Although light industry in Armenia has a large potential, today, it faces many problems for development. The major company in this field of economy is the “Garun” production unit. Gohar Yenokyan, who is a professor of the technical institute of the sewing branch and a graduate of the light industry institute in Kiev, has worked in the different fields of this economy for many years. Since October 28, 1985, she has been the director of the “Garun” production unit. We talked with Gohar Yenokyan about the problems facing the development of light industry.
In 1989, with the decision of M. Gorbachev, the government provided the “Garun” production unit 5 million dollars for rearmament. The French “Albert” brand name company completely renovated “Garun” with new equipment. However, business did not go well after the collapse of the Soviet Union. The roads for raw material import closed. During the Soviet era, the materials were brought in from Soviet countries. After the collapse, the production unit had to work with the client’s raw material and use the cheap work force. “In the end of 1992, Holland Armenian brothers came to Armenia, got acquainted with the production unit and wished to cooperate with us. The system was the following: they rented an airplane from Russia and the raw material was imported from Holland. We would sew the product in a month and then the same product was exported to Holland the month after by the same plane. Four years later, the price for Russian airplane fuel went up twice the amount. It was no longer profitable to rent Russian planes. We tried working with the Yerevan-Holland flight for one year. At the time, the plane was making flights once a week. However, we faced a problem here also. The flower importers were getting in the way: they would fill the plane with flowers and there was no room left for our raw materials. There was no raw material import for weeks. The customs tax for raw material import doubled and our Holland Armenian collaborators reduced the amount of raw material,” says G. Yenokyan.
The “Garun” production unit has been collaborating with the American “Amerex” brand name company since 1995. “Amerex” has also started to cooperate with companies from Georgia, Gyumri, Akhuryan and Yerevan (10-12 in number), however that collaboration lasted until September 11, 2001 when American economy was in a downfall. The American company has reduced the number of orders and amounts of money for sewing and this is not profitable for the “Garun” production unit. Based on that, in 2002, the latter refused to do business with “Amerex”.
“In 2003, we applied to the Ministry of Defense, went along with the times and got many orders for sewing military clothes. We still do that today,” says Mrs. Yenokyan. The production unit currently has orders from France and Russia, however, it does not have that much power. Finding clients is also a very difficult process, according to G. Yenokyan. Another thing is that foreign businessmen don’t trust the political/economic situation at hand in Armenia.
Generally, the client is the one that takes care of the expenses for the import. Mrs. Yenokyan told us about one of the problems in regard to this: “Three to four years ago, we had found a client-the English “Susan Martin” brand which ordered 50 thousand coats. However, there were problems connected with roads for export. The English stores had signed contracts and demanded that the coats be ready within 40 days and send them to the stores, but it took 29 days to transport the material from London to Armenia and then send the product back. This means that it was impossible to sew 4,000-5,000 coats in 10 days. After seeing that we could not make it in time, the brand stopped cooperating with us.”
Why doesn’t “Garun” supply the local market with clothes? The thing is that, first of all, the local market is very small and secondly, the market is flooded with foreign products (primarily Chinese, Turkish and Persian). “Today, our product is not competitive because it is much more expensive. The reason for that is that we don’t have any establishments which can produce the raw material. Since we import the raw material, transportation expenses increase. For example, in China, the work force is cheap and that is why our product is two times more expensive than the China’s. The large companies founded during the Soviet Union had the aim to export 80% of the products to Soviet countries. Currently, we can not work like that because there are just too many expenses. We only provide 1-1.5 million dram in the winter; so we pay taxes for three productions,” says G. Yenokyan. Besides that, according to G. Yenokyan, there are many people that work in the house in Armenia. Two-three member companies can supply the local market. As a matter of fact, there are primarily local products in Armenian stores and markets and their brand names are foreign. More than half of the products are produced here.
One of the reasons that Armenia does not “attract attention” is that George Bush has constituted zero customs tax on imports in five African countries, including, Vietnam. By doing that, Bush has given those countries the opportunity to “get back on their feet”. It is obvious that the U.S. businessmen “glanced” at those countries. They did the same with the Indian client of “Amerex” and “Garun”. “We asked the president of Armenia to help us in exporting our product to the U.S. by zeroing the customs tax. He rejected it. It is most likely that the U.S. forces did not allow that. Of course, that was done “politely”. We were allowed to freely export products made from natural skin and artificial leather. However, Armenia can not be involved in producing such things because there is no demand for that,” said G. Yenokyan.
In the days of the Soviet Union, the lowest paying job was the sewing branch. Today, workers receive a maximum of 35-40,000 drams. Despite the fact that the unemployment rate continues to be high in the country, however, there is a demand for workers. “They don’t reply to our announcements. The people are lazy and they don’t want to work due to the fact that they receive money from abroad. Even if we can make the clothes factory using all the strength that we have, we will still have a shortage of workers. We can invite workers from the Marzes, but then we will be spending lots of money,” says G. Yenokyan. Currently, the “Garun” production unit has approximately 170 workers.
The decline in the exchange rate of the dollar also troubles the exporter. The value of the dollar reduces and makes the income rate of the foreign products lower. The worker also suffers the consequences because his salary goes down as well and then there is an overflow of cadres.
What is the problem that light industry faces? “This field of economy is not in the center of the government’s attention. The government does not do anything for the development and there is no project foreseen for developing light industry. Each businessman is left on his own to solve his problems. Add the high taxes and the customs taxes for imported equipment and materials. After all, they can loosen the burden on the local producer’s shoulders,” said Gohar Yenokyan. Gohar does not have any outlook for large businessmen in the field of light industry as long as the problems concerning light industry have not come into the light and solved by countries.