The cost of the natural gas and power outage which has started as of this week at more than 360 Organized Industrial Zones (OIZs) across Turkey increases. Many of the over 67,000 companies at OIZs that operate in the sectors such as automotive, paper, textile dyeing, textile finishing, and building materials have successively decided to halt production. Sector representatives said the uncertainty about how long the cut will last at the meeting held with Energy and Natural Resources Minister Fatih Donmez and Industry and Technology Minister Mustafa Varank on the weekend was influential on the firms to take these decisions. They also stated that the one-week cost of the halt of production in many sectors may reach USD 1bn.
The automotive industry has taken the first step in this respect. Tofas Bursa manufacturing plant has halted production until Thursday due to the power outage. Ford Otosan and Oyak Renault are also among the companies that have stopped manufacturing. “A 3-day interruption in production means USD 1bn loss according to a simple analysis, considering an export volume of USD 30bn and a domestic market of USD 40bn including the entire ecosystem such as dealers and services,” said Albert Saydam, Chairman of the Board of Directors of the Automotive Suppliers Association of Turkey (TAYSAD).
50% of the companies which operate in the ready wear sector and almost all companies which operate in the textile dyeing and textile finishing sectors are located in OIZs, according to Ramazan Kaya, President of the Turkish Clothing Manufacturers’ Association (TGSD). Kaya also said the cost of a-3-day halt on the textile dyeing and textile finishing side may reach USD 500m.
Moreover, the cost of the natural gas and power outage to the iron-steel industry may also reach TRY 1bn, and the interruption nearly corresponds to a 1% decline in production on an annual basis, according to Ugur Dalbeler, General Manager of Colakoglu Metalurji. “This will also harm many manufacturing branches for which we supply materials. The loss in manufacturing of iron-steel products and liquid steel will reach 500,000 tons and 300,000 tons, respectively,” Dalbeler noted.
The energy cuts have also adversely affected the stock exchange. Borsa Istanbul’s BIST 100 Index dropped by 5.02% to 1,910.29 points yesterday from Friday’s close of 2,011.16 points. The BIST SME Industrial Index dropped by 5.4% following the cut decisions. Possible statements to come from the listed companies about the production are in the spotlight.
The capacity utilization rate of the manufacturing industry dropped by 1.1 points to 77.6 in January, month over month, according to the Central Bank.
The Real Sector Confidence Index increased by 3.4 points to 109.5 in January, compared to the previous month, according to the Central Bank.
The seasonally adjusted confidence index surged by 1.2% in the services sector, 2.5% in the retail trade sector and decreased by 5.0% in the construction sector in January, compared to December 2021, according to the Turkish Statistical Institute (TurkStat).
The Ministry of Treasury and Finance will directly sell a 5-year CPI (Consumer Price Index) indexed lease certificate.
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