Turkish Defense Industry Assembly’s 35th Meeting held in Ankara

Issue 80 - March 2018

The 35th Meeting of the Turkish Defense Industry Assembly was held on 19 December 2017 at TOBB Twin Towers under the presidency of the Chairperson of the Assembly Mr. Yılmaz Küçükseyhan, with the participation of the Undersecretary for Defense Industries Prof. İsmail Demir, representatives of the Ministry and assembly members in order to inform the members on the Undersecretariat for Defense Industries’ short, medium and long term projects and assess the expectations of the industry in 2018.

Addressing the assembly members at the opening of the meeting TOBB (Turkish Union of Chambers and Commodity Exchange) Defense Industry Assembly Chairman Mr. Yılmaz Küçükseyhan shared the meeting agenda with the assembly members. In his speech, Mr. Küçükseyhan stated that there were 61 industries under their Industry Assemblies and the Defense Industry Assembly was at the top of the most crucial assemblies and stated that the industry’s turnover growth was 22% in 2016 – 2017 adding that it was a constantly developing and progressing industry. Underlining that there was an increase of 33% with governmental incentives in R&D expenses, Mr. Yılmaz Küçükseyhan highlighted the industry’s great improvement from 2004 – 2005 until today.

Mr. Yılmaz Küçükseyhan made a detailed presentation to the members of the Assembly regarding the Assembly’s activities, views shared, meetings attended as the Presidency Council of the Assembly and the visits paid within 2017.

Expressing his gratitude to the Undersecretary for Defense Prof. İsmail Demir and Deputy Undersecretary for Defense Industries Dr. Celal Sami Tüfekçi for their continuous support to TOBB’s Defense Industry Assembly and for their participation in the meeting, Mr. Küçükseyhan left the floor to the Undersecretary for Defense Prof. İsmail Demir for his remarks.

Turkish Defense Industry’s Performance Assessment of 2017, Thoughts on Projects and Expectations from the Industrialists

In his assessment on the Turkish Defense Industry and expectations from the industrialists, Undersecretary for Defense Prof. İsmail Demir underlined that the industry needs to accomplish more than expected in order to achieve a “Powerful Turkey” and added that the Defense industry has to unconditionally implement President Mr. Recep Tayyip Erdoğan’s instructions for mobilization.

Stating that there were 300 projects conducted by the Undersecretariat for Defense Industries during his assignment in 2014, Prof. Demir stated that this figure currently has reached 600 projects. Prof. Demir also mentioned that merely 50 of these projects were launched in 2017 and added that in addition to the 22 decrees made by the Defense Industry Executive Committee, 40 projects are being held under the signature stage.

Stressing that critical deliveries were made for the Armored Personnel Carriers and Armored Combat Vehicles, Prof. İsmail Demir stated that they covered crucial ground in the development and production of the critical ammunition such as smart munitions, winged guided kits, precision guided kits, laser guided kits, penetrating bombs, etc. and that they launched the delivery of such products. Prof. Demir pointed out that in order to fulfil the engine and transmission requirements through national resources, they initiated development projects in related areas and added that the delivery of the Modern Infantry Rifle was at full steam.

Noting that numerous R&D projects have been launched under the auspices of the Undersecretariat, Prof. Demir stated that in addition to the currently popular S-400 Air Defense Systems’ procurement, the activities for the National Air Defense Missile System were launched and that the related shareholders are working on this issue. Prof. Demir added that test and development activities for the indigenous and national systems such as Hisar-A, Hisar-O and Hisar-U continue with the national resources as well.

Prof. Demir: “43 UAV Systems consisted of 38 Tactical Class UAVs and 5 MALE Class UAVs performing services for the Turkish Armed Forces”

Prof. Demir expressed that so far, over 1,100 Mine Resistant Ambush Protected “Kirpi” vehicles, over 300 Armored Personnel Carrier “Kobra” Vehicles, over 230 “Ejder Yalçın” Armored Combat Vehicles have been delivered to the Turkish Armed Forces Command.  He stated that they collected the proposals from the relevant companies in respect to the Altay Main Battle Tank’s mass production, adding that mass production would be launched upon evaluations. Moreover Prof. İsmail Demir noted that the 26th T129 “Atak” helicopter was delivered to the Land Forces Command and the preparations for the delivery of the 27th helicopter continue.

Noting that 43 Unmanned Air Vehicles composed of 38 Tactical Class and 5 MALE Class Vehicles were launched into operation by the Turkish Armed Forces and that nearly 10 of these systems were of armed configuration, Undersecretary Prof. İsmail Demir added that they conduct various studies toward fulfilling human resources needs of the industry and that they will be adding new ones in the upcoming future.

Prof. Demir stated that the Undersecretariat for Defense Industries continues its offset applications and that they set rules stipulating the main contractor to assign Sub Industry, SMEs, technology companies and universities and continued: “Throughout 2017, you witnessed the Industrial Competence Assessment and Support Program (EYDEP) emerging in various environments and soon we will be launching this Project. We continue our activities in order to extend the Defense industry in Turkey and enrich the competence of technology and human resources.”

Underlining that one of the most important phases of the investments made in human resources was the realization of technologies with surprising effects and creating an environment suitable for this, Prof. Demir said that taking part in the Defense industry should be done with a spirit of mobilization, emphasizing everybody’s and mostly our industrialists’ need to feel this spirit. 

Prof. Demir also stated that they will be organizing new contests similar to that of the Unmanned and Autonomous Land Vehicles Design Competition and added that they expect the support and contribution of the industrialist to such projects. Prof. Demir: “We held the “Roboik” Unmanned and Autonomous Systems Land Vehicles Competition this year and recently organized an award ceremony for the winning projects. This has been a first step and the number of such competitions will increase. We aim to create awareness and to realize the dreams of our companies, our youth and our citizens. We wish to build various mechanisms to encourage such activities and we expect both your support and participation.”

Prof. İsmail Demir: “Being an industrialist is in a sense equal to being a hero. Where there are a series of areas to easily make money, investing the capital in the Defense industry and expecting great revenues requires courage and dedication.” 

The assembly meeting continued with the Q&A session between participants and Undersecretary Prof. Dr. İsmail Demir.

Medium and Long Term Projects, Industrialization Activities and Plans for Sector Management

Following the networking break, the Head of the Department of Industrialization at the Undersecretariat for Defense Industries Mr. Bilal Aktaş shared a presentation that informed the Assembly members in detail on medium and long-term projects, industrialization activities, plans for sector management, R&D and technology activities.

Head of the Industrialization Department Mr. Bilal Aktaş mentioned that they categorize the subjects for which they are responsible and elaborated that the workload to be essentially accomplished by the Undersecretariat falls under A category, the B category contains exporting of Defense and aerospace products, and category C is composed of technological capability acquisition and investments.

Aktaş: “As of the end of 2016 the amount of domestic and foreign accumulated industry participation offset reached $23.1 billion. $12.8 billion of this liability was realized.  There is $10.3 billion in industry participation offset to be realized within the next decades. As we analyze the breakdown of the offset industry participation agreement, we witness that $3 billion of the $10 billion of local companies’ total liability was accomplished. Yet, there is still a $7 billion domestic participation liability to be accomplished. This shows us the potential in the upcoming period regarding the aspect of business shareholders in the industry.”

Mr. Bilal Aktaş added that technological sub system ownership is the primary objective for achieving a sustainable Defense industry and that they focus on the domestic development model in order to develop this. Mr. Aktaş underlined the vital importance of acquiring sub systems in the industry that do not exist in Turkey, the utilization of the capabilities acquired in future projects and maintaining the participation of domestic companies in the industry by be involving in new projects.

Mr. Bilal Aktaş stated that the continuity of the industry participation offset applications in the next five years would be maintained, the activities regarding the support credits for qualified products and infrastructural support would continue and that they are thinking of increasing the credit volume related to these activities. Moreover, Mr. Aktaş stated that without making regional distinctions in the investments to be made by the industry (in case the investment is made in the Defense industry area), it would be possible to benefit from fifth degree regional incentive implementations all around the country.

Expressing their expectations from the industry as the Undersecretariat, Industrialization Department Head Mr. Bilal Aktaş underlined that exports were amongst the sin-qua-non subjects.  He added that the products manufactured must have sufficient quality, certification and be available for international competition. Also noting that the support and incentive mechanisms granted by the government should be used efficiently, Mr. Aktaş said that in order to maintain this, they established the Industrial Strategy and Investment Planning Department within the Undersecretariat.   He underlined the importance of the participation of all companies in the sector in the clusters. Furthermore, Mr. Aktaş stated that companies should own institutional integrated software systems and have in-depth knowledge of how to fulfil the requirements stipulated by the signed contracts. Mr. Aktaş advised all companies to become members of the portal and touched upon the importance of keeping updated data within the portal and the requirement of entering the post-graduate and PhD degrees and areas of the staff employed at a given company.

Mr. Bilal Aktaş: “Our supervisors will begin assessing companies following the launch of the EYDEP in 2018”

Relaying information to the Assembly members on the activities held as part of the EYDEP program Mr. Aktaş said, “Supervision of the companies will be maintained within the scope of the EYDEP program. EYDEP training was completed as of last week and I would like to thank the executives of all companies for their participation. The training spanned 6.5 months. All of our colleagues attended 17 different training sessions and 110 evaluators assessed the training and a total of 60 classes were opened. With the companies trained here, we will conduct a joint study with the company Boeing on how Boeing supervises companies. They will receive training from Boeing.  We will be executing a similar study with Airbus as well. As of 2018, our supervisors will be starting their assessments at the sites, following the launch of the program. With the help of these assessments, the companies will have the chance to observe their status. In 2018 and 2019 we will be analyzing the status of the industry as part of the EYDEP program. As a result of these assessments, we will be evaluating the ways of elevating companies with lower degrees to higher levels, and which support mechanisms to launch. Hereby, I kindly ask our companies to be transparent and sincere during these assessments and reply to the questions within this framework, if our companies emphasize their strengths to get higher scores and speak less of their weaknesses then they may be deprived from the support they may be eligible to receive.”

Underlining that the development agencies will be among the greatest shareholders in this project, Mr. Aktaş said, “The development agencies located in certain cities will conduct programs with the EYDEP supervisors, and this study will allow the existing capabilities in those cities to reach us.  A resource of 40 million TL was allocated for this program. The support to be given in certain areas required by companies such as institutionalization, quality, etc. will be funded by this resource as well. The list of the parts was received toward achieving the indigenization of our Land, Naval and Air Forces. The products that could be indigenized as part of this resource will be shared with companies passing EYDEP supervision. We assess that the second section of this pyramid could be completed in this way. As I mentioned previously, the clusters are actively continuing their activities, besides a cyber security cluster was included. This cluster which is to be established under the leadership of our Undersecretariat, will be gathering companies active in cyber security under a single roof.”

Mentioning the R&D road map, Mr. Bilal Aktaş expressed that their primary target at this point is to extend to the basis of the technology and informed the audience that priority programs such as autonomous and control technologies, advanced material, innovative platform systems and concepts, energy and impact systems, sensors, signal image processing, KBRN, electronic warfare, destruction technologies, communication technologies, informatics and cyber security projects are taking part in the R&D road map.

Mr. Aktaş stated that the R&D projects conducted by the Ministry of National Defense were handed over to the Undersecretariat for Defense Industries as of 2016 and added that 32 new projects were approved during the SSM’s panel on R&D held in the previous period. Mr. Aktaş also expressed that the Undersecretariat allocated a budget of 300 million TL to R&D and that this resource was used for funding R&D projects.

Mr. Bilal Aktaş concluded his words by underlining the impossibility of speaking of an independent country without achieving superiority in technology and stated that he believed this superiority should be achieved through an extended supply chain.

Addressing the participants with the closing statement, Deputy Undersecretary Dr. Celal Sami Tüfekçi expressed that 2017 has been a busy year for the industry adding that they expected 2018 to be even more efficient and concluded, “The share allocated to the industry support fund from income taxes has increased and we will be maintaining an increase in revenues by 120%, our project portfolio conducted within the auspices of the Undersecretariat has grown incredibly”