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Turkey loses low-wage luster, but gains confidence

Turkey is turning into a plastics processing powerhouse straddling Europe and Asia. At least that was the feeling at this year''s Plast Eurasia Istanbul 2004 last month in Turkey.

Things seem to be pointing in a positive direction after several years of crisis. SelVuk Aksoy, president of PAGEV, the Turkish plastics industry association, says that despite the Iraq war, Turkey''s plastics industry grew by 10% in 2003, and in 2005 expected growth is between 12% and 16%-well above the country''s inflation rate, which has dropped below 10% for the first time in a long time. "If Turkey continues at the same pace, it will easily become the third-largest plastics processor in Europe and Eurasia by 2010," Aksoy says.

Direct exports of finished and semi-finished plastic goods from Turkey have reached $1 billion/yr, mainly in pipes, packaging, plastic furniture, footwear, OEM parts, table- and kitchenware, and textiles. The appliance and automotive sectors registered double-digit growth in exports; when indirect exports in the form of packaging and OEM components are included, the amount jumps to $3 billion/yr, Aksoy says. Turgut Yutman, general manager of PET perform processor Reis (Istanbul), agrees 2004 was an excellent year for everyone in the Turkish plastics industry.

Despite these good figures, all is not rosy. Cenk Heris, assistant general manager of additives supplier Akdeniz Kimya San. Ve Tic (Izmir), says Turkey has lost its luster as a low-wage country for Western European investors. "Turkish labor is now more costly than Eastern European, which has a positive effect that processors here are forced to invest in higher automation to stay competitive," he says.

Another factor hitting processors and equipment makers is the low value of the U.S. dollar. "Turkey is basically a polymer importing country, which means buying resin from Europe in euros, but exporting finished product to regions that are dollar-oriented, such as the Middle East and Russia," says Alp Ozdenler, general manager of polymer market intelligence firm ChemOrbis (Istanbul). "It''s putting a squeeze on processors."

Ilker Alp, assistant general manager at Iz Baski, one of five processors and polymer distributors in a group concentrating on tubes, blowmolded bottles, and injection molded caps and closures, says, "we''re having difficulty obtaining the amount of resin we need at reasonable prices and, more importantly, are having problems passing on these increases to our customers." The companies do 30% of their business in export markets, mainly neighboring countries such as Russia, Iran, Bulgaria, Greece, and Lebanon.

Exports have helped injection molding supplier Permak Makina, says general manager Ahmet Amasya, since he says his equipment is now made to European quality standards, yet sells at Chinese prices.

Mehmet SaraV, general manager of SaraVPlastic Processing Machinery (Sultanbeyli-Istanbul) and head of moldmaker Trendy Molds, also can''t complain. "We''re full up for the next six months [in the moldmaking division] and aren''t taking any new orders. Business is running 25% better than in 2003," he says. However, despite high sales volume to Latin America last year, profits are down because sales are made in dollars.

Despite heated arguments in Western Europe regarding Turkey''s potential admission to the EU, Turkish insiders at Plast Eurasia were surprisingly sanguine.

Huseyin Ozturk, co-general manager of compounding equipment maker Domeks Makine (Istanbul), points out that the country already enjoys tariff freedom with the EU. "If it comes, what it will bring is a boost to Turkish morale. It should stabilize the market and increase foreign investment in a country that may be considered too risky."

Permak Makina''s Amasya sees more concrete benefits; he points out the industry would be compelled to conform to EU norms, thereby raising the quality of goods. Regardless, it appears that Turkish processors and suppliers are poised to continue their climb up the plastics charts.

Robert Colvin [email protected]

Contact information

Akdeniz Kimya San ve Tic   www.akdenizkimya.com.tr
ChemOrbis   www.chemorbis.com
Domeks Makine   www.domeksmakine.com
Iz Baski Sanayi ve Ticaret   www.izbaski.com
PAGEV   www.pagev.org.tr
Permak Makina   www.permakmakina.com
Plast Eurasia Istanbul   www.tuyap.com.tr
Reis   www.reiscnc.com
Trendy Molds   www.trendymolds.com
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