Mortgage crisis hits Turkish marble sector
Posted by meb at March 20th, 2008
Turkish natural stone companies are facing tough times due to a stagnating U.S. construction sector, Turkey’s largest natural stone export market.
Exports to the U.S., which had been increasing for the past 20 years, declined both in terms of unit and value for the first time last year. Out of aggregate natural stone exports worth $1.2 billion, exports to the U.S. reached $386 million last year. Several Turkish companies started to close their storages in various provinces and have clearance sales, particularly in Miami, to achieve rapid sales and enter large construction projects. Moreover, the fierce competition the firms are trying to survive creates losses in sales. The performance of the sector in the first two-and-a-half months of the year reveals a rising deterioration, according to exporters.
The largest amount of exports from Turkey in marble and natural stone products goes to the U.S., said Arslan Erdinç, chairman of the Aegean Mine Exporters Union, which keeps a natural stone sale storage in the U.S. However, bad competition of Turkish companies as well as economic stagnation result in a rapid decline in prices, he said.
The sales in the U.S. market fell by 40 percent, he said, adding: “Everyone opened storages in the U.S. Even Turkish students and migrants started to sell stones by phone. Almost every Turk in the U.S. has become a natural stone vendor. Once this business became unprofitable, U.S.-based companies turned to imports of lower cost stones rather than Turkish ones. At that point, some companies began leaving the market by closing their storages.”
Despite the stagnation, the U.S. remains the world’s top natural stone consumer, said Erdinç. “However, the constructions of the middle income classes, known as track houses, have almost come to a halt. Cheap natural stones were used for this kind of construction.” No decline in million-dollar houses, for which stones of quality are used, has been observed, he said. “Therefore, we have to base our sales on them. We believe the distress will continue until March 2009, but an improvement in the situation is expected after the presidential elections.”
Search for new markets:
The distress in exports to the U.S. is felt most by travertine companies, said Selahattin Onur, chairman of the Turkish Marble, Natural Stone and Machinery Producers Union. “The crisis in the U.S. came from the construction sector. Sales slowed down as there are not many new constructions. Companies reduced their exports by half.” The cost of an average storage location in the U.S. is between $40,000 and $50,000, said Onur. “The companies are closing storages to reduce expenditure. Maybe this distress will push us to find new markets.”
Exports to the U.S. deteriorated by 30 percent, said Mevlüt Kaya, chairman of the İzmir Marble and Natural Stone Platform. “Companies are trying to reduce their stock in the U.S. Therefore, they do not make new orders. We are not sure whether there will be an increase after the existing stock is sold. We stopped producing marbles, and are pondering over global economic problems now.”
The distress in exports also delayed the launch of the natural stone season. Particularly producers in eastern Anatolia prefer not to operate their quarries rather than producing to sell at a loss. Over 10 quarries and many factories in Sivas did not initiate production despite the end of the winter season, said Zeki Özdemir, chairman of Sivas Natural Stone and Miners Association. Increasing costs and decreasing sales took a swing at them, he said.
source: Turkish Daily News
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