TBY talks to Marco Votta, General Manager of Türk Traktör, on the market for agricultural machinery, the partnership between CNH Group and Koç Group, and plans for the tractor market.

Marco Votta
Marco Votta graduated from Luigi Bocconi Commerce University in Business Administration. He began his professional career at Pluritec and then, in 1994, joined Anderson Consulting as a Management Consultant. He moved to New Holland’s Business Development Department in 1998 and joined TürkTraktör, Ziraat Makineleri, New Holland Trakmak Traktör, and Ziraat Makinaları in 1999 as Assistant General manager of Business Control. He held the position of CFO between 2006 and 2010 and has been General Manager since 2010.

How has Türk Traktör grown and developed in Turkey's agricultural machinery sector since its foundation?

Türk Traktör was established 65 years ago as an engine manufacturing company for airplanes; however, in 1954, the Turkish government re-established the company as a tractor manufacturer. In 1963, Türk Traktör started manufacturing tractors in Turkey under the Fiat license. The ownership of the company in 1998 was shared between Koç Group and Case New Holland (CNH) Group, a Fiat Group company. Both partners ended up with the same shareholding at 37.5%, the remaining being on the stock exchange since 2004. The decision by Fiat and Koç to invest in Turkey is due to the fact that this is one of the largest markets worldwide for tractors. In fact, it is the fifth largest in the world after India, China, the US, and Pakistan. Until 2008, Fiat and Koç had another venture called Trakmak, which handled local sales and marketing operations for the Turkish domestic market. In 2008, Trakmak and Türk Traktör merged, making Türk Traktör both responsible for the manufacture and sale of the tractors produced locally, as well as the importation and distribution of tractors and agricultural machinery imported from CNH Group. The locally produced tractor range covers engine sizes from 48 hp to 110 hp, which accounts for 98% of Turkey's domestic tractor demand. Türk Traktör is the longest-serving and most established company, and has a market share exceeding 50%.

How does being a larger manufacturer distinguish Türk Traktör?

Much like companies within the automotive sector, Türk Traktör manufactures a large portion of its tractor components, which is peculiar for Turkish industry. Another advantage is that Turkey has a lower cost of production compared to other countries, thereby making overall prices competitively low. Fiat's agricultural division, CNH, has plants all over the world, and many of them procure parts from Turkey, directly or indirectly. Being able to manufacture in-house presents great advantages in the areas of cost and potential technological development. For example, by controlling the production of engines and drivelines—the most important parts of a tractor—the company is managing the potential for technological innovation while creating product variations to fit market needs. We have five different families of products manufactured at our plant that allow us a wider scope of control and a greater reactivity to changes in demand.

To what extent does Turkey's domestic agricultural sector determine the way you design and manufacture your tractors?

It does not make much sense to manufacture tractors solely for export. The domestic base's volume of sales is contingent upon levels of investment. It is nice to have CNH Group take over certain parts of our tractors, but this is hardly an issue to the farmer in the field. We send our people to the field and have them watch the production output of our tractors. Turkey is diversified in terms of crops and microclimates. It is a wonderful place to test tractors. Certain parts look like Central Europe in terms of agricultural climate, but, in the southeast, for example, you can grow produce atypical to the region, such as bananas. There are few places of this size where you can have such variety. For this reason, developing a tractor for the Turkish market is the most sensible course of action. In fact, we recently changed the way we developed tractors. We are pushing our R&D department to enlarge our range and offer more. Through the evolution of the regulation in Turkey for tractors, we are reaching a standard that allows us to supply products to Western countries, growing our export business.

What is the role of exports in your business, and how do you tailor products to different export markets?

Exports have always been one of our main focuses. Along with many other firsts in our past, we were the first company in the Turkish automotive sector that exported to the US. We are currently in business with over 90 different countries, which is challenging. This is why it is convenient for us to have CNH Group analyzing customer needs in order to demonstrate to us the nature of the international market. We develop tractors for the Turkish market along standards very similar to those in Europe. Since Turkey adopted European regulations in machinery production—engine emissions, noise, and safety, for example—Turkish tractors are almost totally aligned with those made in Europe. There is a slight difference in our emission levels that should be solved within the next few years, but we do not have to change noise emissions to send our products to Europe, for example. Other countries have had to change their manufacturing standards prior to export. Tractors in Turkey have been export-ready since the beginning.

How important are your R&D operations and how would you characterize Turkey as a base for R&D?

Typically, tractor groups make either tractors or components. It is unusual for a group to create both under the same roof. Because we do this, we act as a center for CNH Group. We are also designing newer generations of engines, as well as tractor cabs. For CNH Group, this is very convenient because it is receiving a genuinely good product from a trusted producer. The R&D potential in Turkey is still young compared to other countries in the world. However, there is a lot of commitment from the government to develop the sector by providing support through incentives and energy. Turkish engineers and developers are very hard working and committed to their projects. You can challenge them to hit certain deadlines and deliver certain targets, and they put a lot of energy into achieving them. We might not have all of the sophisticated, tested methodologies that European countries utilize, but we have a good understanding of technology and speed.

As Türk Traktör begins to play a larger role in developing and producing its tractors, what is your outlook for the next decade?

We are not only creating more tractors, but more areas of tractor production. As well as producing the engine, transmission, and overall vehicle, we have begun manufacturing axles. We are completely extending our coverage of the tractor as a concept. On top of that, the tractor itself is evolving. We are seeing the varying stages of its evolution in the context of mechanics, hydraulics, and electronic components. We have started including more hydraulics in our transmissions, which offers farmers more comfort. However, at this stage, it is not economical to aggressively inject new and sophisticated technology into our tractors. In 10 years, I hope that farmers will be affluent enough to afford newer technology and therefore render them as standard in tractor production. Hopefully, we will be expanding beyond the tractor itself, using technological know-how and manufacturing capacity to produce all angles of a tractor. Through these, we can potentially be more successful than if we were to continue importing parts from other suppliers. This will also help Türk Traktör extend its research in terms of exports and stabilized production.