‘‘Major Investments Made in the Knitting Industry in the Last 2 Years’’

‘‘Major Investments Made in the Knitting Industry in the Last 2 Years’’

Fikri Kurt, President of ÖRSAD- Knitting Industrialists’ Association, stated that large investments were made in the knitting sector as the demand was high during the pandemic period and continued as follows, ‘‘Turkey has invested 2500 knitting machines in 2020 and approximately 2850 knitting machines in 2021.’’

ÖRSİAD and ÖRSAD, two associations operating for knitting industrialists, gathered under the umbrella of ÖRSAD-Knitting Industrialists’ Association in 2002 in order to unite the industry. Fikri Kurt, who joined the knitting industry in 1987, has been the chairman of ÖRSAD, which he was on the board of directors until 2006.

Fikri Kurt, who initially operated in the knitting sector as Mangan Textile, established Fikri Örme Industry and Trade LLC for manufacturing and Tekstil Örme Company for fabric sales purposes. Afterwards, he made serious strides in the Turkish industry by establishing Fimaks Plastics Incorporation, which operates in the plastics industry, Horoz Demir LLC, which manufactures in the iron and steel industry, Ekopack Packaging Industry and Trade Inc, which manufactures packaging materials, EET Constructions Architecture and Engineering Industry and Trade LLC and lastly Kurt Excavation Industry and Trade LLC.

Fikri Kurt is also the representative of the Istanbul Chamber of Industry Textile Knitting Group and a member of the İTHİB Board of Directors.

We conducted an interview with Fikri Kurt for the Knitting Special File of our magazine regarding the situation and problems of the industry and he explained his suggestions for solutions.

Can you please elaborate on the state of the knitting industry that has reached today?

Knitting has a characteristic that creates employment opportunities, strengthens the sub-industry, supports all sectors from ready-made clothing and apparel to finishing, from embroiderers to printers. Until last year, the Turkish textile knitting industry was in a growing, developing, and rising position, it was the shining star of commercial life in Turkey.

During the pandemic period, the knitting industry developed according to the demands and fashion trends, especially from Europe. European companies periodically develop the necessary machines and make them compatible with fashion and sell those machines around the globe. They shift their attention to another machine according to the trend of the period. For example, for a duration, production is made with single jersey machines, for another period the machines we call jacquard double plate work, for a period flexible fabric becomes a trend. In the pandemic period, which has been going on since 2020, the industry has focused on the production of flexible fabrics, which are widely in use.

How many knitting machine investments have been made in the last 2 years?

Investments were made in the knitting industry as the demand was high during the pandemic period. Turkey invested 2500 knitting machines in 2020 and approximately 2850 knitting machines in 2021.

‘‘Raw Material Prices Increased Up to 4 Times’’

What are your assessments regarding these machines and investments?

Since the demand in this sector has been high in the last 2 years, many investments have been made inconsiderately. When we consider the situation as of January 2022, we see that the production capacities are not maximized. In 2021, we observed contractions in production when the increase in raw material prices in Turkey was higher than it should have been. Especially in the transition period to 2022, raw material prices have increased up to 4 times. When we look at it from the point of the manufacturer companies and when we add the 4-fold increase in the price of raw materials to the price increase in labor, energy costs, dye-finishing processes, we can clearly understand how much the costs have increased. Which industry can continue to produce with these high costs and the small profits they can add? Our companies, which are generally composed of SMEs and employ many people, such as knitting manufacturers, have entered a difficult period. Production made with the mentality of ‘let the machine continue to produce’, which does not consider the production costs correctly, brings loss nowadays, not profit. For these reasons, when we look at it as of January 2022, the knitting industry is in a situation struggling with difficult conditions and striving with high costs.

What exactly is the current situation?

The most important problem is the hike rates that cause the prices of raw materials to quadruple. In this sense, we betrayed ourselves within the sector. It is necessary to see the entire industry as a family. Yarn is the head of the industry. The middle is the knitting sector and it is the most important power that feeds the sub-industry. Ready-to-wear is the one who makes and markets the country’s added value, fashion, and final product. The components of this sector should keep each other alive and support each other. It has been this way from the past to the present, but in 2022, dissociations began on this issue.

‘‘Trade within the country must be conducted in TL’’

What can you say about the problem that led to this situation?

It is necessary to prevent companies from doing business with each other in dollars within the country and all trade should be conducted in TL. However, yarn manufacturers are pricing and selling in dollars to protect the value of the raw material against currency fluctuations. For sales that used to be done at forward prices, now they require upfront cash payment. Both the exchange rate hikes, cash payment, and increased raw material prices cause knitting manufacturers to suffer and cause problems in the continuation of the industry.

Because labor costs and energy costs have already increased, and when raw materials become more expensive, the manufacturer reflects these prices on the price of the fabric it produces. This affects the apparel manufacturer. They get a price quote for a new collection every 6 months in Europe, and they give you approval after 3 months. Since the apparel manufacturers cannot increase the price they quoted 3 months ago, so that the agreement would not be damaged, they produce at low prices but cannot make a profit. Therefore, the advantageous situation provided to Turkey by the shifting orders from China during the pandemic has started to deteriorate recently. If the situation continues like this, manufacturers will have to cut back from elsewhere to reduce costs.

What do you think the solution is?

The Turkish textile and apparel industry has come to these days shoulder to shoulder, arm in arm, in unity and solidarity. Our industry has developed with each other’s power, design, and marketing. Today, my expectation is that everyone conducts their business in TL. Let them receive the payment in advance, but do not trade in foreign currency in the country. When a solution to this situation is found, the trade will be made more easily and the sector will return to the old glorious days. We need to ensure sustainable and long-term self-enhancing cooperation of the entire sector.

What are the other problems the industry is experiencing?

Our industrialists need to quit imitating and invest in their own agenda and decision. It is not beneficial for anyone doing the same business to establish manufacturing facilities side by side. If necessary, the ministry will arrange this. When someone produces something and profits, if others make the same investment thinking ‘‘there is money here’’, the prices of the products decrease due to the high supply and the profitability there decreases. You will be petrified with the investment you make. In order to make a profit, you shall not covet or attempt to share the profit of others. You will fail, you will hurt the business of others, and you will get hurt yourself more. Let’s support those who do their job well, go their own way, and are successful, but let’s not allow imitators.

Finally, can we hear about your thoughts on the ITM Exhibitions?

Exhibitions, especially industry-specific trade exhibitions, are places to introduce innovations and are exciting. Unfortunately, the exhibition sector in our country has lost its unity and solidarity in the past. Today, everyone organizes sectoral exhibitions on their own. I condemn the holding, division, and dissolution of so many exhibitions in the same sector. Exhibitions should be held in unity and solidarity with all industry components. Especially exhibitions for the textile and apparel industry should be prevented from being held in 2 different places in the same month. This is a situation that harms our industry.

ITM is a machinery exhibition. Since we cannot go to distant places, to all machinery exhibitions in other countries, we must attend this exhibition held in Turkey and update ourselves. We must demonstrate the innovations we have made and closely follow the innovations developed. It is important for us to follow the innovations in the world market and position ourselves according to supply, demand, and fashion trends. In the past, Turks used to buy the machines the most at the exhibitions in Europe, now they do this at this exhibition in Turkey, that is, at the ITM.