led some fashion brands to focus on more ethical and sustainable manufacturing practices, including using local manufacturers, investing in in-house production capabilities, and working with suppliers who adhere to strict labor and environmental standards.
Earlier, we announced some loud manufacturing relocation projects to Uzbekistan from Hugo Boss, Ermenegildo Zegna, and other US and European producers. Now Alex Textile has announced that it will invest $8.2 million in clothing and tights production in Armenia. The investment program will create 207 new jobs. In addition, the company has received customs benefits for importing raw materials and technologies from the Armenian government.
The textile industry in Armenia has shown remarkable growth in the last decade. Its average growth rate of 15%. Some well-known brands such as Zara, Moncler, and Jennifer are already being produced in the country. The textile sector constitutes 2% of the country’s manufacturing industry and 5.2% of its exports. From 2018 to 2021, the sector witnessed a 30% production growth. Moreover, in the past five years, the sector’s workforce has tripled to 10,000. Russia, Kazakhstan, Germany, and Italy are among the top export destinations for Armenian textile products.
Armenia’s manufacturing relocation benefits
Armenia has a competitive edge in the textile industry for three main reasons:
- strategic location,
- low labor costs,
- affordable electricity.
Armenia’s location and its agreements with the European Union and the Eurasian Economic Union allow it to efficiently access markets representing over one billion consumers. Additionally, the cost of electricity in Armenia is below the global average and lower than many other countries known for textile production, including India and Vietnam. Finally, since the textile industry is labor-intensive, labor costs typically account for 30% of production costs.
As a result, Armenia enjoys a competitive advantage regarding remuneration for textile factory workers, which is considerably below the average wages in Asia.
Front Desk Helpers manufacturing outsourcing support
Front Desk Helpers provides turnkey manufacturing relocation to Uzbekistan and Armenia for Textile manufacturers, fashion brands, and wool products manufacturers who want to relocate their businesses for safety. This solution helps businesses minimize energy dependence, reduce costs, access a vast consumer market, and gain additional benefits in the world’s fashion competition.
Our dedicated project manager helps brands on all the stages of industrial outsourcing. We provide support from the factory location adjustment, government and legal authority representation to business optimization during the operational processes. Learn more about our support during individual consultation.
You might also be interested in other materials from our business digest