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The crisis swept the small companies

18 June 2010 / 14:06:14  GRReporter
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“Small and medium enterprises in northern Greece close one after another,” says for GRReporter Kostas Stavrou – one of the many Greek entrepreneurs from Thessaloniki, who are facing bankruptcy. His story is indicative of the effect of economic crisis on the real business in the country. Kostas has enjoyed a successful small business in Thessaloniki with nine employees three years ago. The main activity of his business over the past 10 years has been the manufacture and wholesale of textile products or, in other words, clothing.

Together with his wife Kostas manages its business and successfully distributes its products from Ceres to Patras and Crete. “Things were going well,” he says and continues: “In 2007 we opened a branch office with a showroom in Athens near the ring road to facilitate our customers from south Greece and the islands. We participated in different fairs and thus we found new customers.” He acknowledged that the volume of work at that time was very large and the prospects for the near future were very good.  

The first blow to production came in early 2009, when Greece began to feel the impact of the economic downturn in the U.S. by the autumn of last year. “At that time I thought this situation would be temporary, but I started to be more careful in spending,” he says. The real problem, however, came in the summer of that year, when orders began to decline, and some of his customers started to pay with checks without cover or checks, which could be cashed after six to eight months. The lack of liquidity and reduced volume of orders forced him to release three people from the production facility. Kostas has specialised in the tailoring  industry for years and started to make the clothing patterns by himself.

The financial problems, however, pressed the small enterprise and Kostas was forced to leave the building, which houses the wholesale exhibition in Thessaloniki, and to transfer in his native village in the outskirts of the northern city where the production itself is located. “The things went wrong,” he says. The owner of the store in Thessaloniki even offered him to keep the representation without paying rent until things go well. But even so the costs of the business remained very high – even without a rent, Kostas was not able to cover the salary and insurance payments of the employee in the store or the operating costs for electricity, water, telephone, internet and more.

"I lost many of my retail customers. Small family shops that made orders each season started to delay payments or did not pay their bills at all, because people were suddenly startled by the noise with the crisis and the bankruptcy of Greece and stopped buying,” explains Kostas. Turnover of retail shops falls quickly and sharply down, which significantly reduces the orders to the manufacturer for the next season. “At one moment from a producer I turned to be a collector – I went to customers and begged them to pay the goods which they have taken. This is not a business,” says Kostas. He says that he sought assistance from the European Funding Programs for support of small and medium enterprises in Greece, but no one granted money. The entrepreneur claims that the government has no targeted policy to sustain the economic growth of the country. Many small businesses are not able to survive so producers and textile mills begin to dismiss people or directly declare bankruptcy.” “Shops and small productions in northern Greece are dying like flies today,” says Kostas bitterly. The funds for support of small businesses in Greece proudly promoted by the Ministry of Economy and Development are just empty words, according to the businessman. “The programs are only on paper. In fact no money is granted,” he says.

The summer of the year 2010 finds Costa on the island of Crete at his cousin’s. He has an office for making signs and advertising panels and offers vacation rooms for rent. The activity of the enterprise for the production of textiles has been suspended. The only thing that remains is to prepare the documentary liquidation. The sad truth about Kostas and many other victims of the economic crisis in Greece is that middle-aged people still have to start all over again after years of working. And if Kostas has his family to support him, many other Greeks in his situation are not so lucky.

Tags: EconomyMarketsEconomic crisis
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