The SOMO Bulletin on Issues in Garments & Textiles is a bi-monthly on-line publication of the Centre for Research on Multinational Corporations (SOMO) that presents critical issues of interest to those working to improve conditions and empower workers in the global garment and textile industries. Each edition of the bulletin focuses on one specific topic. Unless otherwise indicated, information presented is drawn from SOMO research. All editions of the bulletin can be found at the SOMO <www.somo.nl> and Clean Clothes Campaign <www.cleanclothes.org> websites. Content of the bulletin may be freely reproduced or distributed, with appropriate attribution.

GARMENT AND TEXTILE PRODUCTION: FOCUS ON TURKEY

Turkey, located at the junction between Europe and Asia, is not only an important regional player in the garment and textile industry but also as a supplier to North America and elsewhere plays a significant role in global garment and textile supply networks.

Trade liberalization in the 1980s designed to shift the Turkish economy to a more private-sector, market-based model, followed by the signing of a Customs Union Agreement in 1996 with the European Union facilitated the growth of Turkey's export-oriented garment industry. According to the International Textile, Garment and Leather Workers' Federation (ITGLWF) clothing and textile exports represent 40% of all Turkey's exports. Those working in the clothing and textile sectors make up 35% of the country's industrial workers (ITGLWF, 2003).

Despite an economic crises in the late 1990s and in 2000-2001 that resulted in the closure of facilities, the sectors are once again going strong.

"Export [of ready-to-wear clothing] which was US $450,000 in the 1970s, increased to US $2.5-3 billion in the 1990s and to US $7.4 billion in 2000, reached US $9.3 billion in 2002," noted Umut Oran, head of the Turkish Clothing Manufacturers Association (TCMA). "Taking a significant leap this year, the sector is proceeding towards US $11.5 billion" (approximately 10.2 billion euros) (Agencies, 2003). Turkish textile exports in 2002 were valued at approximately US $3 billion (883,626,403 euros) (just-style.com, 2003d).

At a time when the number of jobs in the European Union's textile and clothing industry are declining (down by 70,000 jobs in 2001 to 2.1 million) Turkey has become the European Union's number two clothing supplier (behind China) and number one textile supplier. Turkey's exports of clothing and textiles to the European Union were 9 billion euros in 2002. Big names in European garments, such as German fashion house Hugo Boss, German sportswear giant adidas, and Swedish retailer H&M produce clothes in Turkey. Some of Europe's top football teams, such as Real Madrid, AC Milan, and Bayern Munich, have their garments made in Turkey. U.S. brands are in Turkey as well: Levi Strauss, Nike, and Gap, for example. The U.S.-based VF Corporation, the world's largest apparel company, reported plans in 2003 to invest US $15 million (approximately 13 million euros) to increase capacity at its factory in Soke (Just-style.com, 2002c; Just-style.com, 2003d; Fibre2Fashion.com, 2003; just-style.com, 2002d; just-style.com, 2003d).

Providing a full package of integrated services - from cotton to yarn, textiles, and clothing, dying and finishing, as well as proximity to its main market - Europe - Turkey has moved into the number three position along with Mexico in terms of clothing exports, behind China/Hong Kong, and Italy. Production capacity, plentiful raw materials (such as cotton), cheap labor, and investing into the modernization of its industry are all pegged as factors in Turkeys success in these sectors (Knitting International, 2003; Tait, 2000).

With no quota restrictions on Turkish clothing entering the EU, Europe is the major destination for Turkish clothing (73%), with the majority going to Germany. Other important markets are the United States (where Turkish goods are subject to quotas), the UK, France, the Netherlands, Italy, Belgium-Luxemburg, the Middle East, and the Russian Federation (IGEME, 2002a). In addition to garment production for export and for domestic consumption, for which there are official figures, there is also a "cash-and-carry" niche in the sector. These are goods that are exported to Russia and the former Soviet bloc.

"…No one knows the actual value of the cash-and-carry market…, which is centred around the Laleli region of Istanbul. This area is absolutely packed with discount 'Tekstil Stores,' and hordes of east European buyers armed with suitcases in which to cram their tax free goods. This market is supplied by a plethora of small knitting companies which operate as a separate 'black market' economy," according to a Knitting International report (2002).

Much of Turkey's garment production for the export are produced in and around Istanbul (75%, according to the Istanbul Exporters Association). Other important locations are Bursa, Izmir, Denizili.

However, because costs are higher in the vicinity of Istanbul the Turkish Clothing Manufacturers' Association is promoting investment in Anatolia, where costs are much lower and unemployment is high. The manufacturers see this as a way to keep the industry competitive globally (Knitting International, 2003).

Most of production, the majority of which is carried out by women workers takes place in small or medium-sized enterprises; most are privately-owned. Knitted garments, followed by woven garments, are the main export product in the sector. As in the garment industry elsewhere, subcontracting is an important characteristic, and in reality much of production in Turkey takes place in unregistered workplaces (ex. small workshops and in homes). Subcontracting to other countries, particularly to Bulgaria, where Turkey is the main investor in the country's garment industry, is also not uncommon. However, because most production takes place in unregistered workplaces - as part of the so-called informal economy - reliable detailed data on the structure and characteristics of the industry is difficult to come by (FWF, 2003).

Turkey is also home to some large vertically-integrated companies, however, such as Sahinler Holding, profiled below.

Textile exports, valued at US $3 billion in 2002 (more than 883 million euros), are 8.4 percent of total Turkish exports (just-style.com, 2003c). Most fabric formation (weaving and knitting) and processing (dying, printing, and finishing) takes places in the Istanbul area, Bursa, Adana, and Kayseri.

Much of Turkey's fabric production is based on cotton, as Turkey is one of the world's major cotton grower, ranking sixth in cotton production in 2000 with a total amount of 791,000 tons (IGEMEb, 2002).

Recognizing the strategic value of having operations in Turkey, and tariff-free access to the EU, Cone Mills, one of the U.S.'s top textile manufacturers and the largest producer of denim fabric in the world began a joint venture in Turkey. The company, IsKone, teams up Cone with Turkish denim company Isko to sell denim fabrics to Levi Strauss Europe (Cone, 2003).

Turkey also has a man-made textile sector, with reportedly the sixth largest capacity for synthetics in the world, and also has a wool industry (Turkey is the third largest mohair producer in the world) (IGEME, 2002b).

In recent years some Turkish textile companies have gone multinational, expanding or relocating operations to other countries. For example, the Turkish cashmere and silk manufacturer and retailer Fabeks Group announced plans to set up a factory in Inner Mongolia; Ateks Textile chose Turkmenistan as the location for its new textile plant, as well as future yarn spinning and weaving operations; Akteks Tekstil announced plans to invest in a factory in Syria, while Bursel joined in a joint venture with Japanese and Uzbek investors to build a textile factory in Uzbekistan (BFIA, undated; Agencias, 2003b; just-style.com, 2001; just-style.com, 2002a; just-style.com, 2002b).

Comments from industry experts seem to suggest that Turkey is poised to consolidate its position as a producer and sourcing hub that serves the European market and beyond.

Industry analyst Michiel Scheffer predicts that in the future, brands seeking to place orders for garment production will want "one-stop shopping" with a local base in textiles. They want production that is closer to their markets and want speed and flexibility to respond to rapid changes in customer preferences. He predicts that Turkey will emerge as a base for European production, winning out over production countries that are dependant solely on garments (Ascoly, 2003).

Analysts McKinsey & Company note that Turkey "excels at the lower end of the apparel value chain: clothing assembly (sewing) and original manufacturing (replicating a given sample product). At this level, Turkey is competitive, indexing at 70 to 80 percent of the productivity rate of Italian clothing manufacturers." However, they add, if Turkey wants to move into major profits in the sector that will come with original design and brand manufacturing (2003).

Indeed, this is where the industry would like to see itself going. Major Turkish brands, for example the Orka Group's Damat-Tween brand and leading Turkish shirt maker Oztay Tekstil's Abbate brand have expanded sales operations in such markets as Europe, North America, and South Africa. But also companies that previously produced mainly for Western brands are seeking to make the transition to producing and retailing their own brands in markets beyond Turkey. Gunkar Tekstil, for example, a swimwear producer for such brands as Otto, Champion, and Marks & Spencer, is seeking to expand its own brand production (Sunset and Lei brands) both nationally (where they have 30% of market share) and internationally (plans were recently announced to open shops in Paris and Milan). Another example is Eker, a company that started production for export in 1984, and produces jeans for such brands as Calvin Klein, Guess, Mustang, and Eddie Bauer. The company launched its own brand, Mavi, in 1991 on the Turkish market, but has since made inroads into the North American and European markets and was recently launched in Australia (just-style.com, 2003; CDI, 2003, BharatTextile, 2003, IHT, 2003).

Umut Oran, head of the TCMA, sees more attention to the development of Turkish brands and collections as a strategy to diminish the competitive threat posed by clothing producers in the Far East, particularly China, and the Maghreb region in the post-MFA playing field (Knitting International, 2003).

"If Turkey can continue to improve its core productivity and make inroads into the creation of further added value, the apparel industry could create up to 1 million new jobs," predicted McKinsey & Co. (2003).

A number of serious concerns regarding working conditions in the Turkish garment and textile industries have been raised by trade unions and labor rights NGOs.

- Limited trade union rights

The International Confederation of Free Trade Unions (ICFTU) reports that legislation in Turkey places restrictions on trade union rights, the right to strike, and collective bargaining. For example, while people of foreign nationality can join a union, workers have to be Turkish to be a member of a union's executive body and have to have at least ten years work experience. Solidarity strikes, general strikes, and go-slows are banned. The penalties for participating in illegal strikes in Turkey are severe, according to the ICFTU, and include imprisonment. This is significant because there is an extremely long waiting period (nearly three months) from the start of negotiations before a strike can be held. The ten-year ban on strikes, lock-outs and mediation in the export processing zones (there are 21 "Turkish Free Zones") was repealed in August 2002 (ICFTU, 2003; Ministry for Foreign Trade, 2003).

Overall, unionization rates in the sector are very low (about 4%) and as a result workers have restricted bargaining power. According to the Fair Wear Foundation (an organization that verifies that member companies have implemented good labor practices throughout their global supply chains and has studied industry conditions in Turkey) it is not uncommon for security forces to be used to prevent union representatives from distributing fliers or talking with workers near their workplaces.

"Union representatives are often arrested and subjected to physical violence by Turkey's security forces," the FWF reports (2003). There are only about a dozen unionized workplaces with collective bargaining agreements in Turkey's apparel industry, according to the FWF.

Ozilplik-Is: Affiliated nationally to the Hak-Is Confederation and internationally to the ITGLWF, which puts its active membership at 5,153 in June 2000. The majority of members are from the textile sector. The union does not represent any garment factories.

Speaking at the 16th Congress of the Turkish textile and clothing union Teksif in Ankara earlier this year, Neil Kearney, general secretary of the International Textile, Garment and Leather Workers' Federation, said that the Turkish government and Turkish employers will have to take steps to come into compliance with ILO standards. Ensuring that "the Turkish approach to industrial relations is in line with ILO standards, which until now has not been the case" is urgent if Turkish goods are going to be successfully marketed internationally, said Kearney (ITGLWF, 2003).

- Use of child labor

A 1998 expose in a major Italian newspaper on child labor at an Istanbul factory producing garments labeled "Made in Italy" for Benetton drew international attention, not only to the Italian company's failure to implement good labor standards in its contract factories, but also to conditions in the Turkish garment industry. The use of child labor was condemned by the ITGLWF and the Clean Clothes Campaign (CCC) (ITGLWF, 1998; CCC, 1998).

The issue of child labor was raised in 2000 during the seminar "Meeting Labour Standards in the Turkish Ready-made Clothing Sector" when an ILO representative noted that labor practices in Turkey fell short of ILO conventions on child labor, freedom of association, and other working conditions. Gulay Aslantepe, the ILO's Turkey director stressed the need to address child labor and increase education on health and safety issues, as well as the importance of programs to improve union rights (ILO & IBLF, 2000). Although there are no official figures on the number of children working in the sector, the DISK/Textile Workers Union estimates that 180,000 to 200,000 children are employed in the garment industry (FWF, 2003).

- Unregistered workers have fewer rights

One of the conditions that facilitates child labor is the fact that much of the Turkish garment sector operates in unregistered workplaces. Official Ministry of Labor and Social Security figures on the number of workers employed in the garment and textile sectors were set at approximately 518,000 in July 2002, however employee and employer associations estimate employment in the sectors are more than five times as much, perhaps as high as three million (FWF, 2003).

According to the Fair Wear Foundation "existing legislation considers unregistered operations and the employment of unregistered workers as illegal. However, enforcement and inspections are almost totally non-existent; and constant understaffing means inspections and enforcement remain wholly inadequate" (FWF, 2003).

With such a significant amount of activity in the unregistered and unregulated workplaces where labor practices go unmonitored, standards often do not meet international labors standards or standards set by law for registered workplaces. Unregistered companies usually do not have legal obligations to pay taxes, social insurance, or severance pay (ex. the Job Security Act does not cover workplaces with ten or fewer employees, though in 2000 for example, such workplaces made up 25% of total employment in 2000) (ICFTU, 2003). Employers operating in this informal economy basically have free reign to reduce labor costs as they wish, also by employing children, as mentioned above, or unregistered foreign workers. Migrant workers, numbering at about one million in 2001, are a relatively new phenomena in Turkey; the majority come from the Balkan states, former Russian Republics, and the Middle East (FWF, 2003).

The motivation for employers to operate in the informal economy is clear. According to DISK, registered and unionized workplaces have labor costs that are six to seven times higher than those where children or unregistered foreigners are employed. Unregistered workplaces are also often unsafe and unhealthy. Unregistered workers are not able to join existing trade unions or establish their own, which limits their ability to organize and press for improvements in their working conditions.

- Low wages and insecure employment

Other concerns raised in relation to working conditions in the Turkish garment industry include the possible existence of sex-based discrimination in wage scales, wages below the living wage (especially for unregistered employees), improperly compensated overtime, and sexual harassment and intimidation of women workers (particularly in unregistered workplaces). Because Turkish producers often fill the role of subcontractors within global supply networks there are problems with continuity of employment, i.e. workers are hired when orders come in and during busy seasons, but are laid off when the orders stop (FWF, 2003).

Recognizing the strategic importance of Turkey in global supply networks and the need to have more extensive information on conditions in the Turkish garment industry SOMO has commissioned a study of the sector. The study, to be carried out in 2003 and 2004 will consider such issues as the impact of the phasing out of the multi-fiber arrangement (MFA) on the Turkish garment industry, and will look at working conditions in specific factories. The findings will be made available on the SOMO website in April 2004.

Turkey has been selected as the location of a project to be undertaken by the major multi-stakeholder initiatives (MSIs) related to the monitoring and verification of compliance with codes of labor practice in the garment industry. The project will bring together the Ethical Trading Initiative, Fair Labor Association, Fair Wear Foundation, Workers Rights Consortium, the Clean Clothes Campaign International Secretariat, and Social Accountability International. The project aims to establish guidelines and principles for good practice in code implementation.

Agencies (2003a) "Turkey: Ready-to-Wear Export Predicted to Reach US $11.5 billion," October 22 <http://www.bharattextile.com>.

Agencias (2003b) "Turkey: Fabeks Planning to Set up New Cashmere Plant in China," October 28, <http://www.bharattextile.com>.

Ascoly, Nina (2003) "Pricing in the Global Garment Industry" report on IRENE/CCC seminar held February 20th, Mülheim an der Ruhr, Germany.

BFIA (undated) "Bulgaria: Opportunities for Investment," Bulgarian Foreign Investment Agency.

BharatTextile (2003) "Turkey: Damat Tween to Target US, Canada," January 25.

Bilkont (2003) "Bilkont Jeans," corporate website <http://www.bilkontjeans.com>.

CCC (1998) "Benetton Using Child Labour," October 13, Clean Clothes Campaign press release <http://www.cleanclothes.org/companies/benneton98-11-13.htm>.

CDI (2003) "Case Study: Orka Tekstil San," Innovating Europe project, Confederation of Danish Industries <http://www.ie.jones.dk/cases/turkey>.

Cone (2003) Cone 2002 Annual Report <www.cone.com/us/ConeMillsAR2002.pdf>.

Ercan, Emine (2002) "Changing World Trade Conditions Force the Turkish Textile and Apparel Industry to Create New Strategies," Journal of Textile and Apparel, Technology and Management, Vol. 2, Issue 4, fall, pgs. 1-8.

Fair Wear Foundation (2003) "Background Study on Turkey," June.

Fibre2fashion.com (2003) "Germany: Hugo Boss to Produce Apparel in Turkey," June 28 <http://www.fibre2fashion.com/News/NewsDetails.asp?News_id=3671>.

ICFTU (2003) "Turkey: Annual Survey of Violations of Trade Union Rights (2003)," <http://www.icftu.org>.

IGEME (2002a) "Turkish Clothing Industry," Export Promotion Center of Turkey, Undersecretariat for Foreign Trade <http://www.bzbturkishtextile.com>.

IGEME (2002b) "The Turkish Fabric Industry," Export Promotion Center of Turkey, Undersecretariat for Foreign Trade (http://www.bzbturkishtextile.com>.

IHT (2003) "From Cashmere to Denim: A Name of One's Own," sponsored section International Herald Tribune, March 20.

ILO & IBLF (2000) report on conference "Meeting Labour Standards in the Turkish Ready- Made Clothing Sector," held November 23, 2000 in Istanbul.

ITGLWF (1998) untitled press release, November 30.

ITGLWF (2003) "Turkey: Unions Have a Major Role to Play in Securing Future of Clothing Industry," press release, May 10.

Just-style.com (2001) "Turkey: Ateks Plans $32m Investment in Turkmenistan," January 15.

Just-style.com (2002a) "Turkey: Businessman to Invest Millions in New Syrian Factory," February 27.

Just-style.com (2002b) "Uzbekistan: $66.7 Million New Textile JV Unveiled," April 5.

Just-style.com (2002c) "Belgium: Europe's Textile/Clothing Industry Loses 70,000 Jobs" July 3.

Just-style.com (2002d) "Turkey: Soccer Kit Firm Jan Tekstil to Open New Plant," November 5.

Just-style.com (2003a) "Apparel Sourcing in the 21st Century, the 10 lessons so far," January.

Just-style.com (2003b) "TURKEY: Gunkar Tekstil Eyes Foreign Expansion Drive," June 12.

Just-style.com (2003c) "Turkey: Apparel Giant VF Corp to Invest $15m in Plant," July 1.

Just-style.com (2003d) "World Apparel Convention focuses on quota freedom," July 8.

Knitting International (2002) "East Meets West: Special Report on the Turkish Knitting Industry," April.

Knitting International (2003) "Moving Turkey Forward" interview with Umut Oran, September 15.

McKinsey & Company (2003) "Turkey: Making the Productivity and Growth Breakthrough" February <http://www.mckinsey.com/knowledge/mgi/turkey/appparel.asp>.

Ministry for Foreign Trade (2003) "Free Zones: General Information," July 28, Undersecretariat of the Prime Ministry for Foreign Trade <http://www.foreigntrade.gov.tr>.

Sahinler Holding (2003) "Sahinler Holding," "Domestic Companies," "Abroad Companies" pages on corporate website <http://www.sahinlerholding.com.tr>.

Steinborn, Deborah (2002) "The T-Shirt Turk," Forbes, October 14.

Tait, Niki (2000) "Textiles in Turkey," Just-style.com, November 2000.

Yesim Tekstil (2003) "General Information," "History," "Exports," and "Human Rights" pages on corporate website
<http://www.yesim.com/eng/>.

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