TBY talks to Yener Aydın, Manager of Tekfen Construction, on the construction industry in Azerbaijan, operating as a foreign company, and developing the right human capital in the sector.
TBY What is the background of Tekfen’s activities in Azerbaijan and the joint venture between Tekfen and Azfen?
YENER AYDIN Tekfen was established in Turkey in 1956, and we’ve been in Azerbaijan for 16 years. In 1996 we established a joint venture called Azfen with SOCAR, which has a 60% share in the company, with Tekfen owning the remaining 40%. Both companies are general contractors and are very much alike, even though Azfen is a much smaller company than Tekfen. Some projects we perform as Tekfen, some as Azfen, and some jointly as Tekfen and Azfen. In addition, some projects have been carried out as a three-way partnership between Tekfen, Azfen, and another company. For example, we’re currently running a project in the Bayil area as the ATA consortium, which includes Tekfen, Azfen, and AMEC from the UK.
What criteria do you use when deciding how to approach a project?
If Azfen can do it alone, then that’s what we prefer, because that’s why we established Azfen. Nevertheless, Azfen has a limited capacity regarding machinery, personnel, experience, and financial capability. In bigger projects that need some financial muscle, Tekfen will go in. When necessary we bring in specialists from Turkey or even other countries and employ them as Azfen personnel.
Who are your primary clients?
We work in different sectors, although we’re very well known in the oil and gas industry, and most of our projects are in that sector. When I say oil and gas, this also includes, for example, SOCAR’s management building, which we are currently constructing. It’s a giant 40-storey building on Heydar Aliyev Boulevard. Having said that, we are certainly mostly specialized in oil and gas construction, be it pipelines, refineries, compressor stations, or infrastructural projects like harbors, shipyards, roads, and highways. In fact we’re number one in Turkey for the construction of highways. When there are challenging projects that nobody else can do here in Azerbaijan, we are the first port of call for many.
Has staff training figured in your development plans?
Yes, in fact that was the main idea behind the establishment of Azfen. It started off as a small liaison office, and now it’s bidding for $500 million projects on its own. So Azfen has matured, almost as much so as Tekfen, except, as I said, in terms of size. Our aim is to educate and train our people at Azfen. We have one of the best welding schools. We bring instructors in and we train our employees to do the jobs that they will be needed for. That having been said, we also learn a lot from our local employees because they are very experienced in local realities, and also Russian construction standards and techniques, which we know little about. Another advantage we have as a Turkish company is that we share a similar cultural heritage with the Azerbaijanis, and speak the same language.
What balance has been struck between local and foreign employees?
Azfen only employs Azerbaijanis where needed, whereas Tekfen employs only Turks, in general. However, for example at the Bayil oil platform, Azfen and Tekfen share common management, not separate, and AMEC acts independently. There are about 2,000 Azfen and Tekfen employees working on that project. As for the SOCAR tower, we employ 400 people there, around 80% of who are local. In general, I think projects like housing should be left to local companies. They have the capacity to do those projects. We, as foreign companies, should do the work that local companies cannot.
What are the challenges for the construction sector in Azerbaijan?
The biggest problem is working visas. Having to have a visa to work here is a hindrance. We believe in the free flow of manpower and goods, especially considering the amount of commercial and also cultural ties between Turkey and Azerbaijan. Taxes are also a problem. They’re too high, making customs difficult. Both governments are tackling these problems, however, and visa restrictions are set to be lifted. A further problem is infrastructure. The railways and highways have to be modernized, and new ones have to be built where necessary. There is a lot of work going on, and it is on the right track, but there is a way to go yet.
Do you take part in infrastructure projects in Azerbaijan?
Yes, we are waiting for the right project proposals to come along.
What sort of strategies did you apply during the economic turndown after 2008?
Those years were a loss for us as we spent a lot of time waiting for work to come in, and other contractors suffered a similar fate as things dried up. What we had to do was decrease the number of people working for us overall until a job came up. Once we got a job, we hired the necessary people. That cut our costs down and minimized the adverse effects of the situation.
What is your outlook for the future of the company?
I think Azerbaijan is in the early stages of a long period of development. It is on the right track and doing the right things in general. Like I said, more has to be spent on infrastructure. I think the situation will improve greatly within the next five years, especially if high oil prices continue, which they are expected to do.
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