Reopening factories in southeast Turkey could revive local economy

Several Turkish governments have characterised the country’s Kurdish issue – the decades-long struggle between the Turkish state and the Kurdish political movement – as one of development, tying Kurdish dissatisfaction to regional underdevelopment and unemployment.

The government has spent millions on subsidies and investment packages to stimulate economic development in Turkey’s predominantly Kurdish southeast. Yet many of the factories and other facilities created during that drive are now closed due to neglect, economic problems or the 2015 resumption of violence with the outlawed Kurdistan Workers’ Party (PKK), an armed group that began its fight for Kurdish self-rule in 1984.

Two disused factories are owned by Toprak Holding, in the town of Lice in Diyarbakır province. Halis Toprak, the company’s founder, grew up in Lice, and when he built the marble factory and the oil and feed factory in his hometown, Turkey’s then-president, Süleyman Demirel, attended the opening ceremonies.

Despite a $40 million investment in the factories and considerable local benefits, the doors were shut in 2009, leaving hundreds of workers without jobs. In all, 22 Toprak factories were closed by the state-run Savings Deposit Insurance Fund (TMSF), which seized the company’s assets when it went bankrupt in 2009.

At the time, many locals expressed displeasure with the TMSF decision to close or sell the factories rather than seek a solution that saved workers’ jobs.

Halis Toprak, who eventually managed to buy several of his factories back from the TMSF, blamed the closures on the state, which he said had encouraged him to invest beyond his means.

The marble factory in Lice now lies abandoned and left to rot, after Toprak Holding spent $10 million on the construction.

The factory covers 162,000 square metres, 8,000 square metres of which are enclosed. It was meant to employ 400 people, and to annually produce 650,000 square metres of marble for export to 30 countries.

In 2010, Toprak’s business partner, the Demirören Group, purchased the marble factory from TMSF, but today only five security guards work at the site. No reason has yet been given for the factory remaining shuttered in a region rich with marble reserves.

The oil and feed factory, opened in 2003 for $30 million, is in a similar condition. Initially projected to annually produce 98,000 tons of oils and oil products and 210,000 tons of feed, since the TMSF took over in 2009 the factory has been staffed only by security guards.

Businessmen Refik Bulutçu and Reşit Cantürk rented the oil and feed factory for five years in 2014. However, they faced funding problems from the start, and disaster struck in 2015 with the resumption of violence between Turkish forces and the PKK, which decimated many cities across Diyarbakır province.

The factory was closed again without production even restarting. Cantürk said he had been warned by many people when he decided to rent the factory not to get involved with business in Lice.

Yet there was good reason to believe the factory could be a success. It is the largest factory of its type in the east and southeast of Turkey, with the capacity to supply those regions and export to the Kurdistan Regional Government of northern Iraq.

When Cantürk and his partners took over the factory, Turkey was importing 70 percent of the sunflowers used in oil production. Cantürk and his partners conducted a workshop with Dicle University’s Faculty of Agriculture aimed at lowering dependence on imports by encouraging farmers to produce the crop locally.

The factory would have brought economic benefits to the region. Yet, Cantürk said, it would require an annual investment of over $30 million dollars, and many banks did not look warmly at Lice as a place to invest, likely due to the risk of conflict.

Likewise, when Cantürk’s company contacted the Turkish petrochemical company Tüpraş to buy hexane, a highly flammable chemical needed in the oil production process, he said they faced problems.

“We sent our capacity reports and the money, but the official at Tüpraş told us he wouldn’t send the chemical to Lice,” Cantürk said.

Cantürk added that he had applied for assistance to the local governorate but was rejected. “It’s sad for us that the factory is being left to rot. The area has a young population, and there’s a factory ready-built. It could go into production in two months,” said Cantürk.

Toprak Holding is also looking to secure funding to reopen the factory, which it hopes can reinvigorate the local economy.

“I think in the years since our production has ceased, the people of Lice have been facing serious socio-economic problems. There are no other areas that are creating employment,” said Ayhan Aydın of Toprak’s construction group.

Eyüp Atman, who lost his job when the marble factory closed, spoke of the heavy blow the factories’ closure dealt to the local community.

“Everyone is looking for work in Lice. Those who couldn’t find it have gone elsewhere,” Atman said.

Eşref Demir, another former worker at the factory, remembers the years before it was built, when local men had to travel to western Turkey for 4-to-5-month stints to work in construction. But when the factory opened, Lice began to draw workers from other areas.

“The factory produced a lot while it was operating. Around 200 people were working up until 2005. Sometimes we couldn’t keep up with our orders. The factory was making money,” Demir said, adding that he still could not understand why it had closed.

With Turkey’s current economic situation looking bleak, and the construction sector, a vital employer for locals, under severe strain, many in Lice see the factory as their only hope.

“We want this factory to reopen and start producing as soon as possible,” Demir said.