Crisis bites into Turkey

As the crisis sinks its teeth into the real economy worldwide, various industries in Turkey are also feeling the pinch.

Turkish producers operating in the auto, paint, iron and steel industries have begun reducing production, laying off employees and downsizing. Two of the biggest issues for Turkey's producers are the tendency of banks to halt loans and the decline in domestic and international demand. The export industry has been particularly affected.

Construction companies 'flirt'
The construction industry grew only 0.9 percent during the second quarter of this year. The industry is expected to end the year with zero growth. The reason for declining growth is a lack of demand caused by loan interest levels hovering around 1.79 percent to 2.40 percent.

The construction industry hopes to turn things around by fixing exchange rates for those seeking to buy real estate. The Housing Development Administration of Turkey, Osmanlı Yapı, Ofton İnşaat and Propa İnşaat are some of the firms implementing this procedure. Ağaoğlu and Teknik Yapı reduced down payments to 10 percent of total costs.

Sales in the auto industry deteriorated 38 percent in October, while production dropped by 20.5 percent. Hoping to revive sales, almost all brands created new sales campaigns. Discounts started from YTL 2,000, reaching YTL 25,000 for some models. Renault currently implements no ?TV on commercial vehicles. Many companies have decided to downsize and some have suspended production.

The latest suspension decision came from Ford Otosan. The firm announced it would halt production between Nov. 13 and Nov. 26. An industry contraction of 20 percent is expected within the next year.

Meanwhile, supermarkets that used to pay meat and milk product debts within two months are now prolonging payment for four months, making things even more difficult for white meat producers. The price decline in wheat and flour has also put pressure on the Turkish Grain Board, which has 900,000 tons of grain in stock. As the new planting season is around the corner, Turkey's producers have rushed to sell all the wheat they have, causing prices to decline.

The price of 50 kilograms of flour dropped to YTL 38 from YTL 40. Meat consumption has also declined 50 percent. A liter of milk which cost YTL 0.66 at the beginning of October now costs YTL 0.60.

Some giants of the textile industry are also quietly closing their shops. Sönmez Filament halted production, while Edip İplik announced it would pull out of the textile business as of Dec. 31. Many factories have closed throughout Turkey, including 14 factories near Istanbul and 60 leather factories in Çorlu, just this year.

Milliyet reporters Çağnur Hatipoğlu, Bülent Yardımcı contributed to this report.