TBY talks to Safa Bayar Yavuz, CEO of Asaş Aluminum, about the growth and export potential of the aluminum industry.
TBY How would you assess the level of aluminum production capacity and demand in Turkey?
SAFA BAYAR YAYUZ In Turkey there are roughly 100 extrusion companies. Total capacity is around 850,000-900,000 tons, whereas total production is around 450,000-500,000 tons. As you can see, there is a great unbalanced situation. The consumption per capita in Turkey is around 10 kilograms, and should rise to 20-25 kilograms because this is the general rate in Europe and the world. Additionally, when you compare Turkey to larger countries such as Germany and Italy, with similar populations, we see much higher consumption rates. Therefore, what we see in the coming years is an increase in demand. In real terms, a 30% increase in total demand is expected by 2020.
Which sectors constitute the biggest demand for Asaş?
The construction industry represents most of our business, as it is the third biggest industry in Turkey. With a young population there will be a need for new homes and we expect this to create powerful growth in the coming 10-15 years. The automotive industry is also very significant for us. This is looking positive with the outlook showing more use of aluminum in cars. This will be a good market for extrusion. Another positive sector is the train industry. We see the government putting a lot of attention into that, and this will also be positive for the sector.
What changes have you seen in the Turkish market over recent years?
A very organized customer base and understanding has emerged in Turkey. There is, however, still a lack of foreign investment in the sector, and so we are hoping for more on that side in the future. In Europe, the average age is much higher, and the younger generations are more comfortable, not working like their parents did. This is not the case in Turkey, and this boosts competition. People still work very hard here, and that has seen the market grow and develop over the years.
How would you rate Turkey’s production base compared to its competitors for industrial investment, such as Eastern Europe?
In addition to the young, robust workforce, which can be hired at a relatively low cost, Turkey also has the advantage of location. Shipments by truck can reach Russia, Germany, or down to Iran and Iraq within a week. In addition, if you consider that Turkish is spoken in countries from Tajikistan to Azerbaijan, there are many advantages. A lot of Turkish construction companies have been carrying out successful business in those regions for years. In addition, Turkey is a stable and democratic country with close proximity to certain regions like Iran and Iraq. It is much easier to serve from here compared to serving from European countries.
What investment opportunities do you see in Central Asia?
We have already completed many international projects. When we make a significant investment, there needs to be a certain level of trust. From the trust point of view we prefer to make investments in Europe but not in the other Turkic republics. The ethics of business have to be settled. It is too soon to be making investments in those regions, as the right business environments just don’t exist yet. We do believe, however, that investments could be possible with the right partners.
What kind of investments are you making in R&D?
We work in close cooperation with universities and also with the Scientific and Technological Research Council of Turkey (TÜBİTAK). Today, Turkey is a level two economy, meaning it is efficiency driven. Level three is an innovation-driven economy. In level two economies, the GDP per capita is around $3,000-$9,000, and for level three economies, the GDP per capita is over $17,000. When a country is at the efficiency-driven level, the important thing is that the right technology is present and sophisticated products are being produced. To become a level three, innovation-driven economy, a lot of new technologies and sophisticated processes need to be developed. Asaş is playing its part in this process, and we are working on new technologies all the time.
Do you have plans to make investments to expand your production line?
We have already made investments of over €100 million. The new production line will be ready in the second half of 2012. We have a market share of 70% in aluminum composite panels. Flat products are the new thing we are working on. We are confident in growing demand. Other metals have been in use for 3,000 years, but aluminum is a young metal. It is the metal of the future, and that makes us brave in our sales figures.
What is the ratio of exports to imports, and what are your primary export markets?
The export-import ratio is roughly 50-50. Indirectly, there are a lot of customers that buy from us and sell directly to Europe. If you consider those as exports, we reach 70-80% exports. In terms of direct exports, we sell mostly to Western Europe. The reason why that is our target market is because of our quality. If you sell to the East there is price competition and we cannot add value to our products. However, in Europe most of our customers are the leaders of their sectors, and so quality is the most important aspect for them. To add this value to products is key, and that is why we have worked so hard to develop the right technological know-how.
What is your outlook for the future?
For the future we would like to be in the top 25 companies in Turkey. In our sector we would like to be in the top 10 in Europe.
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