The Turkish clothing manufacturing sector is in a more optimistic mood

The Turkish clothing manufacturing sector is in a more optimistic mood

The Turkish clothing manufacturing sector says it has struck an accord with major brand buyers to complete and pay for previous orders.

Turkish manufacturers were left with some US$3.5bn in inventory and orders on hold earlier this year after retail customers left them stranded during the start of the Covid-19 pandemic through contract cancellations, postponements and payment delays.

The move sparked action by trade bodies such as the Turkish Clothing Manufacturers' Association (TGSD), which issued a letter of complaint in the International Textile Manufacturers Federation's (ITMF) April newsletter.

Following lengthy discussions and "diplomacy" between brands and manufacturers, most buyers have now agreed to complete and pay for previous orders, says Hadi Karasu, president of the TGSD (Türkiye Giyim Sanayicileri Dernegi).

"It took us around two months, until the end of July, early August, to clean up with minimal damage, like some discounts and late payments," he told just-style. "The big brand names recovered faster in terms of buying and paying, so it seems that shocking period is over, when they were in a panic."

A Turkish manufacturer who wanted anonymity over concerns about future business relationships, said brands were often apologetic, starting emails with "we appreciate what you have done for us." 

"Let us say that the bad blood, non-payments and orders held off, has been handled relatively amicably, and the brands have owned up to the situation. Around 80% to 90% of orders have been cleared, or paid for, or arranged to be paid for, so it's not as rough a climate as it has been. But it has cost a lot to be so accommodating."

Supply chain reshaping

Around 80% of Turkey's clothing and textile manufacturing stopped during the first few months of the pandemic, while the Turkish government provided financial support, covering up to 30% of wages. 

And while Karasu says a semblance of normality is returning to the sector, some brands are still not acting responsibly.

"Some brands, even luxury brands, that bought products that don't sell, are going back to the manufacturer and asking for a 20% discount," he explains.

Also, despite the general détente between brands and Turkish suppliers, Karasu insists that going forward there will be changes in how orders are made and met. "The supply chain is going to be re-formed," he told just-style.

The TGSD wants to renegotiate supply arrangements, with further discussions among manufacturers and brands scheduled for an upcoming Istanbul Fashion Conference in October.

While orders are returning for the upcoming season, the process has changed. "In the past, brands ordered say 100 pieces for an entire season, now it is being split into cycles of 20, looking just one or two months ahead instead of three to six months," Karasu says.

Turkey is in a strong position to handle such smaller, fast orders, particularly for Europe, for which it is a near-shoring hub. "With lead times of two to three weeks, we can easily manufacture and replenish orders that can then be trucked to a store in Europe in five days," he adds.

Sportswear and activewear sales are currently particularly buoyant as consumers continue to stay at home, with fewer orders for formal and luxury clothing.

Karasu says Turkey's clothing and textile manufacturing industry lost around US$2bn in exports due to the pandemic, but recovered around US$1bn in revenue by making and exporting medical clothing and PPE (personal protective equipment). 

"We took back around US$1bn but exports are still down by minus 15% to minus 20% [on 2019]. It is survival mode," he notes.