Textile factories closing 1-2 per month, capacity slips to 60%

Turkey's textile and ready-to-wear sector is reeling from the closure of one to two factories each month amid high production costs and shrinking demand. Ahmet Öksüz, Vice President of the Turkish Exporters Council (TIM), warned that factory closures have become routine news.

According to Öksüz, the manufacturing sector's share of national income has fallen to 15 percent; this is the lowest level Turkey has recorded in the past decade. Emphasizing that existing facilities are operating with 40 percent idle capacity, Öksüz said the sector is struggling to survive with 60 percent capacity utilization. "Lost facilities do not come back; people think 'I might as well shut down while I can' and leave," he said.

This picture threatens not just textiles but Turkey's entire production backbone. Öksüz pointed out that deterioration in the investment environment has blocked new investment from filling the gap left by closed facilities: as demand for ready-to-wear in the domestic market narrows and is combined with pressure on exports, existing capacity erodes.

According to assessments, Öksüz argues that the government should shift its priority from new incentives to keeping existing factories afloat. Similar capacity erosion was seen during the 2009 crisis, the sector's worst period in the past decade; the short-time work allowance introduced at that time had limited factory closures. Currently, no such measure is on the agenda.