Nenad Bakić Rescues Varteks: Workers No Longer Leaving, Salaries Paid on Time

Famous textile industry brand Varteks is getting a new lease of life after Nenad Bakić became the majority owner of the Varaždin clothing manufacturer last year. Bakić recently took over the position of the CEO in order to accelerate the business processes that should lead to the full recovery of the company. Workers have stopped leaving, after a long time the company is no longer closing its shops, and wages are being paid on time, reports on April 12, 2019.

“We found Varteks in a situation in which it actually only pretended to be a corporation. Varteks is a company that was in the slow decay for 10 to 15 years, accumulating a loss of 800 million kuna in the last 12 years. In such a situation, substantive and fierce management is needed. Therefore, I am working to dynamise the company and turn it towards real life, instead of monitoring processes that do not serve any practical purpose. We have put workers and designers in focus, instead of corporate bureaucracy. Paško Vela is also a member of the management board. We are working to empower the people below us. We will bring in several more people, and I hope that by the end of the year we will stabilise the company and significantly accelerate the growth so that I can return to the supervisory board,” said Bakić.

In addition to its own clothing, Varteks is also producing clothes for some of the world's most famous brands, such as Hugo Boss, but now the focus is back on its own collections. They also produce special clothing, such as police and military uniforms.

“Sewing clothes for others is not a hugely profitable job, and it can even be a loss-making one. We are implementing changes in our brand and retail programme. We are dynamising the situation, putting in the centre our designs, our project constructors and factory workers. We are launching four new stores; we have outstanding results in retail, and we are already producing orders for the fall/winter collection. The number of coats produced will be 50 per cent higher. Varteks has a fantastic quality; however, it did not know how to present the quality it has. Now, apart from improving the design of the clothes, we will continue to increase its quality,” said Bakić.

Although wages in the textile industry are low, they have managed to start paying them on time, and the next goal is to increase them. They also want to attract workers from other textile companies. “With the recapitalisation and interest-free loans which I provide to the company, for the first time after a long while workers are getting paid on time. It is true that salaries are still low, but we have just concluded a collective bargaining process where we have agreed on better incentives for workers. Our goal is to increase salaries. The aim is to make more money, to pay back our debts and invest in productivity, and higher productivity means higher wages. Higher wages are the only way to keep workers and increase their numbers. We think that some other textile firms will soon cease to exist, so we want to increase the attractiveness of jobs in order to attract the workers from these companies. Varteks used to lose 15 workers a month, but now, in the last four months, we have had just a few departures,” said Bakić.

The financial situation in Varteks is not favourable even after recapitalisation. They have no support from banks, and Bakić is financing the company with interest-free loans. "We have a strong need for working capital. However, Croatian banks have given us a grand total of zero kuna of working capital. They operate as local branches of their owners, and they do not want to take any risk because they are doing fantastic business anyway. We have a framework to receive guarantees in the amount of a million euro, but in order to get it, we had to provide a million-euro deposit. It is crazy. Financing needs are solved by me providing interest-free loans to the firm. Since my financial power is not infinite, we are struggling to survive, but we have something working for us – the retail is doing great,” said Bakić.

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