Syrian Industry Shot by Both Sides Suffers $2.4 Billion Hit

Photographer: Pablo Tosco/AFP/Getty Images

As well as leaving more than 125,000 people dead since the uprising against President Bashar al-Assad began March 2011, the fighting has wiped out more than half of Syria's manufacturing output by crippling the network of small factories that drove what was once a $60 billion economy. Close

As well as leaving more than 125,000 people dead since the uprising against President... Read More

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Photographer: Pablo Tosco/AFP/Getty Images

As well as leaving more than 125,000 people dead since the uprising against President Bashar al-Assad began March 2011, the fighting has wiped out more than half of Syria's manufacturing output by crippling the network of small factories that drove what was once a $60 billion economy.

Syrian businessman Saeed Nahhas had already fled the country by the time his two workshops were engulfed by the civil war.

Government shelling destroyed one that made packaging machines, and four months later rebels looted another that produced plastic bags and zippers. Nahhas was living in the Turkish province of Gaziantep near the Syrian border when he lost the two facilities. He decided to stay there and set up a new workshop while waiting for the conflict to end.

“It’s a tragedy,” said Nahhas, 46. “And the longer the conflict drags on, the harder it will be for people to return and set up their businesses again.”

As well as leaving more than 125,000 people dead since the uprising against President Bashar al-Assad began March 2011, the fighting has wiped out more than half of Syria’s manufacturing output by crippling the network of small factories that drove what was once a $60 billion economy.

The loss of production, theft and destruction at workshops tops 330 billion Syrian pounds ($2.4 billion), 70 percent of it at privately owned enterprises, according to estimates from Fuad Lahham at the United Nations Industrial Development Organization, based on government statistics. Exports are down to 10 percent of what they were before the conflict.

Displaced Workers

“The losses are probably bigger because the assessment doesn’t include all factories as many are inaccessible,” Lahham, technical coordinator of a UN program to rehabilitate Syria’s industry, said by telephone from Damascus.

The Ulker Golf Muller Syria factory where Osama Ashour worked in Aleppo kept making ice cream until July. It finally closed after its warehouses were hit by government shelling, destroying 11 refrigerated cars and causing the stock of ice cream to melt, Ashour said from Bursa in Turkey.

The factory was located in a rebel-held area and reaching clients in government-controlled parts of Syria became impossible because of the clashes. Ashour and about a dozen employees out of 400 uprooted to Jordan or Turkey, where he’s now working at a related ice-cream maker.

Related: Warehouses Seized by Syrian Militants Leads U.S. to Suspend Aid

“We just couldn’t move products from the factory to distribution areas,” said Ashour, 53.

Industrial Base

Syria’s prewar industry was typically made up of smaller factories, employing people in their dozens rather than hundreds or thousands. Industry made up 23 percent of Syrian gross domestic product before the war and employed 16 percent of the country’s labor force, according to the CIA World Factbook. Compared with neighbors, that’s more than in Lebanon and Iraq, though less than in Turkey.

Syria’s economy has experienced “massive de-industrialization as a result of business closure and bankruptcy, capital flight, looting and destruction,” according to an October report by the Syrian Center for Policy Research.

Economic output slumped by more than a third between 2010 and the first quarter of this year, according to the report, produced for the UN Development Program and the UN Relief and Works Agency. Manufacturing was among the worst-hit sectors, shrinking more than 70 percent.

While some factories have relocated to Turkey or Cairo, others have gravitated toward the relatively safer western part of the country, which has been largely spared the violence that devastated other provinces, said Lahham at the UN.

Peace Talks

Should the peace talks due to start in Switzerland next month lead to a settlement, that industry can play a key role in helping resuscitate the economy and providing jobs, said David Butter, Middle East analyst and associate fellow at foreign policy research group Chatham House in London.

“Anybody who’s trying to be in charge of any of the reconstruction would look to industry as being an important area to get moving again,” said Butter.

The head of the Union of Syrian Chambers of Industry, Fares al-Shihabi, told the pro-Assad Al Watan newspaper that the government has identified several industrial areas on the west coast and the southwestern Suwayda province that investors and industrialists can use to set up shop.

Razek Mamarbachi has been determined to keep his two factories open and retain his 140 workers, even though he’s not making any profit.

The warehouse of one of his facilities, which produces lube oil under Total SA licensing on the Adra highway, some 27 kilometers northeast of Damascus, was hit by a few shells early this year, causing minor damage. The plant, called Alimco, closed intermittently between January and April because of the violence, said Mamarbachi.

‘Sheer Luck’

His other factory, in Drousha on the way to the Golan Heights, produces cleaning products under license for Germany’s Henkel AG and insecticides for Johnson Wax. It was out of action from February to April because of fighting in the area, and took one hit that’s since been repaired, he said.

Mamarbachi, 71, is aware he’s fared better than others. Now his eye is on capturing the recovery he’s hoping peace talks eventually will yield.

“It’s sheer luck,” he said by telephone from Beirut. “I can’t tell you more than that. After two years of labor, we should start being slightly optimistic. I’m looking forward to 2014 to start making a bit of profit.”

Nahhas, the workshop owner who left for Turkey, said Syria will need to keep its skilled workforce to rebuild its economy if peace talks succeed.

He’s hired two men who were not as lucky as him. One lost a technology company and is now working for Nahhas as an accountant and supervisor for $600 a month. Another is making $1,200 working two shifts after his pharmaceuticals distribution company was destroyed.

“They’re willing to do anything to survive,” said Nahhas.

To contact the reporter on this story: Donna Abu-Nasr in Beirut at dabunasr@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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