Middle East Crisis Hits Turkish Industry as Factories Move Eid Holidays Forward
The escalating tension in the Middle East and the logistical deadlock in the Strait of Hormuz have dealt a blow to the heart of Turkish industry. Due to the increase in plastic raw material prices and the disruption in the supply chain, many plastic facilities located in Istanbul, Gaziantep, and Konya have brought their holiday break forward. According to a report by Merve Yiğitcan from Ekonomim, factories that have sent their employees on holiday leave are urgently awaiting a 'force majeure' regulation from the public sector.
War hit the factories: In Istanbul, Adana, Gaziantep, and Konya, numerous facilities released their employees for an early holiday break.
The closure of the Strait of Hormuz amid the US-Israel-Iran conflict has sent shockwaves through global trade. As oil prices surged, a raw material crisis emerged in the real sector. According to a report in Ekonomi, the cost of polymers, the primary input for the plastic industry, has seen an increase between 60 and 80 percent. As access to raw materials became increasingly difficult, many facilities in Istanbul, Adana, Gaziantep, and Konya found their only solution was to send their employees on holiday.
Yavuz Eroğlu, the Chairman of the Plastic, Rubber and Composite Industry Council of the Union of Chambers and Commodity Exchanges of Turkey (TOBB), stated that the blockage in the Strait of Hormuz, through which 20% of the world's oil and natural gas reserves pass, has directly hit Turkey.
"Some facilities have ceased production."
Eroglu, who pointed out serious inflation pressure in sectors such as plastic - which is used in everything from cheese molds to water bottles - textiles, home appliances, and automotive, stated, 'In the packaging sector, costs initially reflected at a rate of 25%.'
Eroglu reported that many facilities have decided to take an 'early holiday break'. He expressed that many other plants have halted production as of last week, saying, 'At a time when raw materials are so expensive and there is a supply shortage, a large portion of the factories have taken an early break for the holiday. In fact, some of them have stopped production as of last week. Particularly, most of our members in Gaziantep and Istanbul are trying to buy time to see the course of the war. If there is no pullback in oil prices or a glimmer of hope for peace, sharp declines in capacity utilization rates could be experienced due to the pulling forward of annual leaves.'
Eroglu pointed out that the public sector needs to consider this situation as 'force majeure' and reassess the prices.
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