Production cuts, layoffs spread as economy slows

The global credit crunch and a slowing economy is biting hard into Turkish companies, as more Turkish companies downsize, halt production or lay off employees in hopes of survival.

Aksu İplik, Çimsa, Afyon Çimento, Viking Kağıt, Toros Tarım, Yeşim Tekstil and Parsan are the latest additions to a growing list of companies that were forced to take painful measures, reported Vatan newspaper yesterday.

Turkey’s white goods and electronics giant Vestel revealed Tuesday its decision to suspend partnership talks with Whirlpool due to the global financial crisis. "Both parties have agreed to suspend talks until the global environment improves," said the company.

On the textile front
Akkök Group subsidiary Aksu İplik, operating in the textile industry, has announced it is pulling out of yarn production and is laying off 250 to 300 employees by the end of the year. Aksu İplik will pay a total of YTL 2.5 million to those employees it will make redundant. The company will continue to provide employment for 600 to 650 people after the layoffs.

Yeşim Tekstil, which makes products for world-renowned companies, will also cut 370 jobs. "Although the fall in demand in the textile sector is not as high as it is in the auto sector, we are facing a demand decline of 10 to 15 percent," said Şenol Şankaya, Yeşim Tekstil chief executive. "We stand no chance of competing internationally. Come Dec. 5, we will have fired 370 of our workers." Yeşim Tekstil used to have 6,500 employees back in 2000, he said, and added that number had nowadays deteriorated to 3,200.

Polyester, yarn and fiber producer Sönmez Filament halted production in November, while Edip İplik announced it would pull out of the textile business as of Dec. 31.

Afyon Çimento, a cement company, will halve production in one of its two ovens, due to a decline in demand. Çimsa, another cement firm, suspended the production in its secondary production line at its factory in Eskişehir, located west of Ankara, until Jan. 2, 2009. "The staff in Eskişehir will focus on maintenance," read a company statement.

Not all news from the cement industry is bad. Oyak Cement Group announced yesterday its decision to press ahead with investments, despite an expected 10 percent decline in domestic cement sales this year. "[Our] cement companies are continuing their investments despite the crisis," the company said. The group, which has four listed companies, Adana Cement, Bolu Cement, Mardin Cement and Ünye Cement, said net sales in the first nine months of the year reached YTL 691.6 million ($437 million), while net profits were YTL 243.1 million ($154.2 million). It did not provide comparative figures, but in 2007 as a whole, the group's net sales rose 10 percent to YTL 850 million ($539.7 million).

Yaşar Holding's paper-making subsidiary Viking Kağıt, meanwhile, reduced the number of its regular staff by 10 percent. Tekfen Holding subsidiary Toros Tarım, which operates in the agriculture sector, suspended production in its facilities located in the Mediterranean city of Ceyhan and Black Sea city of Samsun, due to a fall in demand.

Suffering the most
The automotive sector is among the industries that have suffered the biggest hit. Honda Motor will halt its plan to increase its production capacity in Turkey and delay plant construction in India by at least one year amid slowing demand, Nikkei English News reported Tuesday, citing an unidentified senior official. Honda’s 1.3 billion yen ($13.9 million) project in Turkey, which would boost the annual capacity to make Civic and other compact cars by 26 percent to 63,000 units, would be frozen until the market recovered.

The automaker initially planned to complete the expansion by mid-2009, according to Nikkei.

Hyundai Motor, South Korea's top automaker, has curtailed production at its overseas plants in reaction to slowing sales, Yonhap News Agency reported Tuesday. The Hyundai factory in Turkey’s Kocaeli had halted production of the "Accent" model for three weeks last month, sending 600 workers on paid leave.

Ford Otosan, Ford Motor's unit in Turkey, was among the first auto producers to halt production. The firm had suspended manufacturing at its plant in the northwestern province of Gölcük between Nov. 13 and 26. Parsan Makina Parçaları Sanayi, a machine parts company, said yesterday it is halting production for 13 days. The company’s factory will not operate between Dec. 12 and Dec 22, and also between Dec. 29 and Jan. 5, according to a filing with the stock exchange.