INDUSTRY OF

RUBBER

AND PLASTIC

PRODUCTS

EVALUATION OF THE SECTOR BETWEEN 1990-1994

ONUR BAŞER

AZİZ ÇAĞLAR ERDOĞAN

GENERAL INFORMATION

Number of firms in the Rubber & Plastic Industry is 170 with the data of 1994. 164 of these firms are corporations (142 Anonim, 22 Limited) and 6 of them are sole proprietorship.

Sector Indicators According To The Employment Criteria :

Scale Range	Number Of Firms	Number Of Employees	%	Net Sales Billion TL	%	Total Assets Billion TL	%	Capital Billion TL	%
Small Firms (<50)	89	2,291	12.00	4,699.8	9.51	2991.6	8.60	1,440.8	8.62
Medium Firms (50-500)	75	10,951	57.40	23,814.3	48.18	16,672.8	47.95	7,455.3	44.58
Large Firms (>500)	6	5,838	30.60	20,912.2	42.31	15,110.4	43.45	7,825.6	46.80
TOTAL	170	19,080	100.00	49,426.3	100.00	34,774.8	100.00	16,721.7	100.00

According to the employment criteria we can see that 89 small firms employ 12.00% , 75 medium firms employ 57.40% and 6 large firms employ 30.60 of the total employment number 19080.

SALES & EXPENSES

I-)Total Sales :

	1990	1991	1992	1993	1994
Domestic Sales	3,227,779	5,614,929	9,797,983	19,845,002	36,732,743
International Sales	561,769	1,203,819	2,594,904	2,541,578	15,124,950
Other Sales	90,618	98,640	367,309	256,612	767,861
TOTAL	3,880,166	6,917,388	12,760,196	22,643,192	52,625,554

As seen on the charts, the total sales have increased considerably. One of the thing has taken our attention. When you look to the International Sales of 1994, there is an enormous increase in the sales. This can be a result of

1994 Economic Crisis which caused the demand decline in the domestic market. So the companies started to sell their excess production to international markets.

II-)Discounts On Sale :

	1990	1991	1992	1993	1994
Sales Returns	15,897	44,129	108,071	113,762	460,309
Sales Discounts	107,096	154,330	269,879	792,603	2,382,466
Other Discounts	20,859	51,884	156,503	44,695	356,533
TOTAL	143,852	250,343	534,453	951,060	3,199,308

In the total amount of discounts from 1990 to 1993 there was a normal increase. However in 1994 the amount of increase was 336.3 % compared to 1993. This is also connected with the 1994 Crises which cause a decline in money supply (of TL), and companies preferred large discounts to speed up the turnover of cash. There is also an enormous increase in Sales Return of 1994 compared to previous years. As our sector is a

sub-sector of many other production industries, may be they merchandised their usual stocks in the beginning of 1994 from our sector. But with the unexpected Crisis they had overstocks. Due they may have to return some of their stocks back.

III-)Cost Of Goods Sold :

	1990	1991	1992	1993	1994
TOTAL	2,098,057	5,013,535	12,225,743	21,692,132	49,426,246

As seen on the chart there is normal increase in Cost of Goods Sold. We can say that there is a normal increase in 1994 although the Crisis. We think that this result can be from the sectors’ old inventories. They can use this inventories in their production so that their cost of goods did not increase so much.

IV-)Cost Of Activities :

	1990	1991	1992	1993	1994
TOTAL	538,580	917,998	1,555,439	2,702,649	5,025,388

Cost of activities consist of Research & Development Expenses, Marketing and Transferring, Management Expenses.

V-)Profits Or Losses :

	1990	1991	1992	1993	1994
Profits Or Losses Of Activities	357,503	735,512	1,580,107	3,272,828	10,115,180
Other Ordinary Revenues And Profits	95,855	143,929	234,991	587,781	1,501,245
Other Ordinary Expenses And Losses	-30,405	-52,956	-121,530	-206,921	-937,075
Financial Expenses	-220,033	-583,057	-795,393	-1,356,177	-4,269,682
Unordinary Revenues And Profits	13,603	36,078	85,698	88,908	731,276
Unordinary Expenses And Losses	-85,199	-57,030	-44,809	-165,409	-568,006
The Total Amount Of Profits Or Losses	131,324	222,476	939,064	2,221,010	6,572,938

The Total Amount Of Profits are the values before the taxes.

Net Profit Or Loss :

	1990	1991	1992	1993	1994
TOTAL	67,167	79,026	673,998	1,534,815	4,272,957

These values are after the tax values which are net profits. As

the effects of inflation is ignored we could not compare the profitability from the exact values.

PROFITABILITY OF FIRMS :

	1990		1991		1992		1993		1994
	Firm Num.	%	Firm Num.	%	Firm Num.	%	Firm Num.	%	Firm Num.	%
PROFIT	119	85.61	115	82.7	152	89.41	147	86.47	149	87.65
LOSS	20	14.39	24	17.3	18	10.59	23	13.53	20	11.76
NO CHANGE	0	0	0	0	0	0	0	0	1	0.59
TOTAL	139	100	139	100	170	100	170	100	170	100

On average the firms of our sector is profitable at a percentage of 85.3%. Fluctuations on profitability of firms are small and have no effect on sector except 1992, in which 31 new firms entered in the industry.

Some Ratios About Profitability

	1990	1991	1992	1993	1994
Profit Before Tax/Owners Equity	25.66	23.31	22.90	26.67	34.45
Net Profit/Capital Ratio	21.03	20.07	15.42	19.12	19.95
Activity Profit/Net Sales	9.76	10.43	10.38	10.54	15.47
Interest Expense/Net Sale	6.3	12.49	8.02	7.88	9.92

Central Bank Of Turkey has taken these for evaluating the profitability of sector. According Profit Before Tax/Owners Equity, the ratio has decreased from 1990 to 1992, but increased through 1992 to 1994. When we again look to the profit before tax graph the profit has increased simultaneously. So we can conclude that the decrease between 1990 and 1992 is because of the increase in the Owners Equity, and also we can say that the increase between 1992 and 1994 is due to the difference between the increase ratios of Profit Before Tax and The Owners Equity.

EXPORTS AND IMPORTS

	1992	1993	1994	1995
Exports	380.20	385.40	450.20	554.50
Imports	979.30	1,155.60	1,002.90	1,779.50
Ratio Of Export/Import	38.82365	33.35064	44.88982	31.16044

1990,1991 data are not available

As seen on the table the increase of imports is greater than the exports. Moreover we can see that our industry is dependent to the foreign countries.

BALANCE OF THE SECTOR

A-)Assets :

	1990	1991	1992	1993	1994
Unstable Assets	50.22	53.08	63.69	64.87	65.22
Stable Assets	49.78	46.92	36.31	35.13	34.78

As seen on the chart we can say that unstable assets increased but also the stable assets decreased.

B-)Liabilities :

	1990	1991	1992	1993	1994
Short Term Loans	1,230,907	2,049,277	3,367,507	6,569,152	15,350,704
Long Term Loans	418,965	574,994	766,066	1,472,680	2,702,567

As seen on the chart short term loans are increased more than long term loans. This can be because of the market structure of Turkey. We can say

that the market allows short term loans.

C-)Owners Equity:

	1990	1991	1992	1993	1994
Owners Equity (Million TL)	1,334,531	2,310,130	3,986,878	7,321,526	18,221,614

The huge difference between owners equity of 1993 and 1994 is both caused by owners capital add and profitable operations.

INDUSTRY OF RUBBER & PLASTIC PRODUCTS

Rubber and Plastics are essential parts of our contemporary life. Every complex device around has a plastic part from cars to CDs. As it is

so much in our life, and going to be so for a long time(average recycle time is 400 years),this industry will continue to prevent its’ importance in the future . Moreover as our families are in the car and tyre dealing jobs our future occupations will be related to rubber and plastic industry.

Rubber and Plastic Industry has a considerable place in the production sector of Turkey. It forms 4% of Turkey’s production companies, 3% of the employment, 3% of the net sales, 4% of the capital, 3% of the total assets of production industry, 5% of the imports, however 0.6% of the exports. The difference between exports and imports is the result of the requirements of raw materials such as oil and rubber which are scarce resources of Turkey.

Our industry is a sub-sector for most of the production industries. For instance, Automobile sector is the most important dealer of the industry, and every little fluctuation effects each other. Also the sectors which forms the basis of a countries’ production like Major Durable Consumer goods, Packaging , Food and Drinks Industries, are dependent to, and have to arrange their production according to the conditions in the Rubber and Plastic Products Industry.

In the recent years demand to the sector , production, imports, and exports proceeded considerably with the improvement of car industry. However signing the agreement of Customs Union had effect the unprepared Turkish Industry most of which are our dealers, and the government’s new policy on the imports of cars, doubled the problems, although Rubber and Plastic Products Industry can challenge with foreign markets. According to DPT, this will increase the exports by 13.0%.

For a brief evaluation, we prepared some tables and charts, which will guide you to see ongoing conditions of industry.

BIBLIOGRAPHY

1-)Sektör Bilançoları (1990-1992), Türkiye Cumhuriyet Merkez Bankası, Ankara, 1993

2-)Sektör Bilançoları (1992-1994), Türkiye Cumhuriyet Merkez Bankası, Ankara, 1995

3-)Temel Ekonomik Göstergeler, T.C. Başbakanlık Devlet Planlama Teşkilatı, Ankara, Eylül 1996

4-)Ekonomik ve Sosyal Sektör Gelişme Destek Programı Çalışması, T.C. Başbakanlık Devlet Planlama Teşkilatı, Ankara, 1996