TBY talks to Aydoğan Koç, General Manager of KoçConsulting, on the competitive advantages of Turkish companies, R&D, and the future of Turkey’s aerospace and defense industry.
TBY What are the advantages of being both a German-based and a Turkish-based consultancy company?
AYDOĞAN KOÇ In the aerospace and defense sectors you have to develop new things, new technologies. This requires know-how and experience. European aerospace and defense companies have this experience, while in Turkey they are new to some areas. I connect European aerospace and defense companies with Turkish companies to develop projects in Turkey. This is an advantage. Some European and US companies have been doing this for 100 years, but Turkish aerospace and defense companies are not older than 25 years at the most. In some areas, they need a lot of support for the development of new technologies. This is what I am doing, bringing the know-how and technology to Turkey, bringing European companies together, and creating cooperation for
Although Turkish companies are young, are there areas where they excel or offer a competitive advantage?
They are young companies, but Turkey is buying many aerospace and defense products. For example, Turkish Airlines has ordered 65 new Airbus planes. In Turkey, companies do not want to only buy the products now, they want to develop and produce the products themselves as much as possible. There is a 50% offset, which means some part of the production occurs in Turkey. In other words, if Turkey buys 35 aircraft from Lockheed, they enter into industrial cooperation and some parts of the aircraft are built here in Turkey. For example, they might build the door in Turkey, and then sell it to the corporation. In the future, companies want to produce the whole system. It is cheaper to produce in Turkey than in Europe, and this is an advantage, but the biggest advantage may be the people. There are a lot of well-educated people in Turkey, and they are very eager for new ideas and new technologies. Part of this is the fact that Turkey is young. The average age in the country is 28 years. In Germany I think it is over 45. In Germany there are 20 million people over 65, but Turkey has 28 million people below 24. If you look at people over 60 they want stability. But young people want innovation. At this moment Germany would like to have stability, but young people in Turkey want to move into the next 20 years. They want to change. You can feel this in Turkey. Another advantage is the fact that Istanbul is developing as a center for Europe and Asia. There are 15 million people living here, and I think the crisis in the Arab region is bringing Turkey forward. Although we are dynamic, we have a stable democracy. As a result, we are becoming an anchor in the region.
The Turkish government wants to increase R&D spending to 2% of GDP. What is Turkey’s potential to become an innovator of this type of technology?
In Germany R&D spending is around 8% of GDP, but in Turkey it is still low. However, the Prime Minister and the government are going to increase the budget. This means that Turkey can increase its own products for domestic consumption as well as become a hub for markets outside of Turkey, to the near east or to the Central Asia. Sometimes it is very easy to sell Turkish products outside of Turkey. They can be sold cheaper than European products because labor prices are still lower than in Europe. This is an advantage for Turkey. I say to European companies that they should come to Turkey, cooperate with these companies, develop new products, and sell their products together with
You have established yourself among the larger companies in the industry. What motivated you to break off and create your own consultancy?
I was previously working at EADS Holding on a project with Turkey. I had contacts in Turkey, and I could see that there was a huge need for new technologies, know-how, and consulting. When I started consulting it was not just for aerospace and defense, it was in general to support European companies, to make market analysis on Turkey, to develop market entry strategies for the companies in Turkey, and to advise on how to start a business in this country. We consulted for a lot of companies in Europe, and later on in my company in Ankara we started to consult aerospace and defense companies in Turkey. Still, what we are doing is not only aerospace and defense. We are doing it in all sectors. We have some different projects. Maybe 60% or 70% is aerospace and defense, but we have other projects too.
Can you tell us about some of these projects?
After seven years since the establishment of my consulting company a lot of companies know what I am doing, and now they are coming to me with projects. One interesting project that we want to start in Turkey is fish farming. There is a huge consortium in Germany, and they asked me if they could do it in Turkey. The idea is that we will not produce fish in the sea but rather do it on land, in small pools, so we do not depend on the weather. There is a demand for this. If you go to the Mediterranean Sea, the Aegean Sea, or the Marmara, there are not enough fish anymore. Starting from April until September, most of the fish consumed in Turkey is imported. That is why we are developing this huge project. I have another project where I am going to start to produce a two-seater sport aircraft in Turkey. We are going to establish a company in Ankara or Istanbul at the Sabiha Gökçen Airport, and we are going to produce civil aircraft in Turkey for the first time.
Six years ago you wrote a book that became a best seller among aerospace and defense literature. What made your book have such widespread appeal?
I wrote this book without using complex equations. I had questions about the aerospace industry, and I answered them using easy words that everybody can understand. For engineers it is very easy to answer a question with an equation, but it is difficult to answer a question and explain it with normal language. Questions like “How does an aircraft fly?” If you use Bernoulli’s Principle, nobody will understand.
How would you rate Turkey as a production base?
It has a lot of advantages. You have well-educated people, not only engineers but certified technicians. People are very motivated, and the salaries are still lower than in Western Europe. I think there are a lot of advantages for European companies to produce in Turkey. And the quality is good. You can establish a good quality because you can use the gold standards and apply them to companies here, and so there is no difference. But you have to coordinate it very well. Sometimes it is not easy because Turkish companies may not always deliver on time. You have to manage it differently and force them to deliver on time with contract penalties, or you have to supervise them and check the production yourself.
What is your view for the future of the Turkish aerospace and defense industry?
It is a young sector for Turkey, but the need is there, and there are highly qualified engineers to develop new products. The 50% offset legislation is also supporting the industry. However, Turkish companies need to cooperate much more with their European and international counterparts to benefit from their experience. One practical thing that must change in order to facilitate this is the visa situation between Turkey and the EU. The EU’s visa regulations toward Turkey are not acceptable for business. This is a problem for some Turkish businessmen. This is slowing down trade between Europe and Turkey.
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