The Turkish textile industry is experiencing significant upheaval as rising costs and labor expenses push manufacturers to relocate operations abroad. This trend comes amid broader economic challenges, with industry sentiment reaching new lows and production metrics continuing a downward trajectory.
The Istanbul Chamber of Industry’s sectoral purchasing managers’ index (PMI) for March highlighted the severity of the situation, with the Turkish textile industry scoring just 41.1 points, significantly below the 50-point mark that indicates a positive outlook. This figure represented the lowest sentiment among the ten sectors surveyed. The PMI data revealed a nine-month decline in output, a sharp drop in new orders, and reduced hiring and purchasing activities.
Economic Strains and Declining Exports in Turkish Textile Industry
The economic strain on the Turkish textile industry is multifaceted. An overvalued lira and diminished demand in key overseas markets led to a decline in textile exports last year. According to the Istanbul Textile and Raw Materials Exporters’ Association, exports of finished and raw materials fell to $12.6 billion, down two percent from 2022’s total of $12.9 billion.
In response to these challenges, Turkish textile companies are increasingly relocating production to countries with lower labor costs and more favorable trade agreements. Egypt has emerged as a preferred destination due to its cheaper labor market and advantageous free trade deals with the EU and the USA. The latest example of this trend is DNM Denim, a subsidiary of Eroğlu Holding, which announced a $40 million investment in a new plant in Egypt’s Qantara Industrial Free Trade Zone in early April.
Optimism for Long-Term Recovery in Turkish Textile Industry
Despite some criticism of the offshore shift, Ahmet Öksüz, chairman of the textile exporters’ association, emphasized that this move is part of a broader integration of Egypt into the Turkish textile industry manufacturing chain. “Egypt and Turkey complete each other; the fabric is produced in Turkey and then shipped to Egypt,” Öksüz explained, highlighting the benefits of Egypt’s cost advantages and export facilities.
Öksüz remains optimistic about the sector’s long-term prospects. He believes that the Turkish textile industry’s comprehensive production capabilities, from raw materials to finished products, position it uniquely for a rebound once cost pressures subside. With inflation forecast to peak in the second quarter and then ease from its March high of 68.5 percent, Öksüz anticipates a potential recovery for the Turkish textile industry by the end of the year.
