The continuous decline of Greek industry since the country entered the European Union is a sad occurrence that has resulted in a downward spiral in the Greek economy.
As decades-long standing factories and businesses shut down each year, manufacturing and entrepreneurship in Greece have come to a standstill. The economy is becoming more service-based and dependent on real estate development, mostly based on foreign investors.
Deindustrialization in Greece began in the 1980s, shortly after the country’s accession into the European Union—then European Economic Community—on January 1, 1981. It was the result of several interrelated factors that contributed to the decline of industrial production.
According to an older PricewaterhouseCoopers (PwC) report, 26,570 Greek manufacturing businesses closed in the 1980s and 1990s, leading to the loss of approximately 160,000 jobs.
Along with the deindustrialization of Greece following its accession to the European Union, the country’s largest department stores were burned down in the previous year. The fires generated suspicions and conspiracy theories, leaving important questions unanswered to this day.
At around 3 am on December 19, 1980, two explosions were heard in the Omonoia Square area, ten minutes apart from each other. The Fire Department was called in to extinguish the fires at Minion—the first department store in the country—on Patision Street and Katrantzos Spor on Stadiou Street—about 250 meters from the former fire site.
On December 22, through phone calls to newspapers, the newly formed terrorist organization “Revolutionary Organization, October 80,” an offshoot of the Revolutionary People’s Struggle (ELA), claimed responsibility for the instances of arson.
From June to July 1981, the Klaoudatos, Atene, Dragonas, and Lambropoulos department stores, all near Omonoia Square, suffered a similar fate. Hundreds of employees lost their jobs, the owners were in financial ruins, and the retail landscape in Athens changed drastically.
Later on, foreign investors filled the retail void that had been generated. That fact alone prompted the conspiracy theories that followed, the main one being that the Greek stores were burned down so that international chains would take over. This is also exactly what happened a few years later.
The 1980s, and especially the 1990s, were when a shift in the global economy took place. Global supply chains became interconnected. In the dawn of the new millennium, China entered the international market as a major manufacturer of goods at low prices, and European countries found it impossible to compete. China, India, Bangladesh, and other Asian countries emerged in the global market, providing very low labor costs for the manufacturing of European and US goods.
As a result of much higher labor costs, Greece, like many other European countries, found it impossible to manufacture electrical appliances, clothes and shoes, toys, and other goods at prices competitive to those of Asian markets. This led to a rapid decline of domestic industries.
In the early noughts, Chinese-operated shops began being established, offering massive quantities of inexpensive clothes and shoes. At the same time, new brands of electrical appliances, TVs, air conditioners, and other goods appeared in stores, all marked “Made in the PRC” and all at comparably lower prices.
In the following years, two major Greek home appliance manufacturers, namely Pitsos (March 2021) and IZOLA (April 1991) went out of business. Eskimo, also a Greek home appliance maker, merged with FG Europe in 2001 and maintained the popular brand name despite manufacturing taking place in China by Midea.
Many Greek industries—particularly the electronics, textiles, and footwear industries— relocated abroad to countries with lower production costs and taxation. By 2023, more than eighteen thousand Greek companies purportedly operated in Bulgaria, and investments from Greece amounted to nearly $3.5 billion (€3 billion), according to Bulgaria’s Economy and Industry Minister Nikola Stojanov.
Preliminary statistics of May 2022 from the Bulgarian National Bank, for instance, showed that Greece ranked third in the first quarter of that year in terms of the highest net inflows of Foreign Direct Investment (FDI) in the country, with value amounting to $133.2 million (€115.2 million). The Netherlands and Austria marked the first and second highest investments, respectively, in Bulgaria, according to the Greek daily Naftemporiki.
Several Greek companies also moved to Greece’s northern neighbor, the Republic of North Macedonia, for lower production costs. According to the Euro Business Center Skopje, in 2023, the top ten Greek companies in the country were: ΟΚΤΑ of the HELLENiQ ENERGY Group; Pivara Skopje AD, a joint venture of Coca Cola HBC and Heineken; USJE of the TITAN Group (Cement); Veropoulos, a supermarket chain; Dojran Steel of the ΙDENOR Group; EDSAD, which belongs to the Public Power Company (DEH); Protergia Energy Dooel of the Metlen Group; Mermeren Kombinat, managed by Pavlidis Marble; Seke Dooel, a tobacco factory; and Galinos Farm Doo (pharmaceuticals).
The economic crisis that began in 2009 and the ensuing bailout programs crippled Greece, nearly leading to bankruptcy. The political upheavals and public unrest of the following years contributed to the fall of Greek industries that had been thriving in past years.
Furthermore, austerity measures imposed by the EU and IMF brought the economy to its knees following cuts in government spending, subsidies, and wages in the public and private sectors. Consumer demand dropped dramatically, especially for durable goods, placing even greater pressure on Greek industry.
At the same time, people were unable to service their loans, weakening the banks with soaring red loans. Banks thus stopped handing out money, adding even greater hurdles to industries and business enterprises. An estimated four hundred thousand young Greeks with university degrees left for other parts of the world to seek jobs as austerity doubled unemployment figures.
During the economic crisis, tourism served as the lifeline for revenue. Greece’s natural beauty, cultural heritage, and fine climate had always been an attractive traveler destination. The Greek economy shifted more toward the service sector, making tourism the dominant industry. Governments hence focused on boosting tourism, relaxing construction laws and well as those on the use of Greek shores.
The vast majority of investment, mostly foreign, moved to the tourism industry. With more investment flowing into tourism, real estate, and finance, incentive to invest in industrial production became secondary, if not non-existent. This limited job opportunities in the manufacturing sector for scientists, engineers, and computer programmers.
The existing Greek industries, especially in traditional sectors, were left behind due to outdated technologies and lack of specialized personnel, and the lack of innovation and inability to modernize machinery and production procedures due to limited funds contributed to a decline in competitiveness overall.
Since most enterprises in Greece are small- and medium-sized enterprises (SMEs), many of these are unable to achieve economies of scale or compete globally. These businesses ended up being inefficient and were led to stagnation. They were consequently forced to fold their businesses.
One of the characteristics of the Greek state in relation to its citizens is the labyrinthine bureaucracy that mars even simple transactions. Complex regulations and slow processes are real hurdles for businesses and entrepreneurs, and these make it difficult for companies to modernize, expand, or establish new industrial operations.
New technologies have made some of the regulations for the Greek industry obsolete, but public agencies remain years behind in the digitization of records. It is not unusual for records to be lost or misplaced in mountains of folders and papers. These hurdles slow down processes and occasionally stall the issue of permits. The lack of streamlined processes for investment and growth impair industrial development in general.
Greece was never a major industrial player, as the modern Greek state was established after centuries of Ottoman rule, at a time when the rest of Europe had already advanced in infrastructure and production processes. Following its liberation in the 19th century, Greece faced further turmoil, including the Greco-Turkish War (1919–1922), the burning of Smyrna in 1922, and the massive population exchange that reshaped the country socially and economically.
The slow steps toward the industrialization of Greece took place beginning in the early 1950s after the end of the Greek Civil War (1946-1949). Ravaged by World War II and the Civil War, infrastructure started again from scratch. Given the situation of post-war Greece, industrial development was left behind, and the country could not compete with the European industrial giants, much less rise from poverty in the immediate post-war era.
Energy costs have also been an issue, as they have traditionally been higher in Greece in relation to other European countries, especially for energy-intensive industries such as manufacturing and metallurgy. This makes it difficult for Greek industries and medium-sized businesses to remain competitive in global markets.
Since the restoration of democracy in Greece in 1974, following the fall of the military dictatorship (1967–1974), there has been no coherent and proactive industrial policy by the State. Various governments came and went without drawing a plan for the Greek industries, and instead of establishing a solid industrial base that would boost the Greek economy, businesses and investors have placed the emphasis on short-term fiscal goals and services. There has been very limited to no investment in research, development, and upgrading of industrial sectors, for instance.
The complete lack of Foreign Direct Investment (FDI) in the Greek industry and indifference of the Greek State left domestic businesses powerless in terms of competing in the international market. Rather, foreign investment focused mostly on real estate. As a result, the Greek industry shrank to the point of nearing complete extinction and generated housing problems for the domestic market.
In March 2024, the foreign owners of the only remaining glass factory in Greece, Yioula Glassworks, shut down the furnace, blaming rising costs and declining demand. Established in 1947, Yioula Glassworks was bought in 2017 by the Portuguese BA Glass group. It was the only operating glassworks industry in Greece. The permanent staff of the Greek industrial unit amounted to 140 people, and there were 60 to 85 contractors and others involved in transport and supplies. All lost their jobs.
Moreover, in October 2023, Crown Hellas Can Packaging shut down its two manufacturing plants in Corinth and Patras, both of which employed a total of 160 workers. They exported aluminum cans in the last two years prior to shutting down. The low return and high fixed costs, as well as the high metal purchase and energy consumption costs in combination with low domestic demand for the unique size of containers the factories manufactured led to the ceasing of production.
On March 31, 2021, the historic Pitsos factory, one of the largest Greek industry units, ceased operations as well. It began operating in 1865 and was active in the manufacturing of small household appliances. By 1959, it produced refrigerators and had become a household name. Around 1,200 people were employed by Pitsos in 2007, manufacturing over 400,000 appliances annually.
Nonetheless, the factory in Greece permanently shut down in 2021, with production being relocated to Turkey, and while the company only retains trading activity, the Pitsos brand name is still used on products manufactured outside of Greece. In October 2020, the Schneider Electric factory, a transformer manufacturing plant located in Oinofyta in central Greece, was forced to close after 45 years due to competition from countries such as Turkey, China, and India, leaving 92 workers unemployed.
The dairy factory of DELTA in Imathia in Central Macedonia, the main facility producing evaporated milk, was forced to shut down after 45 years in June 2019 as well. The closure was a great blow to the local economy, while regional authorities proved ineffective in saving the factory and the jobs of 76 employees. In 2020, Delta was acquired as part of Vivartia by CVC Capital Partners, a Jersey-based private equity and investment advisory firm with approximately €186 billion of assets under management and approximately €157 billion in secured commitments since inception across American, European, and Asian private equity, secondaries, credit funds and infrastructure.
Around the same time, Frigoglass, which specialized in the production of refrigeration chambers and spare parts, halted operations of the Kato Achaia factory, laying off around 90 employees. The company is still in negotiations to sell its activities in Europe to Provisiona Iberia and Serlusa Refrigerantes.
The name Peiraiki-Patraiki in Greece was synonymous with towels, linen, and blankets. The emblematic textile company was established in 1919. In 1940, it provided the fabric for the uniforms and blankets to the Greek Army to fight the Italians and, later on, the Germans. In 1950, Peiraiki-Patraiki established the first post-war factory in Greece at Megalo Pefko west of Athens and built a state-of-the-art factory in Patras to compete with imported textile goods in 1953. At its peak, it employed 4,000 people.
However, in the 1970s, the company began facing problems. The oil crisis resulted in serious financial problems, and continuous strikes by the factory staff then hurdled production. The socialist government, PASOK, which ruled Greece since the early 1980s nationalized the company and appointed new management. In 1989, the center-right New Democracy that rose to power privatized the company, leading to a clash with company factory staff who went on strike. The textile company halted production in 1993 and folded the business altogether in 1996.
The Keranis tobacco company, founded in 1926 by then 23-year-old Georgios A. Keranis, who played a catalytic role in the development of the Greek tobacco industry, had launched some of the most popular Greek cigarette brands, including Ethnos Extra and Pallas. At its peak, Keranis employed 2,500 workers. By the 1960s, along with Papastratos, they had become the market leaders.
Keranis, however, turned to cigarette production for international brands such as Kent and Pall Mall, as its own brands took the back seat. In 1998, the Keranis family proceeded to selling the entire tobacco manufacturing facility, which had entered a period of decline due to bad investment moves. This eventually resulted in the company’s closure in 2007.
Then there was also Halyvourgiki Hellenic Steel Industry S.A., established in 1925, it moved to steel production in 1938. Following World War II, the company moved production into a new factory in Elefsina. The construction boom of the 1960s was the golden age for the Greek steel industry due to a huge increase in demand for steel.
Halyvourgiki likewise faced serious financial problems during the economic crisis of the late 1980s and early 1990s but managed to survive following a modernization program. The economic crisis of the early 2010s, however, finally drove the company to the ground, as construction halted and there was no demand for steel. By 2018, Halyvourgiki was deep in debt and saw no way out but to shut down.
The closure of manufacturing plants and industry business was not limited to Greek companies, however. Multinational firms also took a hit.
In April 2023, for instance, the Tupperware factory in Thebes closed after 56 years of business. The emblematic US company products became a household name in Greek homes in the 1960s and 1970s, and Tupperware had a staff of 160 permanent employees.
Furthermore, in October 2016, PepsiCo-HBH announced the closure of its Oinofyta, Boeotia, factory. The company decided to make changes to its soft drink supply chain in Greece and announced a voluntary redundancy program for its employees. According to reports, PepsiCo-HBH decided to halt production of soft drinks, as it had begun experiencing a net loss in recent years. The company’s soft drinks are now imported from other European countries.
In the 1990s, two major tire manufacturing facilities in Greece were likewise forced to shut their doors. In 1991, the Pirelli manufacturing facility in Patras was marred by long days of continuous strikes leading to a complete breakdown in management-employee relations. This resulted in the loss of jobs for 500 people. It was said that all it took was a telephone call between Leopoldo Pirelli from the Milan headquarters and the Patras factory management. The decision to relocate to Turkey was almost instantaneous and made overnight.
Ιn 1996, another tire factory, Goodyear in Thessaloniki, faced a similar fate to that of the Pirelli facility on the Peloponnese. In the particular case, however, Goodyear received plenty of government contracts for public vehicles, being that it was the only tire factory left operating in the country. The decision to shut down Goodyear operations in Greece was made in the United States. Company officials determined it would be fiscally beneficial to relocate manufacturing to Poland and Turkey due to lower labor costs there.
Following the gradual collapse of its industrial base, Greece became a nation of services—with tourism emerging as its dominant economic engine. Tourism accounts for over a quarter of Greece’s economic output, and nearly two million Greeks’ annual income derives from the sector.
The country set a new record in tourism revenues for 2024, collecting 21.7 billion euros ($22.6 billion), up from 20.6 billion euros ($21.5 billion) in 2023, according to data released by the Bank of Greece on Thursday, February 20.
The increase by 5.3 percent, or 1.1 billion euros ($1.15 billion) compared to last year, had been long expected by both Greek government officials and tourism businesses given the steady rise in tourist arrivals throughout 2024. In 2019, the last year before global travel was interrupted due to COVID, Greece recorded revenues of 18.2 billion euros ($19.17 billion) and 31.3 million tourist arrivals.
Despite record revenues, retaining the current tourism model is not sustainable, according to the country’s ombudsman. Greece must reform if it is to protect its tourism sector for the future.
