Report: IKEA to nearshore production to Turkey for Europe and Middle East markets
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IKEA is set to move production to Turkey so as to limit supply chain disruption and avoid exorbitant shipping costs. The furniture retailer's chief financial officer for Turkey, Kerim Nisel, told Reuters about the decision yesterday.
According to Nisel, the move has been motivated by the shipping problem IKEA has experienced during the coronavirus pandemic. Nisel added:
“We all saw in the pandemic that diversification is so important. It might not be a good strategy to produce items in one country and then try to transport them all around the world. It is more rational to have them manufactured closer where they are sold. That’s why we want to have them manufactured in Turkey”
As Reuters points out, IKEA already produces textile, glass, ceramic and metal products for global export in Turkey. Although the country is not in the EU single market, it is in the customs union, which facilitates export to the EU to some extent. Turkey offers rail freight links into the heart of Europe too.
The news comes roughly a month after IKEA confirmed to media outlets in the US and Sweden that it had been purchasing containers and even chartering ships in order to sure up its supplies.
Mikael Redin, IKEA’s product deliveries director, told Swedish daily Svenska Dagbladet that the move had been motivated by issues such as the Suez canal accident, which had caused great disruption.
Redin also told the Swedish newspaper that port congestion, high demand and a lack of raw materials have also been factors affecting the availability of product lines at the furniture store’s branches:
“Congestion in ports combined with historically high demand has created an imbalance in the entire world market for maritime transport. On top of that must be added a general shortage of certain raw materials. All in all, this has unfortunately led to restrictions in our range today.”