Leadership and Democracy LabWestern Social Science

Natural Risks to Turkey’s Textile Industry

Primary Article Contributor: Jeyasri Pakeerathan

Team Leader: Ernest Tam

17/11/2016

The most common natural disasters in Turkey are earthquakes and tremors. The history of earthquakes in Turkey is caused by the geographic location of the country, as it exists on the North Anatolian fault, between two tectonic plates. This region is one of the most active seismic zones due to the large amount of fault lines. The last earthquake that occurred in Turkey was in Van in 2011, known as the Erics-Van earthquake. This 7.6 magnitude earthquake claimed 570 lives. Earthquakes occur most commonly in the Northern region, close to the Sea of Marmara and around Lake Van.

Historically, Turkey has had a pattern of recurring earthquakes. In 1999, the Izmit earthquake claimed 17,000 lives and cost the Turkish economy 5 billion dollars in damages. The earthquake occurred near the city of Izmit, 65 miles away from Istanbul. When they do occur earthquakes in Turkey tend be severe, incurring large costs for rebuilding infrastructure. Earthquakes in Turkey have caused 64% of the total economic damages due to natural disasters. The probability of an earthquake occurring within the 7-magnitude range in Istanbul, Turkey’s most populous city and economic center, within the next 20-25 years is around 30-60% percent. Taking everything into consideration, companies operating within Turkey, and especially Istanbul, should be aware of the very real possibility of natural disasters, specifically earthquakes, and consider the risk mitigation techniques in the next section.

Floods are the second most common natural disaster in Turkey. In 2009 a flash flood hit the Western region along the Bosphorus Strait, which is situated between Europe and Asia. The Bosphorus Strait is a series of waterways in Northwestern Turkey including Istanbul. This area tends to be the most vulnerable to floods due to its geographic location as heavy rainfall cause the waterways to flood. Floods rarely occur and thus should not be a major concern for investors; earthquakes are the biggest natural risk by far. Geographically, important textile regions in Turkey include Istanbul, Gaziantep, Izmir, Denizli and Adana; these highly industrialized cities are where most of the factories and companies are located. Major brands operating in Turkey include H&M, Zara, S.Oliver and Hugo Boss.

Another natural risk is landslides, which occur due to the large amount of rainfall produced in floods. Like floods, the chance of landslides is much lower than earthquakes, thus risk mitigation efforts should be focused on earthquakes.  Overall, Earthquakes have caused 64% of all the disaster losses in the last century while landslides have caused 16% of all disaster losses.

Istanbul has been very active in risk mitigation efforts with over 700,000 buildings that are able to withstand seismic shocks and upwards of 450,000 people trained to be prepared in the case of a disaster. In response to the recurring earthquakes, the Turkish Government and the World Bank formed the Istanbul Seismic Risk Mitigation Project (ISMEP) in May 2014. The project cost $550 million and improved the infrastructure to withstand future earthquakes and tremors, as well as better preparing emergency response teams to the natural disaster. The ISMEP also implemented strict building regulations and enforced regulations outlined by the state government of Istanbul since the most common issue in construction of Turkish buildings is the use of low quality concrete and the lack of proper reinforcement in the columns.

Companies can pressure politicians to utilize more seismic shockproof infrastructure and enforcing building regulations through lobbying and investing. Companies can also assist in financing government initiatives related to risk mitigation. Businesses are also encouraged to supervise constructions of factories to ensure that government construction regulations are met. Along with improving infrastructure, it is beneficial to institute emergency training for employees.  The health impact of earthquakes can possibly be reduced along with the death toll through employee emergency training. The home textile industry can also mitigate risk as employees work from home and thus, they will be spread throughout the country. By capitalizing on this industry, it is less likely for all employees to be affected by one earthquake as they are geographically distributed. Companies can also capitalize on locations less vulnerable to earthquakes such as Ankara, Konya and Adana. Another option to investors is to place their capital behind companies or regions that have invested in risk mitigation techniques such as Istanbul, or avoid areas around the Sea of Marmara and near Lake Van since they have an increased chance of earthquakes.