TURKISH MACHINERY MANUFACTURING INDUSTRY
ADVANTAGES OF TURKEY

•     A dynamic population open to new and developed technologies with high adaptability
•     Low costs compared to developed countries; in addition to labour, engineering is also cheap
•     Turkey has qualified staff to create designs
•     Increase in techno parks and university-industry joint research centres
•     An important proportion of raw materials of sufficient quality can be obtained in the country
•     For use of CE mark, many organisations have met necessary requirements such as quality and monitoring new technologies and applications
•     Ease of transportation and its proximity to Central Asia, Europe, Turkish Republics and Middle Eastern countries
•     A sense of security has developed towards Turkish machinery industry in close and neighbouring countries, Egypt, and other North African countries that have been developing in recent years and considered potential markets
•     Development of domestic market
•     Turkey is an EU Customs Union member since 1996 and engaged in EU accession negotiations
•     Sector exports in machinery manufacturing industry are mainly to Germany, England, France, Italy, United States of America, Russia, Romania, Iran and Spain. Most of the exports are to European Union countries. These facts indicate that companies within machinery manufacturing industry in accordance with European Technical Legislations

The machinery industry in Turkey is labor intensive rather than capital intensive, and is expected to remain so in the near future. The readily available work force in Turkey plays a vital part in the development and well-being of the machinery industry as it guarantees competitiveness through low-cost labor and engineering services. However, the cost-effectiveness of labor and engineering does not in itself make a world-class machinery industry. In this regard, the advantage of the Turkish machinery industry lies in the accumulation of companies with different capabilities, strategies and products, so that this clustering provides a technological edge to the overall industry.

The machine manufacturing industry holds strategic significance in the development process of countries creating a multiplier effect in economic development by defining the manufacturing skills of other sectors through investment, intermediate goods and the services it offers. A developed machine manufacturing industry provides a critical competitive power over other countries in the manufacturing industry.

 The machinery industry in Turkey has been growing at a rate of nearly 20 percent per year since 1990. The growth of the Turkish machinery sector is backed by highly competitive and adaptable small and medium-sized businesses (SMEs), which form the bulk of the industrial production in the country.

 As the drivers of growth in machinery and major contributors to the industrialization of the country, Turkish SMEs distinguish themselves from their peers in other countries by their utilization of the low-cost and highly skilled work force Turkey offers. Another indicator of the advanced level of the Turkish machinery industry is the rate of domestic input in the production stage. Around 85 percent of domestic input not only reduces the dependency on foreign sources, but also helps other local industries.

 The combined advantage of the engineering capability required to compete in the international market with reasonable labor costs enable the Turkish machinery industry to offer a range of products and components that are both high-quality and affordable.

 The machinery production of Turkey has also started to take up an increasing portion of the country’s exports and accounts for 8.4 percent of total exports. According to Chapter 84 of the EU Customs Code, major export destinations of Turkish machinery products are Germany, France, the UK, Italy and Iran, respectively. On the other hand, Turkey imports machinery products mostly from China, Germany, Italy, France and the USA. Although a trade deficit for machinery products still remains, the balance has begun to shift towards positive values in recent years. A downward trend has been observed as of 2008, while the trade deficit was down to USD 9 billion in 2009.

 The machinery industry in Turkey is labor intensive rather than capital intensive, and is expected to remain so in the near future. The readily available work force in Turkey plays a vital part in the development and well-being of the machinery industry as it guarantees competitiveness through low-cost labor and engineering services. However, the cost-effectiveness of labor and engineering does not in itself make a world-class machinery industry. In this regard, the advantage of the Turkish machinery industry lies in the accumulation of companies with different capabilities, strategies and products, so that this clustering provides a technological edge to the overall industry.

 The harmonization of EU legislation in accordance with Turkey’s accession process has made it compulsory to obtain the necessary safety and compatibility certifications. As of July 2010, four Turkish national institutions have been authorized as notified bodies to ensure local machinery producers’ compliance with EU standards.
 
In January 2010, the capacity utilization rate of the “otherwise non-classified machinery and fittings manufacturing” sector saw an increase of 7.8 points to become 63.2 in January 2010. In June 2010, this rate recorded an increase of 14.8 points compared to the same month of the previous year, thus becoming 72.2.

Turkey’s machinery industry has been given ambitious export targets for the country’s 100th anniversary in 2023. To reach USD 100 billion of exports with a share of 2.3 percent of the global market, the Turkish machinery industry is projected to have a CAGR of 17.8 percent until the year 2023. By that time, the sector’s share of Turkey’s exports is expected to be no less than 18 percent.

What are the latest figures regarding the machinery and accessories industry in Turkey?