Turkey At A Glance

General Industry &  Fastening Sector Overview

Turkey, having a portion in the European continent, while the remaining larger portion in Asia,  where the population consists of the members of various religion and culture is a complete mosaic of cultures. In terms of geographical location, its proximity to Europe and its access to developing regions such as the Middle East and Central Asia provide great advantages in terms of the development of commercial activities. It not only connects Europe to Asia, but it is also an important energy terminal and gate that connects the east and west.
According to Eurostat data and Tüik 2017, with half of the 81 million population being under 32 years of age, Turkey has more youth population compared to the European Union.
 
OVERVIEW OF THE TURKISH ECONOMY
 
Turkey, in the GDP ranking, was the 6th largest economy in Europe in 2016, and 17th in the world. Turkey’s impressive economic success achieved in the last 14 years, resulted in expressed confidence by many experts and international institutions in predictions about the future of the country. According to OECD estimates, in the 2015-2025 period, Turkey will be one of the fastest growing economies among the OECD member countries, with an average annual growth rate of 4.9%. According to 2017 statistics, the number of foreign companies in Turkey is 58 418, the amount of foreign direct investment is 10.9 billion USD.

Trade

According to 2017 data, Turkey’s main export markets


Turkey’s main import sources

 
Turkey has a customs agreement with the European Union. 
Other countries Turkey has free trade agreements with, Albania, Bosnia and Herzegovina, members of EFTA (Iceland, Norway, Switzerland and Liechtenstein), the Faroe Islands, Morocco, Palestine, Ghana, South Korea, Georgia, Israel, Montenegro, Kosovo, Lebanon, Macedonia, Malaysia, Egypt, Moldova, Mauritius, Serbia, Singapore, Sudan, Syria, Chile, Tunisia and Jordan.
 
Turkey – EU Trade
 
Customs Union established between the EU and Turkey with Association Council resolutions 1/95 and in force, since 1 January 1996, has contributed to Turkey’s economy for nearly twenty years of implementation. In terms of statistics, the trade volume between Turkey and the EU reached 140 billion euros annually. Foreign trade with the EU increased by 7 times. Total exports and imports with EU represent a share of 41%. 
 
Turkey, the EU’s 5th largest trading partner and 2/3 of foreign direct investments in Turkey are of the EU. 
 
Turkey’s total exports in 2017 was 157 billion dollars.

Total exports and imports with EU represent a share of 41%.

 
Machinery Manufacturing
 
Machinery manufacturing continues to be one of the key growth drivers of the Turkish economy. This sector plays a crucial role in the development of Turkey’s greater manufacturing industry due in no small part to its capability to produce intermediate goods and to provide inputs to key sectors such as construction, energy, textiles, agriculture, and mining. 
 
The machinery manufacturing sector in Turkey is known for being R&D intensive -- Turkey graduates over 450,000 engineers every year -- and for creating high value. The export/import ratio of the industry has reached 52 percent, and local sourcing accounts for approximately 85 percent of all inputs at the production level.
Total export value of the machinery industry reached USD 13.4 billion in 2016, up from USD 5.2 billion in 2005.
 
Annual growth rate of machinery exports between 2005 and 2016 was 9 percent – better than Turkey’s overall export growth rate during the same period.
 
As the 4th largest export industry of Turkey, accounting for a 9 percent share in Turkey’s total exports, machinery products are shipped to more than 200 countries. 60 percent of total machinery product exports are shipped to the EU countries and the USA.
Turkey’s competitiveness in the machinery sector is driven by favorable input costs and strong enablers. Input costs include competitive labor cost, an affordable and reliable energy supply, and logistical advantages based on the geostrategic location of Turkey, while enablers include a skilled workforce, generous investment incentives, an innovation-oriented infrastructure, and a strong supply base and domestic clusters.

Defense and Aerospace
 
Turkey is one of the largest defense spenders in the world. Turkey’s USD 15 billion defense expenditure in 2016 ranked as the 17th largest defense budget in the world. Turnover in the defense industry doubled over the past decade and reached USD 6 billion by the end of 2016. In parallel with the development of the Turkish aerospace and defense sector’s capability in the past decade, the exports and international cooperation opportunities for Turkish companies have increased. 
 
The industry’s exports increased from USD 600 million in 2007 to USD 2 billion in 2016. With a developed and skilled production capacity, the orders received by the industry amounted to USD 12 billion in 2016.

According to OECD estimates, in the 2015-2025 period, Turkey will be one of the fastest growing economies among the OECD member countries, with an average annual growth rate of 4.9%

 
Construction sector
 
One of the reasons that the construction sector shows incredible development In recent years is Turkey’s strategic position in the intersection of Europe, the Middle East and Central Asia. The construction sector accounted for about 8.4% of GDP over the past decade. Total Foreign Direct Investment (FDI) inflows were recorded as $10.8 billion in 2017, while the share of real estate and construction sectors in this amount was $4.6 billion (42.9%). 
 
Especially urban transformation works and mega projects in Istanbul will lead the activities in the near future.

 
Household Appliances, Parts And Components Manufacturing
 
The household appliances industry is one of the well-established and dynamic sectors in Turkey. The industry is mainly composed of two subsectors; namely, the white goods (durables) which dominate the sector and the small household appliances. With its production of more than 28 million units, the white goods industry has become a significant focus of production in the last 10 years while Turkey has become the leading country in Europe in the white goods sector. In addition to over 50 medium-scale manufacturing companies and the major producers in the market, there are also around 500 supplier companies of parts and components.
 
Turkish household appliances producers have created their original strong brands, leading to tight consumer-dependence in the domestic market while gaining ground in foreign markets, mainly in the EU countries. Some of the major brands in the domestic market are: Arçelik,  Beko,  Altus,  Aygaz,  (Arçelik);  Profilo,  Bosch,  Siemens  (BSH-Profilo);  Ariston, Philco, Indesit (Merloni); Teba (Teba); Vestel, Regal (Vestel); Demirdöküm (Vaillant), Kumtel (Kumtel,Luxell), etc.
 
The exports of household appliances industry stood at US $2,684 million in 2017. Refrigerators, washing machines, ovens-cookers, deep freezers and dishwashers are the leading export products of the sector. In 2017, Turkey ranked the 6th in refrigerators, the 4th in dishwashers and the 5th in washing machines exports worldwide.


 
 Turkish household appliances industry exports its products to 200 customs territories worldwide. The major exports market for Turkish household appliances industry is the EU. 
 
Turkish manufacturers are conscious of quality, safety and the environmental aspects of production. All Turkish manufacturers have affixed the CE Mark to their products both for exportation to the EU and for the domestic market.
 
 Turkey’s automotive industry
 
The foundation of Turkey’s automotive industry dates back to the early 1960s. During a period of rapid industrialization and progress, this key sector transformed itself from assembly-based partnerships to a full-fledged industry with design capability and massive production capacity. Between 2000 and 2017, original equipment manufacturers (OEM) invested USD 14 billion in their operations in Turkey. These investments significantly expanded their manufacturing capabilities, which in turn led Turkey to become an important part of the global value chain of international OEMs. Meeting and exceeding international quality and safety standards, today’s Turkish automotive industry is highly efficient and competitive thanks to value-added production.
 
• Leveraging a competitive and highly-skilled workforce combined with a dynamic local market and favorable geographical location, the vehicle production of 13 global OEMs in Turkey increased from 374,000 in 2002 to over 1.7 million units in 2017. This represents a compound annual growth rate (CAGR) of around 10 percent during that period.
 
• Significant growth posted by Turkey’s automotive sector led to Turkey becoming the 14th largest automotive manufacturer in the world and 5th largest in Europe by the end of 2017.
 
• Turkey has already become a center of excellence, particularly with respect to the production of commercial vehicles. By the end of 2016, Turkey was the number one producer of light commercial vehicles (LCV) in Europe.
 
• Proven as a production hub of excellence, the Turkish automotive industry is now aiming at improving its R&D, design, and branding capabilities. As of the end of 2017, 132 R&D and design centers belonging to automotive manufacturers and suppliers were operational in Turkey.
 
• Notable examples of global brands with product development, design, and engineering activities in Turkey include Ford, Fiat, Daimler, AVL, and Segula. Ford Otosan’s R&D center is one of Ford’s three largest global R&D centers, while Fiat’s R&D center in Bursa is the Italian company’s only center serving the European market outside its home country. Meanwhile, Daimler’s R&D center in Istanbul complements the German company’s truck and bus manufacturing operations in Turkey. AVL Turkey, which opened up its 2nd R&D center in Turkey, started to develop autonomous and hybrid vehicle technologies.
 
• Turkey offers a supportive environment on the supply chain side. There are around 1,100 component suppliers supporting the production of OEMs. With the parts going directly to the production lines of vehicle manufacturers, the localization rate of OEMs varies between 50 and 70 percent.
 
• Turkey is home to many global suppliers. There are more than 250 global suppliers that use Turkey as a production base, with 28 of them ranking among the 50 largest global suppliers.
 
Automotive brands and models manufactured in Turkey
 
■ Fiat – Egea ■ Fiat – Doblo  ■ Fiat – Fiorino 
■ Fiat – Linea ■ Peugeot – Bipper ■ Citroen – Nemo
■ Renault – Megane - Clio ■ Ford – Transit ■ Ford – Courier 
■ Ford - Custom ■ Hyundai – i10 ■ Hyundai – i20
■ Toyota – Corolla ■ Toyota – Verso ■ Toyota – Ch-R
■ suzu – D-Max ■ Honda - Civic ■ Opel – Combo
 
Auto manufacturers increasingly choose Turkey as a production base for their export sales. This is evidenced by the fact that around 80 percent of production in Turkey was destined for foreign markets in 2017. More than 1,300,000 vehicles were exported from Turkey to foreign markets in the same year. In addition, Turkey was the number one vehicle exporter to European markets with 986,000 units in 2017.
 
• While Germany, France, Italy, the UK, and Spain are currently the major export customers of the Turkish automotive industry, there is a trend of diversification in export destinations with companies looking to break into nearby emerging countries where there is considerably more demand potential for new auto sales.
 
• The rise of per capita income from USD 3,000 in the first few years of the 2000s to around USD 11,000 in 2017 led to higher sales in the motor vehicles market. While the average annual sale figures in the market were around 360,000 in the early 2000s, the average sales increased to nearly 1,000,000 by 2017.

ANALYSIS OF FASTENER MARKET IN TURKEY 

Developments in the fasteners industry of Turkey, in line with industrialization in Turkey, accelerated in recent years. With the investments made within the fastener industry both in quality and technology in recent years, Turkey has reached a very competitive position in the production of special and standard products. Correspondingly to this development, production and export figures are rising rapidly.
Many well-equipped laboratories have been established that provide world-class service to meet needs for tests and measurements required for quality. MATL A. in Istanbul and MFCE (Metal Forming Center of Excellence) in Ankara are some examples.
Depending on the intensity of investments, the use and need for fasteners is constantly increasing mainly in automotive and sub-industries, and white goods and sub-industry as well as in the industries including machinery manufacturing, building, electricity, furniture, lighting, defense, ship building, window, glassware, medical, elevator, trailer, mold, plastic, agricultural machinery, construction, heating and cooling.
 
The fact that there are many strong manufacturers in the production of raw materials used in the production of the fasteners and a strong sub-industry in mold production contribute to the improvement and service quality of the sector. Domestically manufactured heat treatment machines, coating plants, washing machines, threading machines, sorting machines serve Turkey’s fasteners industry. 
Turkey’s geographical position provides significant logistical benefits. Advanced sea transport as its surrounded by the sea on three sides, rapid logistics opportunities to many strategic countries by road turn into advantage especially in the delivery time and contribute to the preferability of Turkish origin products.  Russia, the Middle East and Balkan countries, as well as Europe, are the destinations which Turkey densely trades with.
 
As seen in the comparative export statistics, an average growth rate of 29% was recorded in 2018 compared to the previous year. According to the data provided by General Secretariat of Istanbul Minerals and Metals Exporters’ Association, total value of $365 million of fasteners export in the year 2017, increased to $472 million in 2018. The countries highest number of 7318 HS coded fasteners exported to by Turkey respectively are Germany, France, Italy, Slovakia, Spain, Poland, United Kingdom, Austria, Russia, Algeria and Sweden.
 
While Fastener Import was 680 million USD in the January-November period of 2017, it decreased to 515 million USD in the January-November period of 2018. According to these data, it is observed that imports are higher than exports, however, since exports increase every year and imports decrease the gap is closing. Top five countries Turkey imports fasteners from are, respectively, China, Germany, Italy, France and the United States. 

    Turkey’s: Export Quantity in Fastener Products HS Code 7318, Unit: tonnes
 
   Turkey’s Import Quantity in Fastener Products HS Code 7318, Unit: tonnes
    

Form of State: Parliamentary Republic
 
Currency : Turkish Lira(TL)
 
Capital City : Ankara
 
Area : 783.562,38 km²
 
Population: 81.867 million (2018 – IMF)
 
Export : 157.0 million USD (2017 – TURKSTAT)
 
Import: 233.8 million USD (2017 – TURKSTAT) 
 
2019 Projected Real GDP (% Change) : 3.5 (IMF)
 
2019 Projected Consumer Prices (% Change): 15.0 (IMF)
 

Date : 01.02.2019