ARMSAN

Turkey 2013 | DEFENSE & AEROSPACE | INTERVIEW

Can you give us some brief information on Armsan's field of expertise?

Şafak Atilla

Can you give us some brief information on Armsan's field of expertise?

As Armsan Silah Sanayi ve Ticaret A.fi.,established in 2006 we have first started of by manufacturing smoothbore hunting and sporting shotguns. Following a steady growth, in 2012, we produced 3,500 shotguns per month, ranking the company number three in Turkey's shotgun sector and number 12 in the overall defense sector. As a result of the increasing number of demands, we started manufacturing defense and tactical shotguns which made us step into the Defense Industry. The success we achieved in the international tenders showed us that we were on the correct road, which led us to focus heavily on research and development. Following a steady and significant growth in research and development, we have started manufacturing single shot non-lethal smooth grenade launchers that can be used both in police and military fields. Last but not the least, we took pleasure in succesfully developing modular pump action shotguns which can be applied to the infantry rifles. It is important to note that the other top defense companies are all government companies. Our strength as Armsan is now our brand, which will help us become a dominant player worldwide.

To what extent is your growth driven by the international market?

In 2012, 88% of our production was for export, but we are continually increasing our production capacity to meet the demands. Currently, we export to over 40 countries. Although exports are our core business, we surely don't want to ignore our domestic market, where we have loyal customers. Nevertheless, the international market is giving us more lift for growth. Our sector is highly influenced by the racing of external factors therefore we choose to work at equilibrium. In other words, our strategy is to table our business plans both international and in our domestic market without becoming too dependent on neither one. The world is changing; while in the past we had been very dependent on the US market, after the financial crisis we acquired that it was unwise to be dependent on one single market . They say “Don't put all your eggs in one basket" is an old-fashioned saying, but it is indeed the grim reality. Having gone under this kind of an experience we have learned our lesson and expanded into many international markets where we now have buyers and distributors.

What have been the advantages and challenges of operating as a Turkish brand in international markets?

The greatest challenge has been the price competition. Turkey is not like China where labor is cheap, therefore our price increase is amplified by the cost of labor. Compared to some of the countries manufacturing similar weapons, our prices are higher. On the other hand, the “Made in Turkey" image has profoundly improved over last 10 years, which carries a very significant advantage for us. While a decade ago, people weren't as impressed by something that was made in Turkey, now it is a recognized sign for quality. Armsan's biggest advantage is incredible correlation of price and quality. Although, we are not cheap, we can manufacture a gun for one-third the price that is the same quality as one made in Europe. This asset which we possess enables us the greatest advantage in the market right now. People do not compare Armsan with other Turkish brands, but with foreign brands which has always been our ambition for growth; competing in foreign markets.

What is the role of personal firearms within Turkey's defense export sector?

In terms of numbers, the shotgun sector composes just a small portion in the defense sector; speaking in numbers it covers only $200 million out of $1.5 billion total in the sector. Most export trade in the sector is based on helicopters, tanks, or for example radar systems from government companies. On the other hand, personal firearms sector has a far more individualistic aspect compared to the other portion of the defense market . While the rest of the defense sector doesn't have that many direct links to the end user, shotguns have!

On the other hand, there some of our defense products are used in the military field where The “Made in Turkey" brand, plays a very important role in the military field too,. Even in the US or Italy, the name Armsan means something for a hunter. Who would know that a certain tank was built Turkey? The militaries might know, but the market may not.

What is the growth potential of the Turkish personal firearms industry in 2013?

We expect the industry's value to at least double in size. We anticipate that 2013 will be one of the most successful years. All of the companies ranging from the small arm producers to the larger players are doing great business right now, which reflects the exciting growth in the sector.

What does that mean for Armsan's goals over the next few years?

We already are a major player in our local market , but we don't think that it is enough. Compared to other arms producers, we consider ourselves still a baby, who is still improving. Consequently, our goal is to pursue more international sales and become one of the significant players. Maybe not right now, but in 10 years we want to be one of the top-10 shotgun manufacturers in the world. There are already a number of very large groups in the market, and it is not easy for a Turkish company. It might be a dream for now, but hopefully it will come true; and we are working on it.

How would you characterize the company's activity in 2013?

We are diving deeper into the defense sector. Because of the brand of “Made in Turkey" and Armsan's reputation, we are starting to get involved with a number of important tenders all over the world. Some tenders have been for police departments or militaries; for example, we won a huge tender in Bangladesh for 5,000 pump action units. We successfully manufactured and delivered the order. We also won other tenders in Kosovo, Thailand, and Tunisia. These experiences have given us an opportunities to get involved in the tactical side of the defense sector. We are also seeking other ways to modify our weapons to meet the specific needs of these clients. Although we do not offer a variety of products currently, we want to launch new products for defense area which will have nothing related to hunting. We still consider ourselves a hunting company, but we eagerly want to branch out on defense line as well.