Italian exporters survey Turkish industrial zones for manufacturing

Engin Esen - ISTANBUL

Affected by the depreciation in the value of the Turkish Lira against the euro, Italian companies exporting to Turkey have started surveying industrial zones in the country with an aim of regaining competitiveness in the Turkish market.

“Our research is focused on the most attractive industrial zones in Turkey for the Italian companies. We have identified some industrial zones according to different criteria such as infrastructures and logistics, main roads, distance from city centers, ports and airports, land availability, average price, well-trained workforce and other investments made by Italian companies,” Aniello Musella, Manager of Italian Trade Agency Office in Istanbul, told Hürriyet Daily News.

“Then we have focused our attention on specific sectors such as automotive, chemicals, pharmaceuticals, machinery and components that are the main sectors of Italian exports to Turkey,” he added.

According to Musella’s remarks, of those sectors, the worst hit by the currency turmoil—an over 30 percent plunge if the lira in 2018, which peaked in August—was “automotive, machinery and components” that cover almost 40 percent of the Italian direct exports to Turkey.

“Building materials,” “garment, apparel and accessories” and “furniture and lighting fixture” sectors followed it, as those products “with the devaluation of the Turkish Lira against the euro became very expensive,” he said.

Business model of Pirelli, Fiat

Turkish imports from Italy were around $7.2 billion from January to August this year, whereas Turkish exports to Italy were $6.3 billion in the same period.

However, the picture started to change dramatically after the currency turmoil in August. Because both Turkish and Italian manufacturers in Turkey that produce at local costs and sell in euros have become greatly advantaged. On the contrary, Italian exporters have found their products less competitive and more difficult to sell in the Turkish market.

To cope with the deteriorated economic environment, Italian exporters have been trying to arrange more convenient terms of payment for Turkish business partners such as fixing exchange rates. Anyway, they have had to reduce their margin profits.

At this point, the business model of Pirelli, Fiat-Tofaş, Ferrero and Barilla—Italian companies involved in manufacturing in Turkey—has emerged as a recipe for success.

“Many companies that already export to Turkey are planning to move part of their production in industrial zones in order to take advantage of the lira devaluation and to consolidate their market share,” Musella said.

“To deal with the currency crisis, some Italian companies have invested in Turkey, such as Sabaf Group, which produces components for domestic appliances. Candy [domestic appliance producer] has also inaugurated a third manufacturing site in Turkey,” he added.

On top of this, more than 80 Italian steel and machinery companies have been participating in the Ankiros 2018 Trade Fair organized in Istanbul between Oct. 25 - Oct. 27.

“Most of them will exhibit with their Turkish agents and distributors, some will have their individual stands and eight companies will be presented inside the Italian official pavillion,” Musella said.