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WORLD OF INDUSTRIES 01/2019

WORLD OF INDUSTRIES 01/2019

Turkey will bounce back,

Turkey will bounce back, as it’s industry’s fundamentals are still alive and strong Despite the recent currency crisis and macro-economic instability in the country, Turkey has a vibrant manufacturing sector which holds immense potential for growth, and is on right track, as well. NEWS AND MARKETS A s one of the largest countries in the Eurasian region in terms of population, Turkey has a strong and a growing economy. With more than 65 % of the population within the working age of 16 to 64 years, Turkey is blessed with a demographic advantage and an expanding middle class, which results in consistent domestic demand. It’s strategic geographic position as a bridge between Europe and Asia has made the country an important manufacturing and distribution hub. It is the 17 th largest economy in the world and its industrial output accounts for more than a quarter of it’s GDP. Turkey positions itself in the global value chain by leveraging its logistical advantage, lower labor costs and flexible production capabilities. In terms of global competitiveness, Turkey ranks 61 st worldwide, with relative strengths on market size, infrastructure, public health and the innovation capabilities. As compared to other emerging nations, Turkey’s performance on the innovation scale is fairly good mainly due to strong research institutions and active participation in global technology publications and forums. But the country faces many bottlenecks when it comes to converting ideas into businesses, Author: Sushen Doshi, International Correspondent for World of Industries mainly due to barriers faced by entrepreneurs in ease of doing business and embracing disruptive ideas. In terms of product and labor market, Turkey lags behind other European countries mainly due to rigidities in worker-employer relations, internal labor mobility, ease of hiring foreign labor and lack of meritocracy. Turkey’s manufacturing sector As Turkey’s economy grew with an average growth rate of nearly 5 % from 2002 to 2016, the GDP levels increased from $ 300 billion in 2003 to $ 850 billion in 2018. Export, which was $ 75 billion in 2005, rose to more than $ 155 billion by at the end of 2018. For Turkey, mechanical engineering and machinery sector in particular is one of the most dynamic segment of the industry and with the collective wisdom possessed by the country’s machine manufacturers, this sector shall remain one of the driving force for Turkey’s economic growth. Over the last decade, the machinery sector has more than doubled its production capacities and has now risen as one of the top exports of the country. Today, this sector accounts for nearly 10 % of the country’s total export. Turkey’s machinery export, which was $ 5 billion in 2005, has reached more than $ 13.5 billion in 2017. Turkey exports its machinery to more than 200 countries, with EU 10 WORLD OF INDUSTRIES 1/2019

and USA being the top export destinations, accounting for more than 60 % of the total. By the year 2023, Turkish machinery aims to double their share within Turkey’s total export. The top three industry sectors driving the Turkish machinery ahead are as follows 1. Automotive and Vehicles segment: $ 24 billion 2. Machinery including computers: $ 14 billion 3. Electrical machinery, equipment: $ 8 billion Turkey’s leading industry sub-sectors Additive manufacturing: The automotive, aerospace and defense, household appliances, jewelry, and medical/dental industries started to use additive manufacturing in Turkey in 2014. According to 2017 statistics, Turkey accounts for roughly 1.5 % of the global additive manufacturing market with more than 400 3D printers being used across the country in manufacturing. There is growing demand for advanced 3D printers and CAD and CAM programs; advanced printing materials, including biomaterials; and largescale additive production capabilities. Industrial Automation: According to the Industrial Automation Association of Turkey, the industrial automation market in Turkey was valued at $ 1.5 billion in 2016, with an annual growth rate of over 20 %. It is expected to reach $ 4 billion within the next 5 years. Many international companies present in Turkey also serve the Russian, the CIS, the Middle Eastern and North African markets, with an annual regional business volume of around $ 5 billion. Data Analytics: Big Data and Data analytics solutions are mainly used in the supply chain and warehouse management systems, in predictive maintenance for real time monitoring of industrial devices. Analysts estimate that the Turkey’s IoT market size will reach a cumulative amount of $ 90 billion by 2022, including sensors, optronics, M2M software and hardware, artificial intelligence, modeling and simulations, cloud services, and cybersecurity applications. Robotics: There are more than 12,000 industrial robots in Turkey, with about half in the automotive industry. According to 2017 statistics, countries with advanced robotics in manufacturing use 300 robots per 10,000 workers. This amounts to just 12 robots per 10,000 workers in Turkey, which shows the potential growth opportunities for robotics in manufacturing industries. Advances and opportunities in manufacturing sector Turkish industry lies in between the 2 nd and 3 rd industrial revolution, the most mature sectors include materials (rubbers & plastics), computers, electronics and optical devices as well as the automotive sector. Advanced manufacturing technologies are increasingly being implemented across Turkey with European automotive and aviation companies leading the way. These sectors employ numerous local suppliers, and have taken swift and bold steps to adapt to the latest technical and technological requirements. In order to prepare the Turkish industry for the fourth industrial revolution, Turkey’s industry bodies and associations are taking strong actions in digitalization and automation of manufacturing. With this the country aims to move up from cheap labor to high productivity and innovation, and climb up the global value chain and ensure its future global competitiveness and boost the economy. Currently, approximately 30 % of Turkey’s manufacturing output and 35 % of its exports consist of medium- and high-tech products. With the help of advanced manufacturing technologies, the Turkish government aims to bring medium- and high-tech product manufacturing up to the EU average of more than 60 %. If Turkey fully adapts the industry 4.0 concept, it could save more than $ 15 billion every year in current manufacturing costs. Depending on the GDP growth in the coming decade, Turkey is expected to invest about $ 3-5 billion annually in the integration of industry 4.0 technologies into the manufacturing process. Tubitak (the Scientific and technological research council of Turkey) has prepared a roadmap to prepare the Turkish industry for adoption and development of Industry 4.0 concepts. It identifies three technology groups, which are digitalization, connectivity and future factories. In the digitalization segment, focus is given on developing cloud service platforms, data analytics and cyber security solutions. In terms of connectivity, attention is given on establishing an industrial IoT platform, machine-machine and machine-human software and hardware that will increase the quality and productivity during the product life cycle; and development of the innovative sensors, industrial wireless networks, and machine vision and image processing software. In the future factories segment, focus will be to develop intelligent production robots, equipment, software and management systems that can compete in the international markets in terms of technical quality and cost. A report by the Turkish informatics foundation indicates that 50 % of manufacturers in Turkey plan to invest in industry 4.0 within the next three to five years, 20 % still do not have any knowledge/strategy, and the remaining 30 % plan investments in five to ten years. In a survey conducted by Tubitak in 2018, the technologies that Turkish SMEs consider most important for their industry are automation and control systems, advanced robotics, and additive manufacturing. Despite the currency crisis and diplomatic tensions with US President Donald Trump and German Chancellor Angela Merkel, many European businesses remain committed to Turkey because they see the country’s long-term growth potential. Making any investment in Turkey seems to be a risky business at the moment. Even thou international companies are holding off investing in Turkey right now, in no-way has the willingness to invest died off. z More power ! © GÜDEL ROBA ® -guidestop rail brakes – more braking force – more holding force – more safety www.mayr.com your reliable partner Mayr-Eng.indd 1 17.01.2019 12:22:33 WORLD OF INDUSTRIES 1/2019 11

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