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The Turkish earthquake and Global systems
The devastating earthquake in Turkey reinforces the notion that you can diversify supply chains to avoid the concentration of manufacturing in hubs like coastal China, but ultimately it is impossible hide from the forces of nature. Turkey is one of the countries cited as an alternative to south-east Asia for low-cost manufacturing, especially textiles for traditional high-street retailers and online fast-fashion businesses.
What has made Turkey so alluring to the fashion industry? The main advantages are its skilled, relatively cheap, labour, existing transport infrastructure, good trading relationships with raw-material exporters, such as Egypt and the central Asian republics, and its proximity to markets in western Europe.
Companies like Germany’s Hugo Boss have attempted to reduce the geographical length of supply routes with new factories in Turkey in recent years. The Spanish owner of Zara stores, Inditex, has 194 supply partners in the country with a workforce of almost 400,000.
Some other foreign fashion companies based in Turkey include:
Mango has over 600 factories; 70 stores with about 1,300 employees across the country
Levi Strauss has 17 manufacturing bases in Turkey, including three factories in the earthquake zone
VF, the owner of North Face, has two factories in the earthquake zone, although the company says that any impact on business operations is minimal
H&M has over 100 suppliers and over 170 factories in Turkey, but most of those are not in the affected areas.
The Ekonomi newspaper has reported that hundreds of textile plants in Kahramanmaras (Marash) have halted operations and it may take about six months to restart production. The economic costs are rising, too. According to Bloomberg Economics, the earthquake could cut GDP by around 1% and lower its GDP growth forecast for this year from 3% to 2.6%. Meanwhile, some major infrastructure needed to handle Turkey’s seaborne trade has remained crippled as damage continues to be assessed. The Port of Iskenderun remains closed until further notice, with significant damage caused by the disaster and subsequent fires. It will take months, or perhaps years, to fully normalise trade flows through Iskenderun port – through which fertilizers, maize, polyester fibres, iron and other products flow.
Recent events illustrate how volatile the world’s supply chains continue to be in the face of natural disasters, pandemic shutdowns, and other systemic risks that have become more prevalent.