Global companies are relocating to Turkey to shorten the supply chain and cut costs.
During the pandemic, the rhythm of supply was disrupted and many countries found themselves in short supply for goods and services – from car parts and microchips to container ships carrying cargo.
The Swedish company IKEA has already officially stated that it is trying to move more production to Turkey in order to shorten the supply chain. This was announced by the company’s chief financial officer for Turkey Kerim Nisel to Reuters. The products, which are expected to be produced there and then exported, are currently being transported thousands of kilometers from East Asia to the Middle East or European markets. “We all saw during the pandemic that diversification of production is extremely important,” Nissel said. He added that the price of a container from East Asia had jumped to $ 12,000 from $ 2,000 before the COVID-19 explosion last year.
The Swedish giant’s move has been followed by other European brands such as Benetton, which has also reorganized its supply cycle, increasing production in Turkey, Serbia, Croatia, Tunisia and Egypt. The ultimate goal is to halve production in Asia.
As it is close to Europe and the Middle East, and has a good production base, Turkey is in an excellent position to take advantage of changes in global production and supply chains. “Turkey, with its strategic location, is a strong alternative to the Asian production network of the pre-COVID-19 era,” Turkish Vice President Fuat Oktay said on Monday. The state has another advantage – a young population with good qualifications.
Poland’s LPP is also exploring moving part of its production closer to Europe to lower its supply costs, its chief financial officer, Przemyslaw Lutkiewicz, said on Wednesday. Production costs have increased by about 10-20%, he added. “We are in serious talks with Turkish factories to relocate some of our collections. Of course, such production will be more expensive, but in order to have stocks, we have to do it, “he said.
Germany’s Boehringer Ingelheim on Wednesday announced a partnership with prominent Turkish pharmaceutical manufacturer Abdi Ibrahim. The total investment in what they called a “localization project” will reach £ 1 billion ($ 110 million) in the long run, according to the company’s regional managing director, Mohamed al-Tawil.
“Our project lays the foundation for an important transfer of technology and know-how between Germany and Turkey. “Once the localization studies are completed, one in two boxes of our drugs will be produced in Turkey for the next five years,” al-Tawil said.