MARKET SECURITY

Turkey 2014 | DEFENSE & AEROSPACE | INTERVIEW

TBY talks to Hikmet Topçuoğlu, General Manager of Savronik, on opportunities present in the Turkish market and reaching the country's 2023 targets for defense exports.

Hikmet Topçuoğlu
BIOGRAPHY
Hikmet Arif Topçuoğlu is the General Manager of Savronik Elektronik, a respected and well-established Turkish defense and transportation technology company. He holds a Bachelor’s degree in Industrial Engineering and a Master’s degree in Software Management. During the 1990s, he ran his own business process and software consulting business serving public sector organizations. From the late 1990s onward, he became involved in defense and prior to Savronik, worked at HAVELSAN on various military process and software development programs, R&D, and international business development.

What were Savronik's main accomplishments over the last few years?

Savronik is a company established in two major sectors: one is defense and the other is transport. We were originally founded in 1986 as a defense company, and we started growing quite rapidly in the transportation sector around 2004. In the defense area, we have started to achieve steady growth, and in 2011 our revenue in the defense sector was around TL13 million. That increased to about TL22 million in 2012 and in 2013 we reached about TL31.5 million in the defense sector. This has been quite a record of growth over the past three years. In 2014, we hope to achieve an additional 34% growth compared to that.

What are the main opportunities in Turkey's defense sector for a company like Savronik?

Turkey is going through a record military modernization process that began in the mid-1990s, and there are still new major programs, especially related to naval systems and aerospace, which will probably keep the industry busy through to 2023. Of course, that is the centenary of the republic. Much of this business will be to do with communications, which is a significant business line for Savronik. Also, Turkey has started to successfully produce some weapons systems, which will continue to generate profits for the companies that participate in their production, not only in Turkey but also in the export markets for these products that have started to grow, albeit from a low base. Therefore, my expectation is that we will see over the next 10 years, at least, a very similar rate of growth for the Turkish industry. Despite the fact that the industry is performing well in increasing exports, at its current pace this will not be sufficient to offset the drop in local demand. The challenge will be to utilize these years to penetrate international markets with innovative products.

How have your export relations with the US developed over the years?

We were one of the first Turkish companies to apply to the Turkish Ministry of Defense for an export license to the US, which began in the early 1990s for intervalometers for the F4 aircraft. We still sell that product occasionally to international customers still using the F4. Currently, we aim to conclude agreements in the near future with some US companies for the export of military communications-related technologies that we have been designing. Hopefully, by the end of 2014 you will hear us announce some of these deals.

As a country, Turkey has an ambitious 2023 defense goal of reaching $25 billion in exports. How will Savonrik contribute to this?

Some of that will be achieved indirectly, because many of the products are subsystems to main weapon systems. Therefore, as the leading Turkish defense contractors for which we are an important supplier increasingly become more export oriented, we will become more export-oriented through these relationships. I think that much of that export growth will be associated with G2G relationships. That will be part of the equation, but the other part of the equation is what we have to do on our own. Our strategy there is to take the example of the development of the Turkish defense industry, which is based on the strategic requirements of the Turkish military to source critical technology locally. Recognizing that other countries will have similar needs and also view the defense industry as strategic, and obviously with the permission and coordination of the Ministry of Defense, we envision setting up international partnerships including elements of technology transfer and local set-ups. This will provide us, we believe, with good leverage vis–à–vis our international competitors that are less willing to share their technology with other companies and countries.