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Aktualitet

Instat/ The production and processing industry sector in difficulty, 29 businesses with over 50 employees in the industry sector have gone bankrupt in 2023

Instat/ The production and processing industry sector in difficulty, 29

The production sector and especially the processing industry have been in difficulties for two years, due to the negative effects caused by the fall of the Euro and the increase in domestic costs.

As a result, dozens of large businesses in the sector went bankrupt last year.

According to official data from INSTAT, the number of enterprises with over 50 employees in the industry sector has recorded an annual decrease of 5.3% last year, where it is noted that 29 enterprises have closed their activity.

Sources from the market inform that most of the bankruptcies have been in the clothing and footwear manufacturing sector.

In addition to internal factors, factories have been affected by the drop in demand in export markets.

Bankruptcies in the industrial sector are expected to be even higher this year, as in the first months many contracts with clients that had been held with difficulty in the last quarter of 2023 were severed.

Albanian factories faced an unusual demand after the pandemic. Strong demand for goods after the lifting of restrictions from the Covid-19 pandemic in 2021 prompted the opening of new production units.

Factories often had demand for goods two to three times greater than production capacity.

Many of them made investments in technology and expanded further, as a year later the business climate deteriorated sharply. The fall of the euro was the main cause.

In 2021 until now, the Euro has lost 23% of its value in exchange for the Lek, which shows that the profits of exporters who sell in Euro but pay salaries and taxes and many raw materials in Lek have decreased to a similar extent.

The start of the war in Ukraine made the situation even worse. High inflation and geopolitical uncertainties increased further with the war in the Gaza Strip, causing the demand for products in Albania to decrease sharply.

Very large production factories, despite going through a difficult period that has plunged them into debt, will continue their activity. Factories in the segment with more than 200 employees seem to be somehow coping with the crisis, hoping for improvement.

This crisis, the strongest in 15 years, has put businesses in front of difficult solutions.

Small units are closing down and moving to other sectors such as tourism, real estate activities and the food industry, while large factories are adapting by switching to high-value segments of production and cutting internal costs through increased productivity. .

The most vulnerable seem to be the employees, who have spent more than 20 years sewing shoes and find it difficult to adapt to other sectors.

Instat/ The production and processing industry sector in difficulty, 29