TBY talks to Hayrettin Uzun, General Manager of the Turkish Armed Forces Foundation (TAFF), on the organization’s strategic plans, the economic contribution of its subsidiaries, and the IDEF industry fair.
TBY To what extent have the companies of the Turkish Armed Forces Foundation (TAFF) achieved their goal of competing in the world defense market to decrease the reliance on imports?
HAYRETTİN UZUN In 2003, 25% of the Turkish Armed Forces’ modernization needs were met through domestic production. In 2010, that figure stood at 52%. In 2010, 56% of the defense sector’s $2.7 billion revenues was made up of the turnover of TAFF subsidiaries. This shows the importance that TAFF subsidiaries play in reducing Turkey’s dependence on foreign imports. TAFF subsidiaries play a major role in the development of the Turkish defense industry with their unique designs of both main platforms and subsystems, and also through their cooperation with leading international defense firms in third-party countries. TAFF subsidiaries spend greatly on R&D as part of their ongoing work in developing national projects. While the success with which TAFF subsidiaries have developed products and systems has played a great role in increasing the competitive power of TAFF subsidiaries on the international market, our emphasis on international cooperation has solidified our place on the international stage.
How does TAFF effectively guide its subsidiaries and affiliates in meeting domestic demand?
The TAFF 2012-2016 Strategic Plan aims to facilitate the forming of strategic partnerships and the development of critical technologies between TAFF subsidiaries, enable TAFF subsidiaries’ subcontractors to become certified subcontractors, enable major international defense companies to become certified subcontractors to TAFF subsidiaries, and allow TAFF subsidiaries to become certified subcontractors to major international defense companies while expanding their technology base. To avoid any problems in the acquisition of foreign subsystems and components that will go to ensuring cost effectiveness and creating the necessary technologies for product development, we aim to support certified subcontractors to help aid the development of domestic resources so as to create local industrial alternatives, and, from the contract preparation phase onward, to aid strategic cooperation.
We are also helping certified subcontractors work with major international defense firms as they enter third-party countries, reducing costs to improve competitiveness, and contributing to sustainable profits. We also help major international defense firms become certified subcontractors to TAFF subsidiaries. TAFF focuses on developing cooperation and partnerships with universities so as to create new R&D projects or complete existing R&D projects that go toward developing critical national technologies. TAFF allocates 65% of its 80% profit share to armed forces projects. Between 2005 and 2011, a total of TL213 million was generated by TAFF.
What portion of revenue from TAFF’s subsidiaries is derived from international contracts and tenders?
TAFF subsidiaries made up 61% of 2010 sectorial exports, and that figure increased by 55% to reach $602 million in 2011. The share of exports as a percentage of total turnover has continued to increase, reaching 35% by the end of 2011. The level of international competitiveness that TAFF subsidiaries have achieved is well demonstrated by projects that TAFF subsidiaries have competed for and won against international firms, such as STAMP, used on Dutch KMS sea platforms, numbered wireless sales to Pakistan and the US, a CN-235 simulator to South Korea, the Pakistan EHTES and South Korea EHES, F-16 modernization for Jordan and Pakistan, A-350XWB design, a multiple rocket launcher (MRL) system for the UAE, 122 and 300 mm rockets, and the T-122/300 weapons system to launch those rockets for Azerbaijan’s border guard services, and more.
What is your outlook and goal for TAFF, its companies, and the Turkish defense industry over the next five years?
TAFF’s vision is to be a group that plays an active role in the development of the domestic defense industry through the companies that it’s a shareholder in, to play an effective role in increasing the share of local producers, to develop unique and original designs, and to compete successfully in international markets. Our mission is to create and develop defense companies that will contribute to increasing and developing the Turkish Armed Forces’ overall fighting power. According to the TAFF 2012-2016 Strategic Plan, by the year 2016, TAFF subsidiaries will have achieved a total turnover of $31 billion, total sales of $4 billion, and 25% of sales from exports, thereby maintaining its domestic market share and expanding its international market share. In the same plan, we aim for the Istanbul Chamber of Commerce’s annual list of top 500 companies based on production and sales volume to include ASELSAN and TUSAŞ in the top 25 of the list, and HAVELSAN and Roketsan in the top 100. We are also aiming for ASELSAN to be ranked 50th in the world’s top 100 defense industry companies and for TUSAŞ to be in the top 100.
What is the significance of the International Defense Industry Fair (IDEF) to Turkey’s defense industry?
The IDEF has been organized under the auspices and support of the Turkish Ministry of National Defense since 1993, and it is under the management and responsibility of TAFF, with the aim of promoting cooperation and friendship between participating nations and their defense industries. In 2011, the IDEF has become the biggest defense fair in the region and one of the five biggest defense fairs in the world, with an ever-expanding list of participating countries, delegations, and companies. The 10th IDEF, which was held on May 10-13, 2011, featured 633 companies from 46 countries and 437 delegations from 70 countries. The fair was visited by a total of 52,502 visitors. One of the most beautiful cities in the world and a meeting point of civilizations, Istanbul will host IDEF 2013 on May 7-10, 2013, when it will be expecting an even greater number of participating countries, delegations, and firms, as it continues to contribute to developing trade, business, social, and cultural cooperation between those countries, delegations, and firms. The IDEF 2013 will feature the static display of land, sea, and air systems and vehicles, as well as extensive participation from local and foreign naval forces in Büyükçekmece Bay. We will take great honor in welcoming with traditional Turkish hospitality the leading authorities in the respective countries’ defense procurement posts and the various leading professionals in the international defense industry, and of course all visitors, to what is our region’s largest international marketing platform.
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