Manufacturing in Turkey: The New Global Powerhouse

As the United States continues to impose tariffs on a growing list of countries including China and the European Union, a quiet trade war is brewing. For this reason, global manufacturers are seeking new, stable, and cost-effective locations to meet their production needs. 

Turkey, with its unique location, highly competitive labour market, and favourable trade relationships with the U.S. and Europe, is emerging as a new centre for global manufacturing.

Turkey is not a member of the EU and is therefore subject to lower U.S. tariffs. Turkey also has a customs union with the EU. This gives manufacturers access to European as well as U.S. markets without added regulatory and costs faced elsewhere. Contact our investment specialists in Istanbul for more information about manufacturing in Turkey. 

Reasons Manufacturers Are Choosing Turkey

1. Favourable Tariffs

In 2025, the U.S. introduced a 10% universal tariff on almost all imports. Stable and low tariffs make Turkey a more appealing trade partner for U.S. and global markets. However, many countries were hit much harder:

- China: Up to 65.5%

- India: Up to 46%

- EU: 20%+ due to retaliatory measures

- Turkey: Stable at 10%

2. Cost-Effective Manufacturing

Manufacturing costs in Turkey are estimated to be up to 33% lower than the EU. Compared to China and India, overall costs are almost the same level, but Turkey has easier market access and stronger infrastructure. Average Labour Costs per hour in 2025:

- China: $6.50 USD

- India: $3.00 USD

- EU: $25.00 USD

- Turkey: $5.50 USD

3. Strategic Location with Logistics

One of Turkey’s advantages is its location at the crossroads of Europe, Asia, and the Middle East. Not many can match its capacity to connect markets across three continents. For manufacturers looking for speed and cost-effective logistics, Turkey offers:

- Borders with Europe and Asia

- Easy reach to EU, MENA, CIS regions

- Modern ports in Istanbul, Izmir, Mersin, and Gemlik

- The Bosphorus Strait Trade Route

- High-speed rail and highways

- Air freight via Istanbul Airport

Turkish Manufacturing Numbers

In 2022, total output was $200.5 billion USD, rising by 7.22% to $215.04 billion USD in 2023, and $232 billion USD by the end of 2024. Today, manufacturing accounts for 19% of GDP and employs 5.8 million people.

Turkey ranks as the 17th largest manufacturing economy in the world, climbing four places in the global competitiveness index over the past three years. In 2025, the sector is expected to grow by 6.7%.

Export revenue from manufactured goods is to reach $190 billion USD, supported by over 95,000 Turkish factories. The government has pledged $4 billion USD to upgrading infrastructure and supporting manufacturing growth.

Growth Sectors in Turkish Manufacturing

Automotive Industry: In 2023, Turkey built 1.47 million vehicles, becoming the 13th largest vehicle manufacturer. This attracted investment, including a $1 billion USD Electric Vehicle factory by Chinese giant BYD.

Home Appliances and White Goods: Turkey produced 32.4 million home appliances in the year 2024. Domestic sales increased by 14.4%, reaching a total of 9.5 million units, while production value increased by 13.7%.

Textiles and Ready-to-Wear: With exports nearing $10 billion USD in 2023 and shipments to 199 countries, Turkey’s textile sector is competitive. Contributing 15% of national production, it is expected to reach $20 billion USD in exports by 2030.

Industrial Machinery: Exports of Turkish industrial machinery reached $21 billion USD by the end of 2023, making it the country’s fourth-largest export industry. 60% of these exports go to the U.S. and EU.

Electrical Components: Exports totalled $14 billion USD in 2024. This sector includes items such as transformers and control equipment. Growth is strengthened by Turkey’s renewable energy sector and infrastructure development.

A Highly Skilled Labour Force

Turkey boasts a young, tech-savvy, and developing workforce. With an average age of 33.5 years, Turkey has one of the youngest populations in Europe. Each year, more than 800,000 students graduate from the country’s universities and technical schools – many specialising in engineering, automation, logistics, and applied sciences.

This influx of talent is matched by productivity. According to data from the Turkish Statistical Institute, productivity in the manufacturing sector has grown by an average of 4.1% per year over the past five years. The government is also heavily investing in vocational training programmes to further educate their workers.

Incentives and Tax Breaks for Foreign Direct Investment

Industrial Zones (IZs)

Industrial Zones are areas aimed at improving global competitiveness of the economy, facilitating technology transfer, boosting production, employment, and accelerating international capital inflow. There are currently 40 IZs across Turkey. Benefits include:

- Entitlement to easement rights at reduced rates.

- Access for public investment funding from Ministry of Industry and Technology.

- Quicker and simplified administrative processes for investors.

Organised Industrial Zones (OIZs)

OIZs are designed to provide companies with a better environment through ready-to-use infrastructure and social facilities. Currently, there are 392 OIZs across 81 provinces. These zones house over 67,000 companies and employ more than two million people. Benefits include:

- Exemption from VAT for land purchases.

- Exemption from real estate duty for five years after completion.

- Reduced costs for water, natural gas, and communications.

- Exemption from municipal taxes for construction and usage.

- Streamlined processes for plot mergers and separations. ​

Free Zones (FZs)

Free Zones are strategic sites outside the customs area, designed to boost export-focused investments. Turkey has 19 Free Zones, located near EU and Middle Eastern markets, with 18 active and one under establishment. Benefits include:

- Total exemption from customs duties and other duties.

- Total exemption from VAT and special consumption tax.

- Total exemption from corporate income tax.

- Total exemption from real estate tax and stamp duty. 

- Unlimited storage period for goods.

- Ability to transfer profits abroad without restrictions.

Technology Development Zones (TDZs)

Known as technoparks, TDZs are designed to promote research and development (R&D) initiatives and to attract investment into technology sectors. There is 101 TDZs in Turkey, with 87 operational and 14 under construction. Benefits include:  

- Exemption from income and corporate taxes for profits.

- Exemption from VAT for sales of software produced.

- Tax exemptions on salaries for R&D, design, and support personnel.

- Government paying 50% of employer share of social security.

- Customs duty exemption for imported products.

- Stamp duty exemption for applicable documents.

Istanbul: Perfect Manufacturing and Export Base

Istanbul and the Marmara region consisting of Bursa, Kocaeli and Sakarya, are responsible for 70% of the country’s industrial output and hosts three of its five busiest export ports. Istanbul plays a crucial role as the bridge between the East and West.

Istanbul is a hub of modern infrastructure, providing superb connectivity via rail, road, sea and air. Istanbul Airport, one of the world’s largest by cargo capacity, offers air freight operations to Europe, Asia and the Middle East.

Large ports such as Ambarlı and Haydarpaşa handle vast container volumes at once, linking Turkish manufacturers with international shipping lanes for streamlined connectivity across the world.

Railways, like the Istanbul–Kapıkule line connecting Turkey to the EU, improve cross-border trade times. Working in unison with an extensive highway network, this makes production and fulfilment easy for manufacturers based in Istanbul.

For companies looking to expand operations, Istanbul offers:

- Easy access to Europe and MENA markets.

- Proximity to strategic suppliers and distributors.

- Ready-to-use factory units and land in organised industrial zones (OIZs).

- Industries in automotive, electronics, textiles, and machinery.

Who's Already Moving to Turkey?

Turkey’s emergence as a manufacturing hub is already happening. A growing number of manufacturers from Europe and Asia have started moving production or have launched studies in several Turkish cities. In recent months:

- German auto suppliers: Began looking for sites in Bursa and Kocaeli.

- Chinese electronics firms: Have launched feasibility studies in Izmir.

- French textile producers: Signed long-term Istanbul rental leases.

Several trends are driving: diversification from reliance on Chinese manufacturing, reducing exposure to EU and U.S. tariff uncertainty, reducing logistics costs, and staying close to European consumers and markets.

A Logical Opportunity for U.S. Manufacturers

The U.S. is a big investor in Turkey, with over $14 billion USD in foreign direct investment accounted for between 2006 and 2021. Currently, more than 2,000 U.S. companies operate in Turkey across various sectors and industries.

U.S. manufacturing companies are under pressure to diversify. With China facing tariffs and logistical delays, Turkey is emerging as the alternative choice with no trade sanctions, low corporate tax at 20%, and proximity to 1.3 billion consumers within a 4-hour flight.

Is Now the Time to Move to Turkey?

As trade routes change, tariffs rise, and uncertainty becomes normal, Turkey stands out as a strategic choice for manufacturers. Turkey offers clear advantages including location, lower operational costs, a skilled workforce, and easy access to markets. Turkey is a ready-made international solution.

Speak to Our Investment Team: If you’re considering moving production to Turkey or want to explore factories for sale or industrial land near Istanbul, contact Property Turkey’s manufacturing investment specialists today – we are happy to assist you.