TBY talks to Murad Bayar, Undersecretary for Defense Industries (SSM), on achieving the Vision 2023 target, promoting the Turkish defense industry, and producing new lines.

Murad Bayar
Murad Bayar was born in Sivas in 1965. He graduated from Middle East Technical University’s Electrical and Electronics Engineering Department in 1987. He earned his Master’s Degree from North Carolina State University in 1988 and worked there as a research assistant. Bayar started his professional career in Turkey at a military electronics company, ASELSAN, in 1987 and continued working at the Undersecretariat for Defense Industries from 1989 to 1998. After taking part in the management of several defense industry projects, he started an MBA program at Yale in 1998 and earned his Master’s in 2000. Following his graduation from Yale University, he worked as a management consultant at international consultancy Booz Allen Hamilton’s New York office. He was appointed Undersecretary for Defense Industries on February 6, 2004.

SSM wants Turkey's defense and aerospace sectors to contribute 5% to the country's exports by 2025. What needs to be done to achieve this goal?

First, it is important to clarify that we are targeting $25 billion of exports for defense, aerospace, and homeland security products, which slightly broadens the scope beyond what is currently accounted for in the 2012 numbers. Still, significant growth in each of these three components will be required to reach our goal. In the defense component, we are expecting growth from the major platforms that are now moving into the early stages of production in Turkey. These are platforms like the Altay main battle tank, the MİLGEM combat ship, the Anka UAV, and the T129 ATAK helicopter. When these reach full-scale production, they will have significant export potential and I believe they will play a big part in reaching our target for the defense component. In the commercial aerospace component, I have strong belief that the Turkish aerospace sector will show significant growth in the coming years because we have an advantage when you compare quality and cost. Turkey's commercial aerospace sector meets all modern standards, but at one-third of the cost of the European and US sectors. In the homeland security component, we will be leveraging the strength of the Turkish market to produce more unique Turkish products for export. In the past, we only worked with the Turkish Armed Forces; now we also work with Turkish police and intelligence organizations. That means we can field-test some Turkish designs. Once they are field-proven, they will have export potential.

Is Turkey aiming to diversify its defense export markets?

As we continue to field new products, we will be able to bring those products to new markets. Naturally, we start with our immediate neighborhood and friends. Of course, this will extend over time to countries that are farther away. Today, we can talk about MENA, Central Asia, and South Asia as our main export markets, but maybe over the longer term we will be looking toward Latin America as well.

What steps is the Undersecretariat for Defense Industries (SSM) taking to promote innovation in the defense and aerospace sectors?

Promoting innovation has been our major push over the last decade. Previously, our defense industry consisted mostly of licensed producers, but over the last decade we have invested very heavily in R&D, engineering, and development activities. R&D investments now approach $1 billion per year, and we are already seeing the results of that investment in Turkish equipment. This growth will continue, expanding into new technology and areas, but, of course, it will depend on the capacity of the country in science and technology. It is not only a question of developing the products, but developing the capabilities. In many sectors, innovation is still very limited. We are still essentially a manufacturing country rather than a design and innovation country. In the defense sector, we are trying to make that transition, but it is not entirely straightforward. The important thing is to manage the risks associated with designing your own products. When you are manufacturing a licensed product, you don't have a product risk to deal with—someone else developed the product to meet a market need. When we are developing Turkish products, we bear the full product risk alone. That makes it a challenging transition to develop both the equipment and the capability. The first phase of this process is product development. We are coming to the end of this phase now and we have been fairly successful. The risk in the product development phase is that you can invest without ever seeing an end result. In each segment where we have invested, we have been able to develop fielded products. That is very encouraging as we move into the next phase of this process. Overall, it has been a successful transition. We have been able to grow our engineering capacity in the defense industry, and now we have a significant engineering force to use moving forward into the next phase of projects. The next phase of projects will be in a few different areas. Aerospace will be a major focus. We will be developing a medium-category utility helicopter, funded by SSM and contracted to TAI. We will also be developing a more advanced jet engine UAV that can travel at higher altitudes with longer endurance (the current Anka UAV uses piston engines). We are also currently in the early conceptual design phase for a future Turkish fighter aircraft. In naval programs, we have a major frigate program for air defense. In regard to land systems, the plans mainly focus on putting the current products into production. With missiles, we may also have more activity, such as guided missiles and anti-tank or anti-ship missiles.

What are Turkey's medium-term goals in space technology?

Our main objective is to build our own satellites, which is why we are investing about $100 million in a space and satellite integration center on the TAI premises outside of Ankara. The center will be an assembly, integration, and testing facility for all types of satellites, both military and commercial. According to the “Satellite Roadmap" that we recently completed, we expect to build approximately one satellite per year for the foreseeable future. We also are investing in R&D to build our capacity to produce the individual components that make up satellites. In the longer term, we are also aiming to develop satellite launch capability.

How will Teknopark Istanbul enhance Turkey's defense and aerospace capabilities?

Teknopark Istanbul will be a hub for defense, commercial aerospace, marine technologies, and industrial software. We want to tap into Istanbul's human resources. Most of the R&D and engineering for the defense industry is located in Ankara. Ankara has two major universities and a number of good technical colleges, but there are more in Istanbul. For a graduate of an Istanbul university, it is a challenge to come to Ankara, so we want to bring the R&D centers of these companies to Istanbul to access the human resources there. We also want to encourage the defense sector to interact more with other private sector industries, and Istanbul has a much richer private sector portfolio. Overall, we believe Teknopark Istanbul will be a major innovation source for Turkey. It will be opening in September 2013. The first phase of the Teknopark will include about 100 companies, but it will eventually grow to include 1,000 companies. The Teknopark has been heavily over-subscribed, and we are in the process of selecting the first 100 companies. Over the next 10 years, the park will grow to reach its full capacity.

As Turkish defense technology becomes increasingly focused on high-tech design and innovation, how will you ensure that SMEs remain involved in the supply chain?

SME involvement is a very important component of our activities. We actively support the involvement of SMEs in all of our defense programs through several initiatives. Any contract we sign with a prime contractor will include requirements for SME involvement, such as work-share thresholds. That has shown some results. For example, in OSTİM industrial zone on Ankara, the number of SMEs working in defense programs has risen from 10 to 100 over the last five years. For Turkey overall, the number is more than 1,000. As we continue this policy, more SMEs are moving from making simple parts to more complex manufacturing, sub-assembly, and even engineering some products. We have two objectives with this policy; the first is to use the dynamism of SMEs to bring cost savings, the second is for this defense investment to filter into other sectors of the Turkish economy. Right now, the defense sector is the largest investor in R&D in Turkey. We hope that our investments through these SMEs will trickle into other sectors of the economy. Each of these 1,000 companies work in a wider range of sectors than just defense, and can apply what they learn in defense to the other sectors. All of them have developed their technological capacity, quality standards, and project management skills through working in a defense program.