The assembly step, and what it is actually worth

The case for placing a finishing or assembly operation in Türkiye is usually presented as an input-cost argument: labour is cheaper, industrial space is cheaper, and a competent engineering base already exists. All of that is ordinarily true, and all of it is the less interesting half of the reasoning.

The more consequential variable is what the step does to the origin of the finished good. Türkiye sits inside a customs union with the European Union for industrial products. Where a process carried out there amounts to sufficient transformation under the applicable rules, the good can present itself at the European border on very different terms from the one that arrived as components. The value of the operation is therefore not principally the wage differential on the assembly labour. It is the tariff and qualification treatment that the transformation confers.

Why the distinction matters

Two firms can build the same plant and hold positions of quite different quality.

The firm that located there for input cost holds a position exposed to input cost. Wages converge, the lira moves, industrial rents rise, a cheaper jurisdiction appears. The advantage is real but it is rented, and the lease is short.

The firm that located there for origin holds a position exposed to trade policy instead. That is a slower-moving variable, generally legible in advance, and it is written down. Rules of origin are published. Schedules are published. The conditions under which the advantage would disappear can be named, watched, and — occasionally — anticipated.

Neither position is safe. But one of them can be monitored.

What the analysis has to establish

• Whether the step is sufficient. Substantial transformation is a technical test, not a commercial impression. Screwdriver assembly frequently fails it.
• Which agreement is being relied on, and whether the same physical process qualifies under each of the routes the business intends to use. It often does not.
• What documentation the qualification requires, and whether the operation is actually capable of producing it consistently.
• The landed cost of the whole route, not the factory gate. A cheaper unit that has to travel further and clear more handling is frequently not cheaper.
• The macro-financial exposure that comes with the jurisdiction. Currency and financing volatility here are genuine and should be priced explicitly rather than treated as an argument for looking elsewhere.

The position this leads to

Türkiye is most accurately read not as a low-cost location but as an industrial platform with unusual access characteristics: manufacturing depth, a substantial domestic market, and a position across the land routes connecting Europe, the Middle East and Central Asia. Firms that buy it for cost tend to be disappointed on a five-year view. Firms that buy it for access, and who price the volatility honestly at the outset, are buying something considerably harder to replicate.

The disconfirming evidence would be a material change in the customs union's treatment of industrial goods, or a tightening of origin rules that raises the threshold above what the intended operation performs. Both would be visible well before they were binding.