The automotive industry, the locomotive sector of Turkish exports, is going through hard times. The industry, whose competitiveness has decreased due to input costs, has started to save money from its employees to keep costs in line. Baran Çelik, President of the Automotive Exporters’ Association, said, “Right now, everyone is making losses except for a few OEMs. It is difficult to understand where the process will stop.”
In accordance with the agreement between the Turkish Metal Union and the Turkish Metal Industrialists’ Union (MESS), the hourly wages of workers in the metal sector will be increased by 21.30 percent as of September 1. In addition, social benefits will be increased by 51.97 percent as of this month. As a result, there have been layoffs in major automotive supply industry companies, especially in the main industries.
Automotive manufacturers state that their competitiveness is eroding daily due to the increase in input costs and the constant foreign exchange rate and that the added value is gradually decreasing. They will continue to lay off workers gradually in the next five months.
Automotive manufacturers note that the contraction in the economy and financial difficulties will have a greater impact on automobile sales and export figures in the coming period. The uncertainty of when the process will end makes the sector uneasy. So much so that Tofaş Automobile Factory, one of the main industries of Bursa and one of the important industrial organizations of Turkey, informed its employees that it reduced the number of shifts to 1 last week.
China became the sub-supplier in mold
On the other hand, while industrial production in Turkey is declining, the automotive industry’s production in Eastern Europe is on the rise. Many of the large supply industries that have completed their investments and started production in Eastern Europe have now opened their facilities, which were used only as assembly lines, to production. This makes the competitiveness of the Turkish automotive industry questionable. This situation in the automotive industry is also observed in the Turkish mold industry. Mold manufacturers’ efforts to reduce costs to get projects have led to a shift in mold production to Chinese mold makers.
Stating that mold production in Turkey is more expensive than in Portugal, mold makers said, “Our orders from Europe were canceled and shifted to Portugal. We have to use Chinese mold makers as sub-suppliers in order to reduce the average and keep costs down, otherwise we cannot get work. The mold factories in Portugal were closed for a while, but now they are opening one by one. The labor cost in Turkey is EUR 2,000. In Portugal, the minimum wage is EUR 850. It is all about costs. The foreign currency is cheap in Turkey.” It is stated that some large supply companies have also stopped production in their mold factories.
Production suspension affected exports
According to data from the Uludağ Automotive Industry Exporters’ Association (OIB), the Turkish automotive industry’s exports in August decreased by 0.4 percent compared to the same period last year. The sector’s share, which maintained its first place in Turkey’s exports, was 12.3 percent.
Stating that industrialists are calculating maximum efficiency, Çelik said, “Currently, everyone is making losses except for a few OEMs. It is difficult to understand where the process will stop. The automotive industry is in the grip of cost and competition. The manufacturer does not update product prices due to the exchange rate. The inflationary environment in the country is also hurting. Even though inflation has slowed down a bit, the damage seen so far is incredible. Losing power in the domestic market also negatively affects exports. SMEs cannot access finance. The cost of money is very high,” he said.
