by Burak Akinci
Some European companies are mulling shifting production to Türkiye amid the continent's energy crunch caused by the Russia-Ukraine conflict, business professionals said.
Türkiye wants to put its geographic advantage to good use to accommodate more Western multinationals that are reportedly thinking to move their operations because of soaring production costs.
"The high price of energy and rising costs in Europe are likely to push more Western companies to choose Türkiye," Kaan Sahinalp, a Turkish representative for several foreign companies, including German tourism giant TUI, told Xinhua in an interview.
Sahinalp, who is also a legal expert based in the capital Ankara, said there is "serious interest" from some European firms toward Türkiye which offers lower labor and production costs driven by a weakening currency.
Comparatively, the labor cost in Türkiye is only one-sixth as in Western Europe, he said.
The embattled Turkish lira lost 45 percent in 2021 and nearly 30 percent this year following a lower borrowing costs policy advocated by Turkish President Recep Tayyip Erdogan to boost production, employment and exports.
As the prolonged impact of the COVID-19 pandemic on global supply chains was still prominent, an array of multinational companies have been considering moving production chains closer to home markets to avoid soaring shipping costs and reduce problems with global supply chains.
With an investment of more than 100 million U.S. dollars, Amazon opened its first Türkiye-based "fulfillment center," a logistic hub allowing businesses to outsource order fulfillment to Amazon, in late September.
Citing Amazon's investment decision, Ahmet Burak Daglioglu, president of the Investment Office of the Turkish Presidency, said that Türkiye offered good opportunities for companies affected by disruptions in global supply chains.
"This makes Turkey a power center in the region as a logistics and production base," he was quoted by the semi-official Anadolu Agency as saying.
Meanwhile, Swedish furniture retail giant Ikea announced it is planning to move part of its production to Türkiye to minimize problems with pandemic-related global supply chain disruptions and increased shipping costs.
While promoting investment opportunities at home to the global business community, Türkiye also boasts strong manufacturing capacity in its western cities of Istanbul, Izmit, and Izmir located near the European border, business professionals noted.
"Türkiye has a geographic advantage compared to other competitor nations. Its infrastructure is solid and its ports, some privatized and modernized, offer logistic advantages at the gates of Europe," Sahinalp said.
Emre Koksal, chief executive of Alumet Aluminum, a Turkish aluminum profiles producer based in the city of Samsun, said that many European manufacturers, who had to cut down or stop their production, are looking beyond the border to protect their brand value and market share.
"This year, inflationary pressures, shrinking demand due to recession concerns, and the cost shock created by the energy crisis triggered by the Russia-Ukraine conflict caught the European producers by surprise," he noted.
The energy crisis has pushed analysts to predict a bleak winter for Europe and most of the world.
"There is significant uncertainty about the evolution of global supply chains and commodity prices," Enver Erkan, chief economist at Istanbul's brokerage house Tera Securities, told Xinhua.
"The global economy continues to deteriorate drastically due to the effects of the pandemic and the conflict in Ukraine. It is not easy to predict international price movements and the global inflation picture can change rapidly," he said.
Editor: Leon
