ESRA ÖZARFAT-ALİ ŞAHİN
The cost and competitive pressure on the automotive industry is most evident in the production of molds for this sector.
With a turnover of USD 160 billion in the world and USD 2.7 billion in Turkey and an average export figure of USD 300 million, the mold industry is the most important solution partner of the automotive industry.
The mold industry, which has been busy in recent years, especially due to new projects in the automotive industry, has recently been experiencing difficult times due to cost pressure, difficulties in accessing finance and strong competitor China.
Şahan Eçin, President of the National Mold Manufacturers Association (UKUB), pointed out that SME-scale companies withdrew from production with the effect of Chinese pressure and stated that the picture will deepen even more in 2025.
It is known that some companies producing molds in Bursa, the production base of the automotive industry, have ceased production, while large supply industries that produce their own molds have shifted their mold production to China due to costs.
Although Turkey does not have cheaper labor costs than Portugal, the Chinese factor is also a competitive factor for manufacturers in Portugal. In Portugal, where the mold projects of the main industries are intensively produced, it is said that the molds are also produced in China.
“Serious number of concordats”
The average hourly rate of mold production in Turkey is EUR 32, while in Portugal it is EUR 46.4. While this figure is EUR 53 in Italy, it is EUR 26 in China.
Şahan Eçin, UKUB President said, “Portugal is 45 percent more expensive than us on average. China is 20 percent more affordable. It is not true that Portugal is more suitable than us in mold production. But Portugal produces the critical molds in its own country, while the non-critical ones are produced in China. Europe is currently making serious use of China in terms of production. There are also those who do this in Turkey.”
Stating that the Chinese factor puts every sector under pressure in global competition and that this pressure is also felt in the mold sector, Eçin said, “China has crushed many sectors from the machinery sector to automotive. The state subsidies are too much in every field. No one can do anything against China. Even if trade cannot be done directly from China, it continues through European countries. The biggest problem in our country is the serious number of concordats. The process started with steel companies and extended to molders. The number of companies closing down around us has started to increase. The triangular structure between OEM, main supplier and supplier is not working correctly. Money is blocked somewhere, and even if it comes in, it is not enough to cover costs. The producer turns to credit. The problem is that there is no access to finance and the money cycle is blocked.”
30 out of 100 molders will be eliminated
Pointing out that SME-scale companies engaged in mold production have withdrawn from production, Şahan Eçin said that this picture will deepen at the end of the year and in 2025.
Noting that companies with a strong corporate structure and external customer resources can survive, Eçin said: “We are currently observing a contraction in employment between 25 and 30 percent in every company. Everyone is trying to do maximum work with minimum labor. The winners at this time will be those who make production with overseas connections. The mold sector works with advance payment. Currently, the main industries do not accept advances. It is stated that payment will be made after the delivery of the parts. SME-scale molders without strong equity capital are forced to start their business with a negative cost against the main industries. Otherwise, losing business is a much bigger risk. As molders, what we need to do is to act cautiously and stay away from investments, continue to work with existing investments and strive to win foreign projects. But 30 out of 100 molders will be eliminated. Closures have already started.”
“We are likely to lose our competence”
Stating that the recent decrease in the number of projects and imports from China have negatively affected the sector, Ceydak Kalıp General Manager Kemal Kutay Can said, “Businesses shifting to China are taking an important know-how with them. When downsizing begins in our companies, we have the possibility of losing our competence in this sector by liquidating an important qualified workforce. We need steps to establish an ecosystem on the mold side, both to use existing capacities efficiently and to produce in accordance with customer demands. At the point we have reached today, we cannot progress on the know-how side and we have started to lose our cheap labor advantage. This trend causes us to fall behind not only in the domestic market but also in the competition in export markets. Despite the stability of the exchange rate, the increases experienced on the cost side have brought down profitability and competitiveness too much.”
“Engineering services also shifting to China”
TKare Engineering General Manager Murathan Toktaş stated that they could not reflect the cost increases to the prices and said: “This forces us to find new markets. The cost of a worker in our sector in Turkey reaches USD 2,000. The same labor costs USD 750 in China. The figure is EUR 1800 even in Italy. In recent years, we have been seeing a significant amount of molds being made in China instead of local manufacturers. Now engineering services have also started to shift to that region. In terms of employment and company continuity in the sector, this situation on both the mold and engineering side needs to be regulated. The main reason for this slowdown in the domestic market, which is similar in Europe, is the projects going to China. There are significant gaps, especially in the capacities of Tier 2 manufacturers.”
