Two prominent Turkish textile and garment companies, Naz Orme Kumas, known as "Naz", and Fame Tekstil, have declared bankruptcy. They failed to overcome a prolonged financial crisis, business daily Dunya has reported.

Rising costs, currency volatility and mounting tariff and non-tariff barriers have reportedly pushed producers into a grim situation, with the erosion of employment and an acceleration of a shift of production to Egypt, where manufacturing costs are lower.

Naz Orme, founded in 1996, was a major supplier of fabrics to global brands such as Zara, Marks & Spencer and H&M, with a monthly output of 800 tonnes. Fame Tekstil, established in 1992, specialised in ready-to-wear garments.

Both companies previously entered concordat (a local form of bankruptcy) proceedings in an attempt to restructure debts, but after failing to meet obligations within the court-granted timeframe, they were forced into liquidation.

According to data from the Economic Policy Research Foundation of Turkey (Tepav) cited by Dunya, job losses in the country’s manufacturing industry have this year surpassed 114,000 (with 350,000 jobs shed in the past three years) and registered employment in the textile sector fell by 1.3% in August. Employers argue that the minimum wage of TRY 22,204 ($521) does not correlate with export revenues calculated at fixed exchange rates, further squeezing margins.

As a result, Turkish production is increasingly relocating to Egypt, where companies benefit from significantly lower labour costs, with the local minimum wage equivalent to just TRY 6,400.

Industry representatives stress, however, that the challenges extend beyond cost pressures, pointing to diplomatic and administrative hurdles.

Hayrettin Gumuskaya, chairman of the Textile, Leather and Ready-to-Wear Sector Board at Turkey’s Independent Industrialists and Businesspersons’ Association (Musiad), was reported as noting that Turkish exporters face additional tariffs and non-tariff barriers in markets such as Algeria, making exports nearly impossible.

Meanwhile, finished garments from Egypt are rapidly penetrating the Turkish market, he said.

Gumuskaya was further reported as highlighting how quotas, lengthy customs procedures, surcharges, and bureaucratic obstacles have made trade increasingly unpredictable, while unexplained rises in logistics costs in relation to Azerbaijan have further strained producers.