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Machinery sector drives Turkey’s export growth

Interview - May 26, 2015

Turkey has ambitious plans to grow the value of its exports to $500 billion by 2023. If this target is to be reached, much will depend on the machinery sector, which is expected to boast exports valued at $100 billion by the year in question. Adnan Dalgakiran, Chairman of the Turkish Machinery Promotion Group, shared his vision for the sector, which is based on innovation and long-term investment in R&D and technology.


Turkey’s Vision 2023 includes ambitious targets for boosting the value of exports to $500 billion, of which machinery will contribute $100 billion; up from $15 billion in 2014.  How will the machinery sector make up this extra $75 billion over 8 years, and how can we expect Turkey’s machinery export products and markets to change over this time?

Turkey is a country where the average annual wage is around 10,000 USD, but we have some problems with this. To date, Turkey has been trying to improve our export power by working with low employment costs. I am trying to impose another strategy based on a long-term vision that improves our global competitiveness, rather than focusing on short-term targets. My strategy is based on making Turkey a top country for technological innovation, not a country that imports technology from abroad. In this sense, the machinery sector is the most powerful and important in Turkey.

There are really strong strategies in the world which hold back our technological improvement. For example, the standards are determined by Germany generally. They control developing countries in a technological sense. They know how to increase your costs and expenses when they want to. The German government says that if it allows other countries to develop their own technology they will lose power and influence. We want the Turkish machinery sector to make both Europe and Turkey stronger, and not to be a threat to Europe. We do not want short-term benefits, we want long-term benefits and cooperation.

The product quality is the most important thing.  Our promotion group exists to inform the world about the quality and competitiveness of our machinery. Germany is our most important market and our companies are strong there. But our technology is low compared to theirs. They set the standards. If we are able to sell technology to Germany we can sell it all over the world.

Another issue is the competition in medium technology in Europe. This year we are planning to form a union for Turkish and European machinery companies in Germany. We plan to do the same in the USA the following year. We look at our sector as a global producer and not a domestic producer. We can raise the standards of European producers and we also have some products that European investors can benefit from. We are trying to produce much better products. I am also on the board of the national science board, TUBITAK. We are trying to support R&D in the machinery sector, but we don’t want to do this alone, we want to do it in collaboration with Europe.

When we look at the target of $500 billion of exports by 2023, the machinery sector is expected to contribute $100 billion to this, making it the biggest sector in Turkey. The government should not leave this only to us, they should do more to support the sector. That is why it is hard to agree on short-term targets and long-term strategies. Some 75% of the sector depends on low and medium technology. We have tried to attract resources to develop technology, but the country’s growth has stalled over the past five years, so the machinery sector has not been able to attract all the resources it needs.

Finally, our sector had exports last year of $15 billion. Half of these exports went to Europe. We invite European investors and producers to come here. Meanwhile, we have another strategy focused on Asian countries. We want them to see Turkey as a bridge between Asia and Europe. We analyse our targets to ensure they are suitable. I see your magazines are well known and readers are well respected, and you are doing a very professional study. We hope your coverage will help to raise our profile. 

There is a quote you made in a previous interview that resonated: “Generally, Turkey isn’t known as an industrial country. People think of sun, sand, and textiles, and that’s it.” Why should people also think of Turkey as an industrial powerhouse, particularly in the machinery sector?

Turkey’s industrial exports are greater than Russia’s! Our annual exports across all sectors already total $150 billion, and the machinery sector contributes $15 billion to this. Exports in our sector are growing more than the average rate of growth in exports across all sectors.

Deputy PM Ali Babacan has made it clear that Turkey has suffered from an image problem in recent years and the G20 Presidency can help change perceptions. Last year, a new ‘Brand Turkey’ was launched under the slogan ‘Discover the Potential’, which is a collaboration between TIM and Economy Ministry. To what extent does the machinery sector stand to benefit from this campaign and the added positive exposure provided by the G20 Presidency?

Turkey has vast potential and well-known brands and branding are very important in helping us to fulfil this. In the institutions where I hold management positions, I always emphasize that Turkey has huge potential.

You are the head of a company celebrating its 50th anniversary this year, which exports to some 100 countries. In many ways your company is the perfect example of Turkey’s entrepreneurial spirit and successful export-led growth which we are hoping to showcase. What personal message would you like to deliver to G20 leaders as they debate ways to revive global trade back to pre-crisis levels? 

Turkey is in a very important location, geopolitically and geographically. With its young, dynamic population and rising economy, Turkey provides big opportunities for those companies looking to cooperate and invest. Globalization requires companies across G20 countries to increase trade activities in the region, and Turkey is the most strategic country for them to focus on. We are surrounded by energy resources and many of our neighbouring countries have economies which are growing continuously. There are many opportunities within our country and within the countries in the wider region.