Economic initiatives deliver recipe for more industry trade with Turkey

Jan. 1, 2020
Turkey is inviting American manufacturers and entrepreneurs to have a seat at the table.

Turkey is inviting American manufacturers and entrepreneurs to have a seat at the table. The nation is undergoing a major push to become a leading global technological and economic presence by 2023, which marks the centennial anniversary of the modern-day republic’s founding.

A series of reciprocal policy agreements and trade missions between the U.S. and Turkey have been established to encourage increased commerce between the two nations. (See this month’s Aftermarket Business World cover story.)

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In January, Turkish governmental and economic development officials presented a lineup of “Investment Opportunities in Turkey” conferences in Los Angeles, San Francisco and Seattle.

“Half of Turkey’s population is under 30 years of age and Turkey is one of the fastest growing economies of the world,” says Gurkan Suzer, the commercial attache for Turkey in Los Angeles. “Despite the financial turmoil around the world, Turkey offers great investment opportunities,” he adds.

“Currently Turkey is ranked the 13th most attractive destination for FDI (foreign investment dollars) in the world, and ninth among emerging countries,” says M. Ilker Aycı, president of the Investment Support and Promotion Agency of Turkey (ISPAT).

“This is a great time in Turkey’s history. As a booming country with a GDP growing at an average annual rate of 5 percent for almost a decade, Turkey represents tremendous potential with numerous investment opportunities for foreign investors. Experts agree that this trend will continue into the future as the country vigorously pursues its goal of becoming one of the top 10 economies in the world over the next 10 years,” he says.

“Turkey is a country that has experienced strong structural change over the last decade,” Aycı continues. “This factor has guided the country into a phase that numerous experts have characterized as a transformation process. And, as with all deep evolutionary reforms, new challenges and opportunities arise.”

According to the statistics from the Turkish Automotive Distributors Association (ODD), in 2012 the domestic passenger car and light vehicle market shrank by 10 percent compared to 2011, with sales declining to 777,761 units. The ODD attributes the drop to “government measures to cool the economy,” an increase in the special consumption tax and a general overall slowing of the domestic financial arena.

Catching the technology wave
Confidence remains high, however, that the automotive sector will move forward with accelerated expansion as incentives are emphasized along with renewed efforts to embrace technological innovations.

At a September global leadership conference in Istanbul, former U.S. Vice President Al Gore observed, “Turkey has caught the technology wave rising across the world just in time.”

Research firm TechNavio forecasts that Turkey’s motorcar market will annually grow by 8.4 percent through 2015.

“The automotive market in Turkey will witness a shift toward the Middle East and North Africa for exports,” says a TechNavio analyst who helped prepare the company’s report. “Presently, the production is focused on exports to Europe and the U.S. Therefore, Turkey will have to find other export markets in the Middle East and North Africa to eliminate its dependence on the unstable European automotive market,” the analyst says. “Government intervention for setting up production, a young population and R&D units will attract considerable foreign investments to the automotive segment in Turkey, and these are some of the factors that will boost the export of automobiles in Turkey.”

Hulusi Senturk, chairman of the Turkish Standards Institute (TSE), recently announced that a $35 million Automotive Test Center is going to be constructed in the northwestern Bursa province. Noting that it would be the largest testing facility of its type in both the Balkans and the Middle East, Senturk says the project means that “Turkey’s 30-year-old dream would come true” upon completion.

“Throughout the last decade, Turkey has been implementing an active policy to improve its investment environment,” says ISPAT’s Aycı. “To start with, the new FDI frame law, which was passed by the Parliament in 2003, is the first installment of these significant economic reforms to change the investment environment in Turkey and make it attractive to global investors. This law guaranteed equal treatment to all investors without differentiating between local and international investors and enabled all international investors to enter Turkey without a preliminary authorization request, to transfer dividends freely, to access real estate, to be protected against expropriation, and to hire expatriates, etc.,” he adds.

“Turkey also decreased corporate taxes from 33 percent to 20 percent for all companies. Important parameters, like the acceptance of the international Arbitration Courts and the ongoing harmonization of laws with EU legislation have made Turkey one of the most liberal countries in the world, both in terms of the legal framework for FDI and the investment environment,” says Aycı.

International presence
Germany’s Bosch began its Turkish operations in 1910 with the opening of a branch office. In 1972 it constructed a production plant in Bursa, and the company’s aftermarket distribution center in Karlsruhe ships products to more than 140 countries.

Another German-based industry supplier, FEV, entered Istanbul’s industrial sector in late 2011. “FEV established the new company in Turkey after the completion of a number of projects for Turkish partners and international OEMs with locations in Turkey. The positive encouragement and feedback from these partners motivated the foundation of FEV’s newest subsidiary,” says CEO and President Stefan Pischinger.

“Turkey’s importance for the world economy and the automotive sector is growing rapidly, and the foundation of this new subsidiary demonstrates our dedication to the Turkish market,” he explains.

“Istanbul is Turkey’s economic hub, with both Turkish and key international players in one of the booming regions of the world,” adds Executive Vice President Dr. Ernst Scheid. “This makes it a perfect location for a powertrain engineering company like FEV.”

Delphi has been operating in Turkey since 1989. In addition to serving an array of international automakers in the country, the various locations are positioned to supply customers in Europe, the Middle East and Asia. A significant portion of the output is exported to OEMs in the United Kingdom, Sweden, Germany, Belgium, France and Spain.

With ISO 14001Certification, the Turkish-made product lines include cables, electronic systems and components, fuel pumps, fuel injectors, nozzles and valves.

Ford has been manufacturing its Transit Connect in Turkey, and in January it launched the Cargo 1846T heavy-duty truck. The Turkish-designed vehicle will be manufactured at Ford Otosan’s Inonu plant in Eskisehir and also in Brazil. “Ford Otosan will be responsible for the development of Ford’s heavy truck product range,” says Director General Haydar Yenigun. “Over 400 Ford Otosan engineers have worked on the Cargo 1846T model for more than three years.”

The vehicle cost about $75 million to develop and implement, and Yenigun says the company aims to sell 3,000 of them in 2013, with 500 destined for export to Russia, Eastern Europe, North Africa and the Middle East.

With distribution slated for Turkey’s domestic marketplace along with the export sphere, Korea’s Hyundai and France’s Renault are also ramping up production at their respective Turkish plants.

(Turkey’s name, by the way, is derived from a Latin term meaning, “Land of the Turks.” The Thanksgiving bird is native to North America; early explorers who brought gobblers back to Europe frequently traveled through Turkey – and the specimens became popularly known as “turkey fowl.”)

For more information, visit http://www.invest.gov.tr/en-US (Invest in Turkey), http://www.taysad.org.tr/www/en/ (The Association of Automotive Parts and Components Manufacturers; known as TAYSAD) and http://www.osd.org.tr; (the Automotive Manufacturers Association; known as OSD).

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