Gaziantep bucks the trend as Turkish industry crumbles

By bne IntelliNews March 23, 2009

Nicholas Birch in Antep, southern Turkey -

In many ways, it's been a grim month for Turkey's economy. On March 9, the statistical agency announced industrial production this January was 21.3% lower than a year before; a week later it said unemployment had hit an all-time high of 13.6%. In Bursa, the heart of Turkey's car industry, 14,000 people have lost their jobs so far this year.

The figures make a mockery of Prime Minister Tayyip Erdogan's comment last October that the world economic crisis would "pass us by." His government's estimate of 4% GDP growth in 2009 looks even more pie in the sky now than it did when it was announced six months ago.

Or maybe it's simply that Erdogan and his economy team have been spending too much time in Gaziantep, a southeastern Turkish boom-town soldiering on as if the word crisis wasn't a part of its vocabulary. "Turkish exports as a whole dropped 35% in the first two months of 2009," says Nejat Kocer, Chamber of Industry head in what is Turkey's sixth largest exporting city. "Exports for the southeast - of which 85% are from Gaziantep - rose 5%."

Admittedly, Gaziantep's exports rose more than 75% between 2006 and 2008. But as far as trend-bucking goes, the city's performance so far this year is pretty decent.

Well oiled

CEO of a small carpet factory in the first of Gaziantep's four industrial zones, Taner Hasirci sums up his company's resilience in the face of the global meltdown in two words: "oil prices."

"I had three bank managers visiting me this week offering me credit," he says. "I was touched by their attention, but I didn't need their money - with oil prices down, the production costs of the synthetic carpets we make are a shadow of what they were a year ago."

Hasirci is small fry compared to local synthetic carpet giants like Naksan and Merinos. Like him, though, they are benefiting from the decision - triggered a decade ago by increasing competition from Egypt and Uzbekistan - to move out of raw textile production. On March 10, Naksan subsidiary Royal Carpets announced it had started selling its new "certified antibacterial carpets" throughout the Middle East.

Up the road from Hasirci in Besler, Makarna, a pasta-maker that also runs Turkey's biggest flourmill, commodity prices have gone in the opposite direction. "Our selling point in the past was that we could produce pasta 20% more cheaply than the Italians," says board member Cengiz Helvacikara. "Drought has made local wheat more expensive than European-produced wheat." Besler has so far managed to take the loss of competitiveness in its stride, in part, Helvacikara says, because "basic foodstuffs are the last thing people stop buying in a crisis." But there is a much more important reason for the company's ongoing robustness: its and Gaziantep's strategic location on Turkey's southern flank.

Figures from the local Chamber of Commerce could not be clearer. While Gaziantep's exports to Italy and Russia in the first two months of this year were 31% and 51% down on a year earlier, exports to Iraq and Syria rose by 93% and 106% respectively. "The figures are like an x-ray of the effects of the global crisis," says Figen Celikturk, the Chamber's deputy director. "If the West collapses, Gaziantep's good fortune is to be in a position to be able to export eastwards too."

The descendants of wealthy merchants who built the grand 18th century residences in Gaziantep's historical centre, today's businessmen are too canny to think their good fortune will continue indefinitely, particularly given that nearly 80% of Gaziantep's exports now go to Iraq. "Will the crisis affect Gaziantep?" asks Nejat Kocer, the Chamber of Industry head. "Of course it will. Because nobody knows how far this will go. There is no sign yet of light at the end of the tunnel."

On a visit in March to the Chamber of Industry, Turkish Finance Minister Mehmet Simsek - an MP for Gaziantep - was given a tough time by a room full of local businessmen highly critical of the government's packages aimed at boosting flagging local demand. Many, including Kocer, said the government and central bank should discard anti-inflationary measures in favour of boosting industrial output.

Everybody present was critical of a regional incentives law passed by the ruling AKP in 2003 that ignored Gaziantep in favour of less-well-off surrounding regions. Simsek agreed the current incentive system was "not rational" and announced that his government was working on a new law based on sectoral incentives. "In Gaziantep," he said, "we might for example offer incentives to the high-tech textile industry."

Like so many economic measures planned by the government, including a new standby agreement with the International Monetary Fund, the new law appears to be on the backburner until local elections on March 29. When it is passed, it won't be a moment too soon. For all its resilience, Gaziantep is showing signs of slowing down. Electricity and natural gas consumption on Gaziantep's industrial estates in the first two months of this year was 4% and 25% lower than last year.

And while the carpet factory owner Taner Hasirci still has bankers knocking on his door, many smaller Gaziantep companies are feeling the pinch as Turkish banks react to the ris in non-performing small-business loans to 5.4% from 1.4% in December 2007 by pulling back their money.

As has always been the case in recent years in Turkey, the worst affected by the downturn are the small textile firms. According to Yilmaz Kocaoglu, chairman of Turkey's Association of Textile Workers and Tailors, 8,000 small workshops in Gaziantep have closed down over the past year.


Send comments to The Editor


Gaziantep bucks the trend as Turkish industry crumbles

Related Articles

Turkey approaches day of reckoning on economic reform

Kivanc Dundar in Istanbul -   The unexpected success of President Recep Tayyip Erdogan’s Justice and Development Party (AKP) in this month’s general election should bring much-desired political ... more

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Turkey and America seen on course for confrontation in Syria war

John Davison of Exaro - Military action by Turkey against Kurdish rebel forces in Syria raises the prospect of a direct clash with the ... more

Dismiss