Direct foreign investment in Türkiye has stubbornly remained off-target (see box). Any investment is good news and the leather sector in Izmir is cock-a-hoop with West Yorkshire Fellmongers’ (WYF) decision to open a euro-hub in the Menemen Free Trade Zone. The Kastro brothers, Beno and Avram, are partners in the venture, along with Ali and Adnan Alak of Alkan Deri. Whilst £1 million won”t revive Menemen’s fortunes, the psychological boost is enormous. Menemen has ten or eleven working tanneries; so a strategic decision was taken to attract industries other than leather processing to the zone. Ceramic, auto spares, and electronic firms now form part of the new industrial mix with environmental certification at the core. Investment seems to be following.

West Yorkshire Fellmongers did plenty of homework before selecting Menemen as their wholly UK-owned Turkish branch. They were impressed with the tax-free trading advantages and a skilled, well insured labour pool. The on-site convenience of thirty-five leather chemical companies, labs and R&D facilities was also a magnet.

‘At Menemen, we have two wastewater facilities certified to European standards. Within the tax and duty free zone, importing and exporting are streamlined and we are near air and sea routes. Menemen is the proper place for this kind of venture’, Avram Kastro emphasised.

Spanish and Italian tannery processing costs have persuaded (or forced) many tanning enterprises to either close or move to lower labour cost areas. Garnering such investment gives Menemen credibility as a serious and committed leather processing centre. The dynamics of the partnership mean that West Yorkshire Fellmongers Ltd, Menemen, will process wool-on sheep and lambskins for nappa and doubleface. Part of the investment has financed capital goods, such as a wool pressing machine. Wool is baled and shipped back to the parent in Bradford and on sold globally. In the doubleface season, raw skins will be processed.

In the first operating quarter, pickled pelt production for nappa has gone from 10,000 skins per week to 20,000. WYF Menemen director, Beno Kastro, said the goal is to process one million skins by the end of 2005. Sales should be equally divided between export and local markets.

Pickle exports go to Spain, Italy, France and Pakistan and potential contacts are being groomed in India and China. What distinguishes the Menemen enterprise is the conscientious grading of skins. Spanish technicians visit regularly and have transferred advanced skills and know-how to the operation.

The bonus for tanners is that they can now choose from ten different grades and buy their exact requirements. Traditionally they bought skins by the container-load that included a mixed bag of grades in with their order. Now, they choose precisely-graded quantities and don’t need to pay for superfluous grades.

WYF Menemen are eliminating the guesswork and risk from the bulk buying of hides. A garment producer, for example, gets only the grade he wants; it is in stock at any given time and he trims his lead time on cutting, stitching and shipping. This is the way to strategically add value to orders and present customers with smart solutions.

‘We are the first boutique tannery in Türkiye’, Kastro stated. For him, the project is the realisation of a dream.

Direct foreign investment

Foreign Direct Investment (FDI) in Türkiye has had long-standing expectations of between $8 and $10 billion, but barely touched $1 billion in any given year. Economic dithering and nepotistic business tendencies scared off private and institutional investors.

West Yorkshire Fellmongers’ investment of £1 million in the Menemen Free Trading Zone comes at a time when a Belgian-Dutch banking group have bought Turkish Dis Bank for $1.3 billion. Electrolux, a Swedish white-goods producer, is reported to be eyeing Türkiye as part of a move to hive off production to lower-wage cost centres. So, leather looks in grand company. This is just as well as Türkiye’s foreign debt is more than 60% of GDP and yawning negative trade and current account balances still blotch a rise in industrial production by a record 14.6% in the year to February 2005.

The West Yorkshire Connection

England once had about thirty-five fellmongers (fell = fleece of a sheep. monger = trader) and West Yorkshire Fellmongers (WYF) based in Bradford, remained in business longer than most. With lamb kills falling (19 million in UK in 2004) and supermarkets taking over the role of butchers, UK hide and skin sales slipped. The micro management of meat hygiene increasingly exposed skins to abuse and inferior quality.

WYF introduced fellmongering to Spain when UK business began to decline but, with this country’s environmental laws and processing costs now close to UK levels, producers are easily enticed to lower cost markets. High energy prices and the beefy euro scarcely help. WYF have given up fellmongering in Bradford and now trades skins only.

Their pickle and wet-blue production of lamb and sheepskins, once carried out in the UK, will now be done in Türkiye.

Leather International spoke with Neville Newton, director of WYF, who is clearly delighted with the Menemen venture and the enthusiasm and professionalism of the Turkish team. ‘It makes commercial sense to service Italian, French and Spanish market from Türkiye’, he said. Production at Menemen is a hands-on affair with on-going technical and management support from Bradford. In Istanbul, Cemre Deri, based in the Tuzla leather zone, will continue their long-standing business as agents for WYF.