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Turks worried about U.S. biz, SARS impact

Like U.S. suppliers, Turkish home textiles suppliers exhibiting last week at the Evteks trade show here said they are concerned about the softness in the U.S. retail market, hopeful for a post-war bounce and watching to see how SARS will ultimately impact the global supply chain.

They also are grappling with some factors unique to their region. For manufacturers that buy their raw materials in Euros, the dollar's decline against that currency is chewing into their margins for U.S.-bound goods. In a double whammy, inflation — up 35 percent in Turkey last year — has increased labor and energy costs, further pressuring margins.

"All of our payments are in Euros. It goes up and down. It's just crazy," said Barbardos Alatas, foreign trade general manager for Ipek Tul, which manufactures window treatments, shower curtains, tablecloths, bedding and lace. Nonetheless, Ipek Tul recently opened a New York sales office and a warehouse in New Jersey and plans to build its business in the United States.

The United States absorbs 21 percent of Turkey's home textiles exports, making it the country's second largest export market after Germany, which accounts for 27 percent, according to statistics published by the Turkish Home Textiles Industrialists Association. As several suppliers were quick to note, while a weak dollar makes pricing for the United States more challenging, it's been a boon to European-bound exports.

"If you really want to sell, you sell," said Fatih Turk, export sales manager for Marteks, which has been selling window into the United States for about seven years. Despite the tough retail climate last year, Marteks boosted U.S. sales by 40 percent. Its target for this year is 20 percent to 30 percent, he said, although the war in Iraq hurt spring orders.

While window and bedding manufacturer Zorlu has also noted the weakness of U.S. retailing, the firm has long-term plans for the market. For most of its 11-year experience in the United States, Zorlu has furnished wholesalers or served as a supplier of private label product for retailers. Now the company wants to start building its own brand.

"U.S. consumers are not aware of Zorlu," said Yakup Kaya, export sales representative. "That's our first target." Researchers in the company's 25-person Atlanta R&D office are studying how items are selling region by region so that the company can create products that target specific markets in the country.

Rudi USA, the subsidiary of Turkish window fabrics and panels manufacturer Dilhan, has expanded its cut-and-sew capacity to handle growth coming from the United States and United Kingdom. Although Rudi previously sold to both wholesalers and retailers, the office is now limiting its dealings to wholesalers, according to Esra Ozkan, vp.

Towel manufacturer Oguzlar also is more comfortable with a manufacturer-to-wholesaler/importer structure for its U.S. business and would like to forge an alliance with a single U.S. partner company, said Tolga Demiray, marketing manager. "In London, we've had a partner company for three years. It has tripled our business there," he added.

However, many Turkish suppliers said they prefer to maintain a smaller but more manageable business in the United States. Window manufacturer Nerfe, which is planning to adopt a new name this year, is satisfied with its U.S. business but sees more opportunity in Europe, according to Harun Sengul, marketing manager.

"For at least half of our European customers, we're delivering a portfolio of goods. It's not one item," he said. European orders also turn faster, he said. "In Europe, repeat orders come in about six weeks. In the United States, we're waiting 16 weeks."

Fabric manufacturer Hismar Tekstil only recently began selling to U.S. fabric suppliers. Although it's too early to tell how much business the company can do there, "we are expecting good results," said Mehmit Emin Sancar, sales executive. "We think there's an advantage for us to fill the gap of what they can produce themselves."