THE TEXTILE AND CLOTHING INDUSTRY

DLEK YURDAKUL 2002431041 BRAHM BAYKUL 2002431005

INTRODUCTION
Turkeys Textile and Clothing industry is regarded as a locomotive industry The textile and clothing industry is developing day by day and increasing its exports by the availability of raw materials, relatively low labor costs, closeness to Europe, the custom Union agreement with the European Union. It has some challenges due to rising labor costs, inefficiencies problems, other low costs suppliers

History of Textile Industry

In the Ottoman Empire period, the development was based on cotton production. Between 1923-1930 economy can be considered as liberal. Textile was one of the protected sectors of the new republic Between 1933-1945 the period was called etatism. The first supported sector was textile in this period. Smerbank established to support this sector

History of Textile Industry

Untill 1950s the government was the major player through Smerbank, after that the role of private sector increased The first phase of development was textile oriented exports period at the beginning of 1980s The second phase was clothing oriented exports period at the second half of 1980s

History of Textile Industry

In 2000, a high inflation rate had a negative influence on this sectors export performance In 2001, the clothing subsector faced a reduced competitive position by high labor and energy costs, problems with the raw materials supplies
Today, textile and clothing industry is an outward oriented industry.

FIRMS IN THE INDUSTRY

Transition from state-owned enterprises to private owned enterprises 40.000 medium-sized businesses are currently in operation Most of the companies are family owned and managed The lack of educated young people

COST STRUCTURE
Turkey is losing its cheap labor cost advantage in the recent years
Comparison of the Labor costs ($/hour) in the Textile Industry

Comparison of Industrial Electricity Prices ($/kwh)

COST STRUCTURE
Governmental support through discounting electricity prices in East and South East Anatolia Review of cost structure: 55-65% Raw material cost 5-20% Labor cost 5-10% Energy cost

PRODUCTION AND CAPACITY UTILIZATION

One of the largest producers of cotton in the world Textile and clothing industry is based on cotton. Also a major producer in all types of yarn, fabric, clothing, household textiles and other ready-made products Production volume in the clothing industry increases in parallel to the increase in foreign demand

PRODUCTION AND CAPACITY UTILIZATION

Among the top ten global producers of wool cloth, carpets, synthetic filament and fibre and polyester Capacity improvements from 1970s Overall capacity utilization ratio (CUR) is 80%.

BARRIERS
WTO member since 1995 In Customs Union with the EU since 1996 Free trade agreements with the partners of the EU, such as the EFTA countries Agreements of the EU with competitors of Turkey USA and Canadas quotas on textiles and clothing from Turkey

CONCENTRATION
Clusters: Aegean(Izmir and Denizli) Mediterranean( Adana) South East(Kahramanmara and Gaziantep) Central Anatolia(Kayseri) Marmara region (with stanbul, Bursa and Tekirda) is the most significant one. Istanbul is the most important contributer in terms of the number of establishments and total employment.

CONCENTRATION
Tekirda(orlu) is one of the newest textile clusters Specialization: Bursa and Denizli in weaving and home textiles Gaziantep and Adana in cotton textiles Kahramanmara in yarns and clothing

Export
Textile and clothing industry exports increased during the last twenty years from 595 million dollars in 1979 to 12.5 billion dollars in 2002

Export
Geographical closness, duty free access to the EU, relatively low wage levels, high quality of goods are main causes of the increases in the exports.

Export
Main Five Markets of the Turkish Clothing Industry (2003-10 Months- 1000 US$ ) 1-Germany 2-UK 3-U.S.A. 4-France 5-Netherlands 2.817,942 1,353,996 1,314799 705,791 544,000 Main Five Markets of the Turkish Textile Industry (2001 Annual 1000 US$) 1- Italy 2- Germany 3- USA. 4- UK 5- Romania 341,077 234,845 170,086 161,792 160,382

Import
Turkey is highly dependent on machinery and equipment imports. They are mainly from Italy and Germany. Turkey also imports raw materials, semi-finished and finished goods mainly from Italy, Germany, US, South Korea and China. The share of the textile and clothing industrys imports in the total imports were 5.5% and 6.7% respectively in 2002.

Import

Import
Main Five Suppliers of the Turkish Clothing Industry (2003-10 months- 1000 US$) Main Five Suppliers of the Turkish Textiles Industry (2001-10 Months- 1000 US$)

1-Italy 2-China 3-Spain 4-U.K. 5- Germany

61,543 47.385 35244 26.991 22,319

1-Italy 2-USA 3-Germany 4-China 5-S. Korea

430,856 418,840 301,073 278,803 225,486

The Sectors Share In The Economy

The sector has great importance in terms of economic development with share of GNP above 10% Industrial production around 40% Manufacturing labor force around 30% Exports around 35%

General and Foreign Investment

The huge investments made to renovate machinery The R&D investments are very low The Turkish textile and clothing industry make heavy investments in almost all the subsectors Turkey has foreign partnership, joint ventures, licensing and technology agreement with the global competitors

Government Incentives
Incentives are available for projects which reduced inequality among regions, spead capital ownership, create employment, make use of advance technology and increase competitiveness.
Incentives are mainly in the form of investment allowance, exemption from various taxes and credits from newly-created Investment Fund.

PRODUCT DIVERSIFICATION
Tree most important textiles products (yarns) by production value in 2002

Product category

unit

Number of Establishments 64

Production Quantity 307180

Production value, mn TL 979127281

Cotton yarn of uncombed fibres n.p.r.s. for other weaving Cotton yarn of combed fibres n.p.r.s. for other weaving Multiple or cabled yarn of nylon or other polyamides n.p.r.s.

Tons

Tons

34

117615

444657366

Tons

10

99383

398229003

Tree most important textiles products (fabrics) by production value in 2002

Product category

unit

Number of Establishm ents

9

Production Quantity
169632133

Production value, mn TL
862305856

Cotton fabrics denim > 200 g/m2 Cotton fabrics,weighi ng<200 g/m2,excl. net curtain,colure d(Raw linen,coarse white calico) Woven fabrics of synthetic fibres mixed with cotton, polyester and viscon

Meter

Meter

31

328446033

609353376

Meter

19

107537483

399830983

Tree most important clothing products by production quantity in 2002

Product Category

unit

Number of Establishments

Production Quantity

Production value, mn TL
1,265,324, 557

T-shirts knitted or crocheted of cotton Men's or boys' trousers breeches etc. of denim Women's or girls' briefs panties boxers

No

124

219,328,489

No

16

30,419,831

516,246,4 74

No

18

28,052,166

56,318,66 6

Research and Development

Turkish textile industry has been transformed from labor-intensive to capital-intensive industry. This transformation is based on the imported or imitated technology. The awareness of the importance of R&D to catch up with the competitors increases.

Research and Development

Some topics in the R&D activities are: Textile raw materials Fashion clothing Quality control Ecological textiles Yarn technology and machineries Die-press technology

Quality
Quality standards that are required by the buyers and European Union has a positive impact on the products.

Number of Textile & Clothing Firms Obtaining ISO Standards

Table shows the percentage of the number of textile and clothing firms that received ISO 9001 and 9002 certifications in the group of companies in all industries with the same certification

ISO 9001 Textile and/or clothing Total Percent 67 831 %8,06

ISO 9002 161 1994 %8,07

STRENGTHS
An integrated textile chain within the country (from raw material to textiles and to clothing) Ability to produce commodity and specialized products (having wellestablished know-how) Proximity to the EU Relatively low wages

 Experience in providing high level of customer service (as a result of longstanding tradition in the sector) Broad domestic raw material basis (selfsufficiency due to being one of the leading cotton producers) Young and motivated workforce (recently increasing number of skilled workforce through vocational programmes) Entrepreneurial spirit

WEAKNESSESS
Lack of highly skilled workers in SMEs High total costs (labour, utilities, etc.) due to high taxes Deficiencies in R&D activities (recently started) Reliance on standardized products (through large proportion of subcontracting links in production) Concentration on SMEs in clothing Diversification of its export markets to reduce strong reliance on the EU market Lack of government support and bureaucratic obstacles Inability to attract FDI

Assessment of Competitiveness of Turkish Textile and Clothing Industry

The contributions of the textile and clothing industry to the economy are vital for Turkey. The global competitiveness determinants of Turkey shifts from low cost to quality, fashion, creation, brand development and innovativeness. Turkey has a good performance in many categories like production quality, use of technology, ability to make design, collections and organizational matters such as marketing, distribution and delivery.

Assessment of Competitiveness of Turkish Textile and Clothing Industry

To access to EU market, free to quotas are the latest development for Turkey Turkey should be preparing itself by focusing on differentiation and moving away from cost based competition. It should improve product mix, become a unified manufacturers to determine the future of Turkish textile and influence government policies in creating and financing the conditions of the textile industry.

CONCLUSION
Decreasing lead times, better quality/price ratio and creation of brands Turkey faces competition after 2005. Need of a restructuring by foreign investment Future growth markets are USA, Canada, Japan and China.

THANKS FOR YOUR ATTENTION