MARKET LEADER

Turkey 2020 | INDUSTRY | INTERVIEW

Sentez Grup has invested continuously over the years in a state-of-the-art facility that is able to produce any kind of packaging customers want.

M. Süleyman Öncel
BIOGRAPHY

M. Süleyman Öncel has been the chairman of the board of directors of Sentez Group since 2003 and oversaw the development of Turkey's largest integrated manufacturing facility. Öncel started his career as a mechanical engineer and formerly served as the general manager of Mehtap Kitchenware, one of the world's leading kitchenware manufacturers. In parallel, he served as finance manager at Biofarma Pharmaceuticals Industry. Öncel also serves on the board of Selçuklu Holding, is a part of the Turkey Cardboard Packaging Manufacturers Association (KASAD) management team and is the association's vice chairman of the board.

Sentez Grup was originally founded to serve the packaging needs of Selçuklu Holding, but later developed into a global packaging producer. Can you outline the most important steps along Sentez Grup's timeline?
The purpose of Sentez Grup's establishment in 1992 was to manufacture boxes for pharmaceutical companies. Later, when Mehtap Kitchenware joined the holding, we started manufacturing boxes for housewares as well. Realizing that it is a promising market, we decided to increase our packaging production using our experience in the pharmaceutical sector. We also expanded through our subsequent acquisitions of Gül Offset and Naturel Packaging, two of the leading packaging companies in Turkey. We held three facilities, employing roughly 550 people. In order to benefit from the shared competencies of these structures, we decided to gather these three facilities under a single roof in 2011. Since 2014, we have been operating in our current Dilovası facility, which has 55,000sqm of indoor area. Our operations here are an example of an industrial profile that is rarely seen around Turkey or even the world. The logic underlying our establishment is to be able to produce any kind of packaging the customer may demand.

How has the growth of the food sector driven Sentez Grup's expansion and helped shape its product offering?
The increase in the volume of our business and the packaging industry could only have been possible with the growth of the food sector. Today, we hold a global market share of around 1%, which is fairly large considering the size of the market. We constantly develop and produce various products ranging from inner and outer packages to flexible packages in order to fulfill all the packaging needs of our customers, which are mainly in the FMCG sector. We target a balanced growth in these packaging groups within the framework of our customers' demands. Since our establishment commenced its operations with cardboard packaging, our production volume in this group is larger than the flexible packaging group. Currently, 25% of our packaging is flexible and 75% is cardboard. We are one of the three-largest cardboard packaging producers in Turkey. We continue our efforts to balance our flexible package production and cardboard package production.

What percentage of Sentez Grup's overall revenue comes from exports, and in what markets are you working to expand your global market share?
Our current export rate is around 25%. However, we plan to increase that figure in the near future. In the short term, we are working toward the goal of attaining a rate of 35%, and then reach a balanced export rate of 50%. We primarily export to European countries and neighboring countries of Turkey, though we want to have a more diversified export base. To achieve this, we have recently begun cooperating with an American firm that has facilities at various different regions of US. The trading volume of the packaging industry is much higher in the US, so it is our most important target market in the first phase. There is also a huge trading volume with our southern neighbors as well. Iraq is a major market for us, but the political situation there affects the business tremendously. Likewise, Syria has the same problem. If everything goes smoothly in global politics, that would be a huge benefit to Turkey's exports. Looking to Europe right now, we are primarily engaged with northern Europe. We also aim to expand to central European countries.

What challenges do you face in the sourcing of raw materials?
Our pricing is mostly based in euros in our domestic sales and exports. Sometimes our suppliers can give their prices in dollars. The fluctuations in USD/EUR parity may cause problems in our costs time to time. This is not an operational issue related to the supply chain. However, we do have alternative suppliers that can offer pricing in both currencies, though such supplier shifts do not always occur easily. Our top priority is always maintaining quality. A few years ago, the Chinese government shut down many cardboard facilities due to environmental concerns, and this had a huge impact on world trade. Aside from the increase in paper prices, firms were forced to find alternative suppliers. The recent trade dispute between US and China and the restructuring of global trade have caused producers to act much more carefully and sensitively.

Over the short term, what are Sentez Grup's investment plans and primary objectives?
We do not plan to make a huge investment especially in machinery and facility in the near future since we have arrived at this stage with continuous investments. We recently signed a subscription contract worth of EUR6.5 million with Heidelberg, a leading company in offset printing technology, and can now produce what we used to produce with four machines using only two machines. We have a capacity that will fulfill our mid- and long-term targets. We have been working on a project for seven years to develop our enterprise resource planning (ERP) system and are working with a Portuguese company to achieve that upgrade. Currently, all our ERP modules are integrated with each other. However, the project requires a second step, which we started in 2018. We have an intense schedule to complete this upgrade within the next 18 months. We call it the “Completion Project," as it will finalize all the other projects we have done so far within the scope of Industry 4.0. It is a structure that enables the control and tracking of all processes within our facility. We can currently do it with a 60% flow rate, and this project will increase that to 100%. Moving forward, we will emphasize increasing efficiency.