41st TOBB Defence Industry Assembly Held in Ankara

The last TOBB Defence Industry Assembly Meeting of 2019 was held on December 24th in Ankara. The first session of the meeting was conducted with the participation of Vice President of the SSB - Celal Sami TÜFEKÇİ, President of the TOBB Defence Industry Assembly - Yılmaz KÜÇÜKSEYHAN, President of TOBB – Mehmet BÜYÜKSİMİTCİ and sector assembly members. The second session was a Q&A session and President of Defence Industries Prof. İsmail DEMİR answered questions regarding sector information and issues.

Date: Issue 97 - January 2020

The meeting was launched with the opening remarks of TOBB Defence Industry Assembly President KÜÇÜKSEYHAN. In his speech, the Assembly President gave an overall evaluation of the sector. 

Member of the TOBB Executive Board - Mehmet BÜYÜKSİMİTCİ underlined that the defence industry is the most critical and prominent sector of the country adding that the rate of domestic participation in the defence industry has reached 70%. BÜYÜKSİMİTCİ also expressed his satisfaction in gathering with Assembly members at the event. 

Addressing members of the sector assembly in the meeting, Vice President of Defence Industries Dr. Celal Sami TÜFEKÇİ stated that the export figures of the defence industry increased to US$ 2.7 billion by the end of 2019 and made the following comments in his remark: “By the end of 2019, the defence industry’s export figures reached US$ 2.7 billion. This is an achievement, and this is your success. But we will not be satisfied with this. We conducted a workshop on how to increase our exports further, under the guidance of our Department of International Relations, in Antalya. During this workshop we presented a three-stage plan to increase the exports. We gathered with many shareholders of the sector at the event, we listened to their ideas and discussed them. A strategic road map will be built with the output of this workshop. All the members of the industry need to act collectively in order to achieve the target of US$ 10.2 billion that we’ve identified for 2023.” 

Stating that they also organized a workshop abroad with former employees of the Turkish Defence Industry Companies working in Europe, TÜFEKÇİ said, “There was a considerable amount of participation in this workshop from all around Europe. I can give the good news that as a result of this workshop, 25 employees will be returning our country.”

Underlining that infrastructural investments are required for production and they will establish a new structure for the formation of such cycle, TÜFEKCİ added that they will build a Teknopark close to the campus of TUSAS, similar to the Technology Development Zone at the Aerospace Industrial Zone, and Istanbul Teknopark structures and added: “A structure to which we refer as the Production Technologies Center of Excellence (ÜRTEMM) will remain at this Technopark. There will be an investment towards prototype production at the center. We will be building a prototype production center towards advanced technologies with the contribution of our industrialists. To this end, we will soon hold a meeting with our main industry companies and the companies we will invite from the clusters. At the meeting we will describe the model to them in order to build a mechanism for accelerating our activities by addressing the feedback we receive”.

Following the opening speeches, the agenda items regarding problems faced by the sector and their solutions were reviewed by the President of TOBB Defence Industry Assembly Yılmaz KÜÇÜKSEYHAN. During the review which was held as a Q&A session at the assembly meeting, the topics on Insufficiency of the Incentives for Fairs, Lost Markets, Export Credit Mechanism, Commercial Credit Interests, Brain Drain, Cancellation/Postponement of Defence Projects, Prevention of Unfair Competition against local manufacturers in Public Procurement Law, the increasing amount of the transferred VAT receivables due to (F) Clause of Article 13 of Law No. 3056, the lack of regulations for encouraging the competitiveness of Turkey in the Aviation/Aerospace Structural Sector were evaluated.

Taking the chair in closing, President of Defence Industries Prof. İsmail DEMİR presented assessments on agenda items regarding sector problems.

Prof. DEMİR: “We projected our target for total defence industry turnover as US$ 26-27 billion.”

President of Defence Industries Prof. DEMİR stated that the total turnover of the Defence Industry reached US$ 8.7 billion as of today (Dec 24) Defence Industry exports will reach US$ 3 billion by the end of the year and that R&D expenses increased to the level of US$ 1.5 billion. Mentioning that the size of approximately 700 projects under the auspices of Presidency of Defence Industries increased to US$ 60 billion, DEMİR said that the total turnover target within the scope of 2023 targets is projected as US$ 26-27 billion while the export target is over US$ 10 billion. “In order to achieve such targets, we aim to increase employment numbers to the level of 80 thousand. We also aim to increase our rate of domestic participation to 75% - 80%. We believe that while proceeding towards these targets, we need to decrease foreign dependency to the minimum, develop platforms, systems, sub-systems by performing our work in detail, identify the data infrastructure, capability inventory and our academic inventory in a way to cover our existing capacities and develop a strategy to become the best in the world particularly in certain areas through bringing our strengths to the forefront.”

Commenting on the negative experiences faced during credit payments, regarding the improvement of the unfavorable credit conditions of Public Banks and many other banks for the better coverage of our companies’ financial requirements, Prof. DEMİR stated that their doors are wide open to all companies taking part in the projects conducted by the Presidency of Defence Industries and that they will be providing all the support they can to all those applying to the Presidency. 

Underlining that complaints on the competition of main contractors and sub-contractors continued, Prof. DEMİR noted that they constantly emphasized that all our main contractor companies, our foundation companies in particular, need to take part in projects of greater sizes and added: “The measures that have to be taken to this end need to be discussed in an open forum. Existing capabilities have to be analyzed, who owns which capability? At which maturity level are they? These need to be analyzed well. Perhaps, certain spin-offs should be made from the extending structures of major companies and they should be formed in companies with depth.” 

Expressing that certain obstacles in exports were true, and that they were ready to support all companies exporting, especially in the formation of being a credit mechanism, Prof. DEMİR continued: “Our companies should absolutely apply to our institution if they have special conditions. The MILGEM Project sold to Pakistan is the best example of this. We provided the credit through a decree of the ministerial cabinet. We are willing to provide all types of support when an export opportunity arises. We are receiving crucial support from our government to this end as well. There is also this issue whether Eximbank loans are used in weapon and defence industry products or not. I would like to underline a few points here. Our companies can apply to Eximbank for loans regarding electronic products, optical products and products that may not be directly linked to the defence industry.”

Stating that there was an increase in brain drain in 2017-2018 and expressing that he has a different perspective on this issue, Prof. DEMİR shared that according to the analysis conducted on the departure of skilled resources in an environment with so many projects, they concluded that the financial aspect was not on the top of the list. Prof. DEMİR: “Financial opportunities are not on the top of the list. Therefore, we need to improve the work and working conditions. We cannot prevent the staff wishing to work abroad, by no means. On the other hand, we need to work in cooperation in order to bring the Turkish citizens either working or conducting research in foreign countries back to Turkey. We have been exerting certain efforts to this end. The human resources offices at the Presidency of the Republic of Turkey have conducted certain activities on this issue as well. A few meetings were held, too. Our ambassadors in certain countries also have activities in this area and they are willing to support us on this issue. The second problem at this point is that perhaps we need to tell the staff leaving our country the following words: ‘You go ahead and stay there for 3 years, and please know that your salary and job will be waiting for you when you return.’ Furthermore, we need to guide them in this respect. There is an opportunity here; companies are opening their doors to our staff. They are opening their doors in terms of technology as well. For the time being, bringing back 10%-20% of the staff who left for foreign countries is possible. We must meet with them, point out a target for them for their future and ask them to stay there for a while but to return to their country afterwards. We have to act rationally on this point. Our major companies in particular, have to work on ways to benefit from the staff that are leaving instead of losing them completely.” 

Following the review of agenda items, the 41st TOBB Defence Industry Assembly Meeting was concluded with the Q&A session.