With naval warfare a thing of days gone by, naval boats and warships are thankfully rarely needed for battle. However, Turkey's Dearsan Shipyard has recently strengthened its focus on the construction and exportation of such defence vessels, and as Chairman of Dearsan Mr Taner Akkaya explains, it is a strategy that has reinforced both the company and Turkish exports
Amidst the very competitive environment of the Turkish shipbuilding industry, in recent years Dearsan has shifted its operations to focus on building naval vessels. What was the thinking behind this decision and why was it a necessary one?
It was a strategic move to focus on naval ship building. Due to the surplus in the merchant ship building segment in the industry, our former manager decided to shift our focus to building naval vessels. Even if there are no wars, we will always need ships for deterrence.
The International Maritime Organization made a decision about tanker building, which led to a boom in tanker building business in Turkey. The Turkish industry constructed so many tankers that they did not have enough customers as the interests for bank loans were high.
We still suffer from this surplus, but we could survive as we switched to building warships. The companies in the sector that invested in building naval ships and cruise yachts have also survived.
It is not easy to compete in the sector. Now the standards are getting higher and higher in the country. For instance, although there was only one person in charge of quality control in the company seven years ago, there are now twenty people working to assure quality. What is more, labour costs have increased, as well. You have to pay more for skilled engineers. In the mean time, you need value added products.
Talking of added value, Turkey’s 2023 vision including raising value added exports to $500 billion. Within this strategy where do you think the shipbuilding sector is and how are you going along with this plan?
Exports of high added [in the warship industry] in my opinion are patrol boats. Due to some political changes in the world we are not expecting war between big groups. There may be some escalations but peaceful solutions are necessary, so in that case, big warships are necessary for deterrence.
In that case, we are able to build some patrol boats [and sell them] to almost all countries because piracy, drug smuggling and human trafficking are the main challenges of the navies now. In some navies if they do not have small patrol boats then they have to deploy frigates for that issue. One patrol boat is worth 50 million dollars, while one frigate is worth 500 million dollars, so you can create ten folds with the same amount of money.
All navies need these kind of patrol boats or offshore patrol vehicles, OPVs. In the next twenty years the main target will be the OPVs, because when we are talking about military vessels and if we have a look at the Africa; Africa will be an emerging market for everyone. From Dakar to Darfur there is no real harbour or real port and there are a lot of oil stations. That is to say, in my opinion as a retired admiral that, oil stations are very vulnerable.
Dearsan is a trusted partner of the government, working with the Ministry of Defence and SSM for example. Why do you think the government has chosen you over other ship builders? What are your competitive advantages?
Indeed, the government took a great risk at the beginning because in that time, in THE good old days, everyone in all shipyards had a lot of business. They were building ships, tankers, tug boats and without very strict standards. Because naval ship standards are very high, getting certificates and trying to get that level, you need a lot of investments. Thank God that our boss invested in that area and our government took a very big risk to choose this small company as a main contractor. That is a very big risk, we are really grateful to all the people who have chosen our shipyard as a partner.
Aside from you partnership with the government, export remains the main segment in your operations. Can you elaborate on this and where do you see opportunities for Dearsan globally?
Contracts with the Navy in Turkey can only account for your running costs such as labour. It’s exports that help you make profits. We are capable and able to build ships for the Navy, but to achieve exports you need to tailor your products according to customer needs and we are able to cater to our customers on the basis of their needs. Our R&D is considerably strong. We will soon be the first company to produce boats for an EU-funded project to fight against terrorism and human trafficking. We invite our prospective customers to see the quality standards of our products. For one thing, we meet the NATO standards of the highest level.
For another, we already use European equipment such as the propulsion systems bought from Germany and some electronic systems from Holland. Our costs, however, are much lower than those of our European competitors. We are the only company in Turkey which established partnership with a German company. We have the best delivery times and prices in the country.
You mentioned your strength in R&D, but you also rely on a high level of technical expertise to remain a market leader. How important is this in keeping your competitive advantage in this ever-growing global world of shipbuilding?
In shipbuilding, [essentially] the shipyard is some flat area near the coast and some lifting capacity, that’s it. If you have these two things you have a shipyard. The rest is your spirit. If you trust yourself, if you trust your capabilities you can build a ship. Mostly, we created a strategy. We employed a lot of retired naval officers and PAT officers in our shipyards, and with their institutional approach, we balanced with the dynamism of civilian originated engineers.
The rest is the function of money. You can buy everything but the spirit and the strategy. Dedication is also very important. We all dedicate ourselves in this company. Personnel are working sometimes more than 16 hours and sometimes we do not go home. As such, I think the main reason we are successful is our spirit.
In many ways you are an ambassador for Turkey with your value added exports representing the country internationally. As such, do you feel responsibility to the Turkish people and the Turkish economy?
Admiral Nelson who was one of the best known admirals in history, said, upon his victory over the French in the Trafalgar Battle, “Thank God, I have done my duty”. Likewise, we would like to be able to do our duty as perfectly as we can. Our achievements make a drop in the sea. We are not in position to represent the shipbuilding industry in Turkey as we are a small company. Yet, we are proud of ourselves since we do our job well.