Sector Outlook Panel with Chairmen Held at AYSAF

Sector Panel with Chairmen Held at AYSAF The 68th International Footwear Auxiliary Industry Fair AYSAF, opened by ARTKİM Fairs at Istanbul Expo Center, brought together 36 business sectors, including footwear auxiliary materials, leather, synthetic leather, textiles, soles, heels, accessories, machinery, chemicals and mold manufacturers from all over the world. On the second day of the fair, the panel titled "Sector Outlook with Chairmen," moderated by Hande Berktan, featured sector stakeholders including AYSAD Footwear Auxiliary Manufacturers Association Board Chair Sait Salıcı, TASEV Turkey Footwear Sector Research, Development and Education Foundation Board Chair Hüseyin Çetin, TASD Turkey Footwear Manufacturers Association Board Chair Berke İçten, and Aegean Leather and Leather Products Exporters Association Board Chair Erkan Zandar. Speaking at the panel, AYSAD Board Chair Sait Salıcı noted that a shoe consists of approximately 50 input materials and contributes to many areas of the economy: "Footwear exports, which rose to USD 1 billion in 2022, closed at around USD 1.3 billion. Due to exchange rate fluctuations, we anticipated that exports would decline in the last quarter of 2022 and our shoe prices would remain very high. For this reason, we made recommendations to our auxiliary manufacturers and shoe producers to offer reasonable prices. Everyone did what they could, but it was not sufficiently effective. Unfortunately, in the first 3 months of 2023, exports declined and imports increased by 120%," he said. Drawing a parallel between the sector's conditions and a jacket knitted in the 1980s that had become too tight, Salıcı stated that physical conditions, especially production areas, need to be improved both to increase exports and to enable new generations to participate in employment. TASEV Board Chair Hüseyin Çetin, noting that the footwear sector is labor-intensive, stated: "Our sector is an ancient craft with significant manual labor. With approximately 300,000 employees, it provides work for 2 million people. We have manufacturers in many cities, particularly Istanbul, İzmir, Konya, and Antakya. Our sector achieved significant export growth in 2022. Particularly in cities where the sector clusters, there was a transition from craftwork to industrialization; as a result, exports increased. For this growth to continue, for price advantage to be achieved, everyone needs to contribute so that footwear exports can continue. There is a very large market abroad for the sector, but Turkey cannot even capture 1%," he said. Çetin, noting that the average age of workers in the sector is 50 and above, said: "Within the next 10 years, we need to bring 300,000 new workers to this sector to replace those who will retire. I do not see this as possible because sector conditions do not match the expectations of new labor. We can only adapt manufacturers' physical and technological structures to current conditions and current people if we first receive even a proper organized industrial zone allocation," he said. TASD Board Chair Berke İçten, noting that labor accounts for 25-30% of a shoe's cost and that reducing working hours would create serious negative consequences, stated: "Since 2014, the footwear sector has increased its exports by 10% every year, ultimately reaching a position where it generated a current account surplus of USD 500 million last year. We anticipate 2023 will be challenging. We received orders for the products we produce today 6 months ago. We identified that the reason for the decrease in received orders was due to our price premium; we all said let's lower our prices. We launched a campaign to reduce prices by 10%, some managed to do it and some did not. We have now reached a point where we have lost our price advantage. Although our exports appear to be increasing in the first 3 months of the year, we show a decline on a unit basis. Because product unit costs have increased, exports appear to be rising, but when we compare April with April of the previous year, we saw a 16% decline even on unit value basis. We believe exports will decline further in the coming months. For this not to happen, the exchange rate needs to move in parallel with inflation," he said. Aegean Leather and Leather Products Exporters Association Board Chair Erkan Zandar, noting that personnel costs, which were USD 290 three years ago, have increased to USD 690 today, and that the labor-intensive footwear sector has increased due to both personnel and raw material costs, stated that costs have exceeded Europe's levels. Zandar said: "Our labor costs need to remain below a certain level. As we entered 2023, we saw signals at international fairs; winter season is the season when more expensive products are sold and we know we cannot compete in this season. Therefore, the downward export trend will continue. At new fairs we will price summer products, but according to what. Nobody can forecast exchange rates for 6 months. Our inability to achieve sustainable economic policy is the biggest problem. Producers are afraid; rightfully so. We need to move toward more sustainable exchange rate policy. We need to diversify our markets, but unless we provide a competitive price environment, wherever we go we will have no opportunity to increase our exports. Actually, we are a country that could also export its auxiliary industry, but we have not yet fully adopted this identity. The participation of our auxiliary industry companies in international fairs is still very low. We need to support these companies, we need to take our manufacturers to those fairs. For example, there is serious production in Romania, Poland, Serbia, and they need materials. We need to target these countries." AYSAF, Eurasia's largest and Europe's second-largest fair in its sector, hosts 327 companies. The fair, which is expected to receive over 15,000 visitors from more than 80 countries, will remain open until 6 May 2023.