Interesting analysis Noreen and it reads as if we can anticipate PS propsects in the very near future.
I can see there are good signs for this area but there are a number of areas which give me cause for concern for which I woud be interested in hearing a PS response.
Firstly, the prospects for jobs seems to be minimal and very narrow (sofa manufacturer and mining) and not industries which will generate significant wealth.
Secondy, there is no mention of the city's policy on attracting investment - I think it is key having a progressive open city that encourages the right sort of companies to invest with, for example, tax breaks.

Personally, I am very interested in getting into an area before it has been 'spotted' but the potential has to be long term not just a two year flash in the plan.

I don't claim to know this area but taking your article at face value, there seem to be some risks would need considering.

I would be interested in knowing other's thoughts.

Hi Alex

I've just returned from 4 days in a ski resort called Borsa west of Baia Mare but in Maramures. We drove back to Cluj by going further east through the mountains to Viatra Dornei and through Bisrita.

A lot of young people from this region were part of the exodus to Italy...hence as many Italian registered cars were on the 'roads' as Maramures ones. Sure those who have made Euros have built nice houses but check out if they are connected to gas and elecrtricity. I dont see too many of these young people coming back until retirement...the potential of the region is in tourism.

I went with two of my children who had aa wonderful time skiing. Ski hire was cheap and affordable. The ski run was over two miles long but no junior or intermediate slope for beginners or the less confident.

The Romanian government recently announced a 'competition' to select six regions where it would provide assistance in promoting tourism. At the moment the roads remain awful and the quality of service took me back to John Cleese (except there was no pretence at hotel management) and Fawlty Towers. Half of what was on the menu wasnt available and there was no traditional Christmas dinner. The level of English was down to one member fo staff. The staff did their best to close the place down by 8.30 on Christmas Eve and when they couldnt they got drunk on Jack Daniels compliments of the bar. This took me back to the Romania I encountered when first coming to this country eight years ago.

One lesson I have learnt about this country is that nothing is certain until it happens. Baia Mare may have potential but that's as far as it goes at the moment. Roads may be planned but have not been prioritised - there's enough doubt about budget etc of the Brasov - Cluj section of the Transilvania Highway.

As far as employment is concerned the word on the ground is that those from Maramures who are not in Italy are coming here to Cluj in search of relatively well paid jobs and a better lifestyle. And as for Ukranians....I predicted earlier this year that Romania would seek to recruit Romanian speaking Ukranians to address labour shortages and that prediction has come true with the government announcing a weekm or so ago that together with Trade Unions and employers representatives it would send teams to the Ukraine (and Turkey if I recall) to address this issue in a structured way and also look at the possibility of recruiting from India and China.

But is this the answer? Officially Romanian unemployment is 4.2% but this masks the reality. For every two unemployed persons (including children and pensioners) there is one employed person. The official figure is derived from those who REGISTER as unemployed and hides the large number of people in rural areas who survive on a subsistence economy (see http: / /www .nineoclock .ro /archive _index .php?page=detalii &categorie=frontpage &id=20071219 -501075 ). Couple this with the Romanian problem of the low levels of productivity of those who are gainfully employed and you have to ask whether this country really needs to import labour. Greater emphasis should be placed on encouraging movement from rural areas to the cities; encouraging those who are abroad to come back with incentives to start small businesses; addressing youth unemployment and encouraging those who retired early often as a consequence of the closure of state enterprises to come out of retirement and learn skills relevant to today's labour market.

Baia Mare.... give the airport an upgrade and invest strategically...a gateway to Maramures tourism at best but not for at least five years.

Seasonal best,

Charles Bell

Alex,

Many thanks for your comments. Baia Mare is a city that we have just started to monitor so expect more information and analysis on this city and region. So far we are impressed with what we have uncovered.

Charles,
Thank you for your insight into the area from your recent skiing trip to Maramures. Your experience of the area sounds very much like mine! The level of service does leave a lot to be desired and amenities and facilities are not of western standards however there are infrastructural plans in place that will open up the city to the rest of the country and to the EU. True, a date when this project will commence has not been confirmed however this section near Baia Mare is part of a route traversing Europe and important enough to merit construction in the very near future.
You have seen how Cluj has developed over the past 8 years and we believe this will be similar to the pattern of development we will see in Baia Mare. Perhaps 8 years ago it would have been difficult to envisage the pace of growth we have seen in Cluj?

Noreen

Hi Noreen

Well...actually...about 8 years ago I was speaking a a Press Conference here in Cluj and said some warm and friendly words about how every time I came to Cluj I noticed CHANGE... a city centre building having a lick of paint; a new bank opening up; a new bar or club. So Cluj was beginning to happen back in those days but did not have the political will to invest in its future. That changed with change of Mayor in 2004 (?).

The key message from this country is that NOTHING IS CERTAIN UNTIL IT HAPPENS. Cluj is happening: I can and have shown you new roads and the Highway; the mole hills which are the trenches for utilities at Jucu; the re-painting of buildings in the city centre. That's real - not Romanian speculative!

I try to keep an eye on the Romanian business/investment media - the flow of FDI into the country: where and when? A commitment from a multi-national can transform a city such as Baia Mare but as yet I have seen nothing.

I've just driven back from Timisoara via Arad and Oradea....all cities to the west. Some say Timisoara has been done or growth has stopped but what I noticed was that in the centre there were vacant plots of land just waiting for someone to put apt. blocks on (I asked myself why havnt they and the answer was because investment in Timisoara has come to a halt). Arad has a ring road with the beginning of industrial/retail parks sprouting up. Oradea - the eventual end of the Transilvanian Highway - has an AWFUL ring road but with scattered retail development and new blocks. It's needle in the hay stack stuff but you might want to keep an eye on Craiova and the imminent European Commission decision on the proposed Ford investment.

As I am sure you have picked up I have certain caveats about the Romanian economy and belive that certain cities will continue to thrive whilst others will all but die.

This Christmas the government was SPECULATIVELY 'banking' on expatriate Romanians bringing back and spending many millions of hard earned Euros. Apparently it just didnt happen (source: discussion with friends and others last night). Why? Because it's cheaper to buy just about anything in Spain, Italy or Hungary than it is here. One of my friends - back from the UK where she is on a salary of £35000 p.a. - when we were talking about the Malls, observed that 'There are lots of people but nobody is buying apart from food which is bloody expensive'. When you have high prices you have high hikes in salaries (a Government Minister recently predicted 20% for next year). What does that do to the potential for forming a middle class to underpin the property market? All I ask is what does Baia Mare have that puts it up with Bucharest and Cluj?

Kind regards

Charles

Hi Noreen again,

In your initial article you suggest that Italsofa employs around 3500 people. Can you confirm your source?

I've pasted below what I have found from the www.nineoclock.ro site and the figures dont add up.

Charles

Class Mob opens first Natuzzi furniture outlet in Bucharest

EUR 600,000 investment for now, Constanta and Cluj to follow.
published in issue 4048 page 7 at 2007-10-25

BUCHAREST – Luxury furniture distributor Class Mob owned by Camelia Sucu on Wednesday opened the first Natuzzi-branded store in Romania with an investment of EUR 600,000.

‘We hope the investment in the first Natuzzi showroom will be returned in nearly three years and we count in at least 30 per cent rise in selling products under this brand name compared to 2007. Premium furniture market records evident growth every year and that is why we trust that the Natuzzi brand will contribute 25 per cent of the total Class turnover in 2008,’ stated Camelia Sucu (photo L). She further added that ‘the Natuzzi products are imported from Italy and that it had been the best selling brand of the 27 sold by Class, so far.

Class intends to open two other Natuzzi stores, smaller in size, in Constanta and in Cluj Napoca, next year, with the total estimated investment being EUR 600,000.

Italian group Natuzzi is one of the major global players on the leather-padded furniture, on an estimated share of 6 per cent. Apart from the Natuzzi brand that is meant for the higher-end customers, the Italian group also owns the Italsofa brand addressed to young people in general. Natuzzi runs a factory in Baia Mare where it manufactures Italsofa upholstered furniture sold in Europe. The company has so far invested EUR 46 M in Baia Mare where it has about 1,450 employees. ‘We have just expanded our factory in Baia Mare that currently has 76,000 sq m and we also want to optimize production in the next two years’ stated the President of the Italian Group, Pasquale Natuzzi (photo R). The Italian company may hire another 1,000 workers for its facility in Baia Mare. Natuzzi officials say that Italsofa furniture sales in Romania may go up to EUR 900,000 this year – bulk price, while the retail priced value of the goods sold may reach EUR 1.7 – 1.8 M. The Natuzzi show-room is located in Unirii Boulevard downtown Bucharest, it has an area of 1,200 sq m on two floors and it shows 350 different products: sofas, armchairs, extensible sofa beds with prices starting from EUR 2,000, as well as an impressive selection of upholstery fabrics and leather.

Below is a widely circulated Press release about proposed investment in Transilvania and some where south of Bucharest.

Charles Bell


Fortune plans 2 major projects in Romania
Dubai: Wed, 26 Dec 2007



In a trend-setting initiative, the UAE-based Fortune Group has unveiled two multi-billion euro real estate developments in Romania.

The commercial launch of the two projects is expected to take place early next year.

Fortune Group, which has investments valued at over Dh7 billion in exclusive commercial and residential projects in Dubai, will develop the two projects jointly with Sadek Architects SRL, which has vast experience in Romania.

The first project will be a waterfront residential and commercial development located in southern Romania, spread over 6 million sq ft, comprising apartments, a five-star hotel and high-end wellness components. The second project in the north will be an exclusively residential development set amidst golf courses and ski slopes with the Transylvanian mountain range as a backdrop. Significantly, both the projects are located in popular tourist spots in Romania.

Its combined size and cost make the projects the largest commercial venture by a UAE developer in Romania and one of the largest globally, the company said.

Commenting on the project, Syed Mohammad Ali, CEO, Fortune Group, said: “Both our projects will be targeted towards the expatriate community. Many British, French and Italian property buyers have evinced interest in our project, but we are keen on attracting GCC nationals as well. Though Romania remains a rather untapped market, many GCC nationals, including Emiratis, have been buying property in Europe. Romania with its eclectic mix of natural beauty, rich history and a diverse social fabric that reflects the various cultural influences, including the strong Eastern flavour, makes it an ideal choice for investors and buyers across the GCC.

“We were determined to enter the European real estate market with a massive project because for a developer the learning curve is independent of the project’s size. We prefer establishing a strong presence through mega projects in one country rather than announcing insignificant developments all around the world. The decision to invest in Romania was taken after a two-year study of the market conditions in the country,” added Ali.

Investments by Middle East investors into the European real estate sector touched four billion euros (Dh22 billion) in the middle of 2007 and it is estimated to reach 10 billion euros (Dh55 billion) in 2009-10. Romania’s property market is buoyant and property prices have been rising at an average rate of 25 per cent since 2003. Romanian property is also attracting a large number of overseas investors, he said.

Khalid Sadek, CEO and managing director, Sadek Architects SRL, said: “We are delighted to partner with a reputed developer like Fortune Group in its Romanian projects. We are confident that our experience in the local market combined with Fortune Group’s reputation built up in Dubai’s freehold market will inspire trust among investors and home buyers to buy property developed by the new company.” -TradeArabia News Service

Hi Charles,

Many thanks for the interesting post - as always is it great to get the local news. Some very interesting reports on FDI into Transylvania which we will most definitely be looking into further this week.

Regarding your query on the number of employees working at the Italian sofa company. This was data I received from our local partner in the country.

I will retrieve the source of that data for you and send it on.

Regards and thanks

Noreen