TBY talks to Adnan Dalgakıran, Chairman of the Turkish Machinery Promotion Group (TMPG), on increasing exports to close the current account deficit, human capital, and promotion campaigns.
TBY What have been some of the major successes you have recorded since 2007?
ADNAN DALGAKIRAN The Turkish machinery sector is one of the fastest growing in Turkey. In 2011 alone, total exports in this sector reached $11 billion. Turkey is the fifth biggest machinery producer in Europe. In 2023 the sector’s total exports are projected to reach $100 billion, making it the single biggest prospective export sector in 2023. This institution was established to promote the Turkish machinery sector and to show off our quality, competitiveness, and dynamism. We are actively promoting the sector in various countries, especially at expos and trade fairs—from Germany to Brazil to China. We’ve been very successful so far. There was a serious economic crisis after 2007 with a major drop in investment, including in Turkey, but this country was a lot less affected than the rest of the world. In 2011 Turkey’s machinery exports grew by 25%. That’s a very high number, and our contribution has been enormous, although it’s hard to quantify in real terms.
Turkey’s current account deficit is a noted concern, with increasing exports playing a key role in reducing the gap. To what extent will Turkish machinery exports help?
We export a lot, but we also have to import to produce what we do. The government is now giving support to promote local R&D efforts. Turkey, in five or six years, may actually solve its current account deficit problem. The solution for Turkey is to focus more on value-added products, and more technologically advanced and profitable products. As we don’t have natural energy resources, we need to go in this direction.
How has the eurozone crisis presented an opportunity for Turkish machinery production and exports?
There are certain big advantages. First of all, labor costs are higher in Europe, and manufacturers have to produce more value-added products. There is a competitiveness problem at the mid-level technology range, which Turkish companies can fill. Compared with Chinese products, our quality is higher. Our prices are closer to Chinese goods, but our quality is closer to European goods. Turkey presents an important opportunity for European companies, with its young population. Europe can overcome many of its problems through a partnership with Turkey. I realize that there are some worries in Europe over Turkey potentially joining the EU, but Europe needs entrepreneurial new members, and Turks are very business minded. Turkey would bring a new level of dynamism to Europe. It would also bring youth and strength to Europe. In a decade, Turkey will be the second biggest machinery producer in Europe. Furthermore, Turkey is surrounded by energy-rich countries. It would be easier for European countries to enter those markets from Turkey. Currently, Turkey’s share of the world machinery sector is still just 0.5%, but our aim is to increase this number to 3%. Germany has 14%, to give a comparison.
How would you assess Turkey’s human capital with regards to machinery production?
A young workforce has obvious advantages for the whole economy. However, that population also has to be educated, and Turkey is focusing on this as well. In fact, training and education make up the biggest part of the government’s budget. As education levels develop, the workforce will advance further. Machinery production requires well-qualified people. We too try and do what we can to support this.
Which promotion campaigns for Turkish exports have been the most successful?
We went to Barcelona with 150 companies and the city was covered with Turkish machinery advertisements. Generally, Turkey isn’t known as an industrial country. People think of sun, sand, and textiles, and that’s it. Yet Turkey has more industrial exports than Russia. It’s hard to measure and change this perception, but we know that our campaigns have been successful and that has led to the desired results. We are currently targeting Germany the most, as it is both a big importer and exporter. It imports over $200 billion worth of machinery a year alone.
How do you lobby for domestic marketing policies? Which aspects would you like to see changed?
We lobby the government a lot. Thankfully, the machinery sector receives huge attention from the government. It has serious plans for the machinery sector, especially when it’s seen as a possible solution to the current account deficit. We receive serious support for R&D, and 2012 will be exceptional. The R&D departments of companies in the sector are also growing significantly. I’m also a member of the Scientific and Technological Research Council of Turkey (TÜBİTAK), and there we are working hard to develop university and business interactions.
What and where is the potential for foreign investment in production and import of Turkish machinery?
The machinery sector supplies value-added to all sectors of the economy. With its development, other sectors also grow, including the automotive, construction, electronics, chemicals, and service sectors, and more. In that regard, there’s a lot of potential. All those sectors rely on a strong machinery sector. Any kind of investment in any area is welcome, and potentially very profitable.
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