Malaescu, Modpack: Romania is losing its lohn auto and textiles companies

The companies working in a lohn system have started to leave Romania, and they are choosing The Republic of Moldova, Macedonia or Serbia, says Valentin Malaescu, the CEO of packaging and relocation company Modpack. He believes that under the current wage pressures, in 5-10 years Romania’s lohn industry in automotive and textiles will no longer be competitive.

”There are many signals that factories working in lohn, generally in the automotive industry, are beginning to move to Morocco, to Africa, and there are factories that work in lohn in the textile industry that choose the Republic of Moldova or Macedonia, Serbia or move certain lines of manufacturing to other countries. If it works out for them, they’ll probably move away completely. Industry develops in factories where technology, robots, smart production are used, I see investments coming, then I see that strong investments come from China, probably on a global level many foreign companies close their businesses in China, and begin to relocate towards Europe,” Valentin Malaescu stated.

Malaescu started Modpack 11 years ago, and it reached around 130 employees and the EUR 5.3 million from last year is espected to rise by 30 percent this year.

A single factory relocation project involves the work of about 50-60 people: from project evaluators, people involved in logistics, those dealing with transport to places anywhere in Romania or in ports or airports, the work of the packaging team, which assembles the pieces into boxes. Then the loading and transport, on pre-established routes, to the factory’s relocation destination. This is where the subcontractors, respectively, those who unload the products come into the picture.

Modpack runs a thousand operations a year and 90 percent of its customers are multinational companies.

Outside the headquarters in Ploiesti, the company uses a rented logistics space in Cluj which serves customers in the center of the country; among the most recent investments is 2 million euros for a logistics centre in Oradea.

”We want to cover the western area of Europe and the exit towards Europe; It’ll probably be ready in the spring of next year,” explains Maldarescu.

However, the company also has facilities in the Czech Republic (Prague), United Kingdom (Liverpool) and it is going to open an office in the United States as well. The total investments in the company and in its expansion go up to more than EUR 3 million.

Currently, the business is divided into several profit centers, with the industrial relocation generating about 30 percent of the business. They have had several large projects, for example the relocation services granted to tobacco manufacturers or the dismantling and packaging of equipment in Africa, by plane, for a local beverage producer.