generalspeaking

Monday, February 04, 2019

Turkey's Dynamic Steel Production vs Financial Woes

"This is my 51st year in the business. I have seen many crises."
"The economic turbulence is temporary. As a company, we are aware of our strength. We know our country's economic strength, too."
"It is unforgivable to hide the money you made in Turkey by taking it abroad."
"[Other bosses] put their feet on the brakes, they cut the work force. We do the opposite."
Fuat Tosyali, 55, entrepreneur, metallurgy producer

Turkey’s crude steel production rises in first five months

Turkey’s crude steel production rose 4.3 percent on an annual basis in the first five months of the year, reaching 15.9 million tons, the Turkish Steel Producers’ Association (TCUD)

Mr. Tosyali is the owner of no fewer than 18 steel-making factories located in Algeria, Montenegro and Turkey. His business represents Turkey's largest producer of steel piping. But when Mr. Rosyali was only five years old -- long before he became the steel magnate he now is, and one of the richest people in Turkey -- as a child living in poverty, he helped his father, Serif Tosyali, illiterate, but a genius at gauging steel, hammer scrap metal into parts for stoves and boilers.

When he was older the Tosyali family began to produce enameled steel for washing machines, and pipes for homes with modern heat in Turkey. 1994 saw the Tosyalis purchase a factory in Iskenderun to produce iron used in construction which positioned them to profit when a sustained building boom allowed them to begin to build their steel-making empire.

Given his long experience and the huge success he was given through his family's hard work and his own entrepreneurial spirit, the current downtown in the Turkish economy doesn't faze the man whose passage from poverty to wealth twinned with his country's journey from the Ottoman Empire to Mediterranean economic powerhouse until last summer's dive in the economy. Turkish steel has been hard hit by the U.S. tariffs.

The plunge in the value of the lira has dictated a decline in consumer demand, given the 50 percent levies on steel imported to the U.S. from Turkey. Despite having the world's 17th-largest economy, Turkey now appears to be the locus high on a list of countries where the next global financial crisis could appear. A near-certainty, which has impelled growing numbers of Turkish entrepreneurs to leave the country, or alternately transfer wealth overseas.

Some among them believe not only that the economy will continue its downward spiral, but that Recep Tayyip Erdogan's government could undertake to seize their assets. Mr. Tosyali, by contrast, claims to be planning a major new investment in steel production, relying on his belief that Turkey, long viewed as an economic success story, will soon be poised to make an economic come-back.

This, despite the political turmoil wracking the country and the government's ongoing threats toward Syrian and Turkish Kurds and its compromised position with the U.S.

Tosyali Holdings which began in the port city of Iskenderun close to the border with Syria looks to the fact that the lira has made a slight recovery even though it had lost 28 percent of its value in 2018.
Steel makers earn revenue from exports in dollars, paying their bills in devalued liras, leaving manufacturers with an advantage in export markets despite the danger to Turkey's financial system.

But European analysts and bank regulators fear Turkish businesses that had accessed loans might not be able to repay them, destabilizing the banks with holdings there.

Mr. Tosyali is relying on Turkish economic dynamism, that the rough period represents an opportunity for fortitude in a situation he views as transitory. As far as he is concerned, Tosyali Holding is planning to advantage itself of lower manufacturing costs in an expansion to place itself in position to gain market share once the crisis is over.