Turkey Table of Contents
Turkey's most important minerals are chromite, bauxite, and copper. The country also exploits deposits of other minerals such as iron, manganese, lead, zinc, antimony, asbestos, pyrites, sulfur, mercury, and manganese. Mining contributed slightly under 2 percent of GDP in 1992, but the subsector provides the raw material for such key manufacturing industries as iron and steel, aluminum, cement, and fertilizers. Turkey exports a variety of minerals, the most important of which are blister copper, chrome, and boron products. Minerals accounted for an average of about 2 percent of export earnings in the mid-1990s. The public sector dominates mining, accounting for about 75 percent of sales. Etibank, set up in 1935 to develop Turkey's natural resources, manages most of the state's mineral interests, particularly bauxite, boron minerals, chromite, and copper.
Private-sector mining enterprises are generally small, concentrating on lead, zinc, and marble; some operate intermittently depending on market conditions. A 1978 law nationalized all private holdings, but it was only partially implemented before being invalidated by the Constitutional Court. In 1980 the government began to encourage foreign investment, and in 1983 and 1985 mining laws were revised to provide incentives for private investment. Etibank sought to encourage joint ventures with private firms in Turkey and foreign investors. Although some partnerships were struck, mainly for copper production, foreign and private investors in 1995 continued to hesitate to make major investments.
Turkey's manufacturing industries are diverse and growing. Public-sector entities dominate manufacturing, accounting for about 40 percent of value added. Private-sector firms are dominated by a number of large conglomerates that have diversified across several industries.
The manufacture of textiles is Turkey's largest industry, very competitive in international markets, and the most important foreign-exchange earner. Domestic cotton and wool provide much of the raw material for the industry, but synthetics production has also expanded. The textile sector contributed 20 percent of total manufacturing output and employed 33 percent of all workers in the mid-1990s. Textiles are produced by factories controlled by the country's largest SEE, Sumerbank, and a number of private firms. Installed capacity is equivalent to around 33 percent of that of the EU in terms of cotton spinning and around 11 percent of EU woolen yarn and textiles. In 1994 Sumerbank was identified as a likely candidate for privatization.
Textile exports grew rapidly after 1980, but protectionism in industrial countries, including the EC nations and the United States, threatened the sector's growth. Nonetheless, between 1987 and 1992 textile export values expanded at an average annual rate of 19 percent. By 1992 textiles accounted for 35 percent of total exports. Investment in increased capacity in the 1980s resulted in increased exports of finished products and ready-made garments. In 1990 the administration of President George Bush increased the quota for United States textile imports from Turkey by 50 percent to compensate for Turkey's economic problems caused by sanctions on Iraq.
Agroprocessing is one of the most dynamic branches of Turkish industry, supplying both domestic and export markets. Main product lines are sugar, flour, processed meat and milk, and fruits and vegetables. Processed food exports grew at an average rate of 8 percent per year between 1987 and 1992, accounting for 9 percent of total exports.
SEEs are the most important producers of intermediate goods, although private firms are also active. The iron and steel sector has become more competitive in adjacent Middle Eastern markets, where Turkey's location is an advantage. However, competitiveness results largely from heavy subsidies to the state companies. Two-thirds of Turkey's steel is produced by three public-sector steel mills, which remain heavily subsidized. Twenty smaller private plants produce steel from arc furnace operations. Public plants include the old and outmoded mill at Karabük, the Eregli works completed in 1965, and the plant at Iskenderun, which was built with Soviet aid and opened in 1975. The overstaffed Iskenderun plant, although the largest and most modern, performs poorly. Private plants, often more profitable than state plants, tend to use scrap as a raw material and to export to neighboring countries. In December 1994, the government indicated that 51.7 percent of the Eregli Iron and Steel Works would be privatized in 1995. This company was cited as one of the most profitable in Turkey, especially after a US$1.5 billion upgrade designed to raise raw steel capacity by one-third, to about 3 million tons annually.
Capacity use in the iron and steel sector increased rapidly in the 1980s and early 1990s. Total output of crude iron grew from about 3.1 million tons in 1985 to about 4.5 million tons in 1992. Steel ingot output rose from about 7 million tons in 1987 to 10.3 million tons in 1992. The value of exports of iron and steel rose from US$34 million in 1980 to US$1.6 billion in 1992. Such exports accounted for around 10 percent of total exports.
The demand for cement also increased in the late 1980s and early 1990s as a result of an upswing in domestic construction stimulated by infrastructure and housing projects. The cement industry consists of a large SEE, the Turkish Cement Corporation, and a number of smaller companies. Until 1970 the country imported most of its cement, but it has since become self-sufficient. Total output increased from 22.7 million tons in 1987 to 28.5 million tons in 1992. Exports of cement, especially to the Middle East, grew rapidly in the early 1980s because of the construction boom in that region.
The chemical industry, one of the country's largest in terms of value, is concentrated in a few large state enterprises, including the Petrochemical Corporation (Petrokimya Anonimsirketi--Petkim) and Etibank, and some 600 private enterprises. Chemicals produced in Turkey include boron products, caustic soda, chlorine, industrial chemicals, and sodium phosphates. The high quality of the country's minerals gives it a comparative advantage in several products. Chemical exports increased during the second half of the 1980s but fell sharply in the early 1990s, mainly because of increasing competition and lower prices elsewhere. In the late 1980s, petrochemical production, dominated by Petkim, started with a complex at Yarmica, near Kocaeli, followed by a second at Aliaga, near Izmir. The complex includes twelve plants, seven subplants, a thermal power station, and a water supply dam. These plants supply small private-sector plants, which in turn manufacture finished products. The sector's goal is to make the country self-sufficient in petrochemicals rather than to export. In 1992 Turkey produced about 144,000 tons of polyvinyl chloride, about 238,000 tons of polyethylene, about 85,000 tons of benzine, and about 32,000 tons of carbon black.
Turkey's automobile industry, established in the mid-1960s, was gradually exposed to imports after 1980. Although the sector recovered from low production levels after 1983, domestic producers remain weak. Industry observers believe that Turkey's automobile makers are too numerous and too inefficient, but market prospects appear fairly favorable because of the low per capita ownership of cars. Car output rose from about 55,000 units in 1985 to about 300,000 units in 1993. Including trucks, buses, and tractors, Turkey produced about 345,000 units in 1992. Some 60,000 vehicles were imported in that year, a figure that should increase in the near future if Turkey gains entrance into the European customs union. Turkish producers benefit from a 20 percent tariff on foreign imports.
The Turkish automobile industry in 1995 consisted of three producers, each affiliated with a foreign manufacturer: Tofas, which assembles Fiat passenger cars; Oyak-Renault, which assembles Renaults; and General Motors, builder of Opel Vectras. Toyota in partnership with local conglomerate Sabançi Holding completed a plant in 1994 designed to produce 100,000 cars per year, and a Hyundai factory that would produce 100,000 units is scheduled to open in 1996.
Data as of January 1995
Turkey Table of Contents