In the past, the Turkish defense industry focused its energies on creating large state-owned enterprises (SOEs) that depended on offset programs to access the latest in technology. However, as the important role of SMEs comes into focus and the capacity to export falls into reach, the government and its related defense institutions have sought to build a stronger supply chain, compiling layers of domestic and international as well as public and private companies together to form a unified structure.
The defense industry is largely being organized and integrated through the work of the Undersecretariat for Defense Industries (SSM). The government body is also responsible for encouraging new enterprises in land, naval, and aerospace platforms, attracting foreign capital, and devising plans for state participation.The Turkish Armed Forces Foundation (TAFF) has played a significant role in the development of the sector, generating TL213 million in profits since 2005, with the goal of a total turnover of $31 billion by 2016. Its main aim is to “increase the share of local producers, develop unique and original designs, and compete successfully in international markets,” according to its General Manager, Hayrettin Uzun. In 2010, he explained, 52% of the Turkish Armed Forces’ needs were met by domestic production, a figure his organization seeks to increase.
Offset agreements have been instrumental as the Turkish government aims to build defense as an indigenous industry, supported by a network of SMEs and local producers. According to the Ministry of National Defense, the usage of offset agreements has encouraged Turkish manufacturers to export defense materials abroad. This activity has boosted and supported homeland security, as well as aerospace and naval development. “Offset programs not only create additional business possibilities for defense industry companies, but can also be utilized as a significant instrument to realize new investments in Turkey’s defense sector,” İsmet Yılmaz, Minister of National Defense, told TBY in an interview.
Owing to considerable investments, Turkey excels in the production of armored vehicles, naval shipbuilding, electronic systems (combat management, avionics, software-defined radios, command and control systems), simulators, military clothing, gear, and logistics. The key export markets for these products are located in the Middle East, North Africa, Central Asia, the Asia-Pacific region, and South America.
ON LAND & WATER
Turkey has achieved considerable success developing armored, tactical-wheeled, and water vehicles. Developed by the joint venture FNSS, the Amphibious Assault Bridge (AAB) is a rig designed to carry tanks and other military vehicles across water obstacles. The military has ordered 52 AABs, which are expected to arrive by 2013. “The AAB project is being locally developed for the specific requirements of the Turkish Armed Forces,” Minister Yılmaz told TBY. “This product has a great potential market, as it is unique in its category.”
With the development of naval equipment and a growing number of domestic supplies, shipbuilding has become an increasingly vital part of Turkey’s defense industry. High-speed boats, offshore patrol vessels (OPVs), corvettes, amphibious vessels, submarines, and auxiliary warships are currently being built in Turkey and exported abroad, as manufacturers achieve international recognition for their world-class equipment.
G. Koray Gökbayrak, Board Member of Dearsan, explained to TBY the growing attractiveness for local shipbuilders to switch to the naval platform. “With the help of government input, we designed a platform specifically to combat smuggling and piracy, to patrol shores rather than open seas,” Gökbayrak explained in an interview with TBY. As a subcontractor of the SSM, Dearsan is “a relatively small, family-owned company” that has inspired other shipbuilders to evolve.
IN THE AIR
In the last decade, Turkey has shifted its focus to develop the indigenous aerospace manufacturing industry rather than procure supplies from abroad. As part of the government’s vision, the Armed Forces will gain the ability to test and export aircraft “made in Turkey.”
To accelerate this process, the government is encouraging foreign companies and domestic SMEs to become subcontractors for Turkish Aerospace Industries (TAI), the country’s leading aerospace manufacturer. Collaboration through these partnerships has accelerated production as Turkey seeks to manufacture its own fighter jet by 2023.
In addition, several other projects, spearheaded by TAI, are on the horizon, “such as a locally manufactured helicopter, regional airliner, and fighter-trainer aircraft,” Yalçın Kaya, Chairman of TAI, told TBY. “TAI is expected to be in the worldwide aerospace market with products such as the Medium Altitude Long Endurance [MALE], UAV ANKA, and primary and basic trainer Hürkuş, as well as avionic system modernization solutions for C-130 transport aircraft and a T129 Turkish Tactical and Reconnaissance helicopter,” he explained.
Since 1984, ASPILSAN has taken advantage of the opportunities in the defense sector by manufacturing competitive and high-quality batteries for jets and fighter planes, and the firm is the only company producing batteries of military caliber in Turkey. Hasan Değirmencioğlu, General Manager of ASPILSAN told TBY that, “our aim is to base at least half of our production portfolio on the portable energy systems of the future, such as solar batteries.”
Another notable aerospace player is Roketsan, a company specializing in the production of rockets and missiles with around 1,500 employees. With the slogan, “Do it right the first time,” the company reflects not only the work ethic and culture of an innovative defense company, but also the discipline of the industry at large.
© The Business Year