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Viewing cable 05ISTANBUL1619, TURKISH TEXTILE AND APPAREL SECTOR: STATISTICS AND
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
05ISTANBUL1619 | 2005-09-21 15:19 | 2011-08-24 01:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Consulate Istanbul |
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ISTANBUL 001619
SIPDIS
SENSITIVE
DEPARTMENT FOR EUR/SE AND EB/TPP/ABT EDWARD HEARTNEY
COMMERCE FOR ITA/OTEXA MARIA D'ANDREA
USTR FOR ABIOLA HEYLIGER
E.O. 12958: N/A
TAGS: KTEX ECON ETRD TU
SUBJECT: TURKISH TEXTILE AND APPAREL SECTOR: STATISTICS AND
TRENDS
REF: STATE 146213
This is a joint message with Embassy Ankara. Sensitive but
unclassified. Not for internet distribution.
SIPDIS
¶1. (SBU) Summary: Total production in the textile and apparel
sectors stands at over USD 30 billion, according to estimates
by both industry and government officials. Registered
exports for the sector in 2004 totalled 17.6 billion USD, or
28 percent of total Turkish exports. In addition, however,
industry sources estimate that USD 4-6 billion is exported
via unregistered "suitcase" or "luggage" trade, mostly to
Russia, the Ukraine, and Central Asia. Due in part to the
lifting of quotas (as well as the growth of the automotive
sector), the textile and apparel sector's share in total
exports slipped to 26.5 percent through the middle of 2005.
End Summary.
¶2. (SBU) Caveat: Due to the significant share of the informal
economy in Turkey's textile and apparel sectors, it is
difficult to obtain accurate figures for exports and
production. Our contacts in these sectors, including in
government and large industry associations, provide their
best estimates. However it is clear that the textile and
apparel sectors are vital for the Turkish economy, and
account for significant shares in total national industrial
production, employment and exports.
¶3. (SBU) Statistics: The most recent statistics taken from
government and industry sources are :
Total Turkish Industrial Production -- 62 billion USD (2004)
Total textile and apparal production -- 30 billion USD (2004)
(note: This figure, which was most recently cited by Trade
Minister Tuzman in a September 2005 speech, is taken from
textile association estimates, and has not changed since
¶2003. Trade Undersecretariat officials disclaimed the number
in a meeting with Ankara Econoff, however, stating that the
GOT does not calculate a dollar value for textile and apparel
production. They estimated instead that the sector produced
2.5 million tons of material.)
Share of exports -- 28 percent (2004)
-- 26.5 percent
(through mid-2005)
Share of imports -- 6.4 percent (2004)
-- 6 percent
(through mid-2005)
Total Employment -- 20 million
Textile and apparel sector's share
in employment -- 11 percent
Total employment in textile
and apparel sector -- 2.5 million
Note: Separately the government estimates that employment in
the manufacturing sector is 4 million, and that 30 percent of
industrial workers are in the textile and apparel sector.
This official estimate falls well short of the generally
accepted figure of 2.5 million, however.
¶4. (SBU) Trends: Beyond the slight decline of textile and
apparel exports in overall Turkish exports in 2005, few
statistics are available regarding the impact of the lifting
of quotas on the sector. Industry sources note too that the
2005 slowdown continues a trend that began earlier in 2004,
in that while Turkish exports rose 32.8 percent in 2004,
textile and apparel exports rose only 16.4 percent.
Similarly, in the first half of 2005, apparel exports (8.7
percent) and textile exports (10.2 percent) rose at a much
more modest pace than the 20.3 percent increase in overall
Turkish exports. Contacts note that the 2005 increase is
actually exaggerated, in that the Turkish lira appreciated
significantly during the period. In Turkish lira terms,
exports were largely stagnant.
¶5. (SBU) Anecdotally, producers speak of declining margins
and falling capacity utilization, noting that whereas the
industry earlier used 75 percent or more of its capacity,
that ratio has since fallen to 60 percent. Producers note
that margins have been squeezed, particularly for low-value
added products, where the competition from China is most
intense. They suggest that Turkey was more vulnerable to the
Chinese challenge than other exporters in the Middle East and
North Africa because it enjoyed large quotas in several
categories under the old system, categories that were
attractive targets once the quotas ended. In meetings in
Istanbul, however, producers expressed hope for the remainder
of the year, noting that the June China-EU agreement
reimposing restrictions on Chinese exports to the EU was
bringing business to Turkey. Esin Benoz, Secretary-General
of the Turkish Clothing Manufacturers' Association (TCMA),
told us that the group expects increases of up to 50 percent
in exports to the EU market in some months during the second
half of 2005. August figures, she stressed, already showed
20 percent increases for both textiles and apparel.
¶6. (SBU) How to respond: Both government and industry
officials recognize that mass market low-value production is
likely leaving Turkey for good. Instead, the industry must
focus on more profitable high-fashion and "technical"
products. Bilal Surucu, textile export head at the Trade
Undersecretariat in Ankara, conceded to Ankara Econoff that
the GOT recognizes that Turkey cannot compete with China and
other low-wage competitors in the manufacture of inexpensive
t-shirts. Rather it must separate itself from mass producers
and focus on quality textiles and apparel for high-end
retailers in the EU and U.S. To that end, he said the GOT
will support establishment of a Fashion Institute in
Istanbul, for which the EU has allotted a EUR 10 million
grant. Surucu expressed hope that this institute will bring
high fashion designers to Turkey and broaden its share in the
high couture market. Separately, industry sources note that
over 200 Turkish companies now provide high-tech waterproof
and stain-proof fabrics for Western companies like Nike, a
field in which few were present just a few short years ago.
¶7. (SBU) Agreement/Safeguards: Notwithstandig their focus on
high-tech and high-fashion prodcts, Turkish industry also
remains transfixed by the idea that preferential agreements
can buy it everal more years to make the transition it
faild to make before 2005. In a meeting with visiting
Ankara Econ Counselor and Trade Officer, Istanbu Textil
Exprtr ITKB) representatives pressedfor ether
uaifid industrial zone (QIZ) or ree rae areement with
the U.S., though they hd difficulty explaining how the
latter could be econciled with Turkey's EU Customs Union.
They nted that they continue to be in close contact with he
U.S. and European textile industries, followig up on their
joint "Istanbul" declartion lst ear pressing for delay in
endng of hetetil quota system. Similarly, Suuc tld
Akar Eonoff that the GOT wants more safeguards in place,
though he did not provide specifics. (Already Turkey has
taken a number of unilateral measures to limit Chinese
imports in the Turkish market.) Notwithstanding the fact
that the EU remains Turkey's major textile market, he
expressed particular concern about the inroads China was
making in the U.S. market.
¶8. (SBU) Comment: With the reality of 2005 sinking in,
Turkish industry increasingly recognizes that it must adapt
to survive, even if further safeguards are imposed that limit
the rate of at which China's exports increase. Producers and
government officials recognize too, however, that even if
they make the transition, textiles are unlikely to weigh as
heavily in the national economy in future as they have in the
past, forcing government to begin considering how it can best
encourage industries that will absorb sector workers. End
Comment.
JONES