Analysis: Business as usual in Turkey

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Report based on from article published in September/October issue of the European Rubber Journal

London – While the failed coup attempt in mid-July and increasing spill-over from the war in neighbouring Syria might have dented investor confidence in some quarters, the fundamentals of doing business in Turkey seem robust for tire & rubber manufacturers.

According to Fazilet Cinaralp, the secretary-general of the European Tyre & Rubber Manufacturers’ Association (ETRMA), the political events in Turkey over the summer are unlikely to have any significant impact on the country’s tire and rubber industries.

“I personally believe that the investments will continue without interruption,” Cinaralp, who is originally from Turkey, told ERJ.

“Normally a developing country would face strong [after] shocks in terms of currency exchange rate and interest rate fluctuations. Neither of them happened.”

This view, she noted, was echoed by analysts at Merrill Lynch, which recently confirmed that Turkish stocks and bonds were the best-performing investments in the global economy in July, despite the upsets.

“This mini-rally in Turkey, brief as it may be, highlights just how much risk yield-starved investors are willing to take on when $11 trillion worth of bonds of governments around the world are offering up negative returns.”

The message of “business as usual” can also be detected among domestic players.

“Business operations are proceeding uninterrupted and will continue to do so,” chairman of the Turkish Rubber Association Nurhan Kaya told ERJ.

Kaya’s organisation will host the RubberCon 2018 in Istanbul, organised by International Rubber Conference Organisation (IRCO).

According to Kaya, customs procedures together with all other government and private sector services have been operating “normally without any delays despite the political unrest”.

Organisers of Rubber 2016 expo in Istanbul also insisted that the tire and rubber sector had not been impacted.

Everything is going well,” assured Cansu Gördü, project marketing specialist at Tüyap Fairs and Exhibitions Organization Inc., which is staging the Istanbul 9th Rubber Industry Fair on 24-27 Nov.

Life has been continuing in Turkey,” said Gördü. “There hasn’t been impact on the tire and rubber industry in Turkey so the date is still the same.”

And, despite the recent political turmoil, a clear indication of market confidence in Turkey was a mid-August $150-million long-term loan by the European Bank of Reconstruction of Development (EBRD) to Brisa, a joint venture between Bridgestone and Sabanci, for a project to build its second tire plant, in Aksaray.

Rated at 4.2 million units/year, the new plant is due on stream in early 2018 and is expected to employ 550 people. It is to become Brisa’s strategic hub, supplying Bridgestone and Lassa brands to markets in Turkey and neighbouring countries.

Among other recent investments, Sumitomo Rubber Industries has signed a major distribution deal with Turkish tire maker and distributor Petlas while Korean rival Hankook is understood to have expanded its supply network within the country.

German automotive rubber parts supplier Freudenberg, which completed its E10-milion expansion in Bursa, Turkey in June, also remains confident about its prospects in the country.

“When we invest, we do it for the long-term – this principle applies to all our investments including the recent one in Bursa,” said company spokeswoman Charlotte Baumann in a written statement to ERJ.

The investment, she added, “allows us to engage in even closer partnership with a large number of automakers with production plants in the area.”

All ERJ on-line news reports are exclusive to subscribers to European Rubber Journal magazine. If you are not yet a subscriber please click here for full details of our news and information services for the global rubber and tire industries.