Page 1

December 2017

Issue: 115

Machinery Exporters Union Monthly Magazine


in english

MAIB SECTORAL TRADE DELEGATION IS IN TEHRAN Machinery Exporters Association of Turkey (MAIB) held a sectoral trade delegation program on December 11-14 in Tehran, the capital of Iran.

T

he trade delegation including Mehmet Güneş - Expert in Turkish Ministry of Economy, Esra Arpınar - Vice Secretary General of Central Anatolian Exporters Union (OAIB) and Bahar Özcan Kaynak - Turkish Machinery held bilateral discussions with the participation of total 40 companies from Turkey and Iran at the Turkish Trade Center in Tehran. In this day, a meeting had been held with the Chairman and Secretary General of Iran Exporters' Union. In which the projects of MAIB and MAKFED were discussed and cooperation opportunities were negotiated in details. The members of the industry and trade delegation visiting Tehran Chamber of Commerce and Industry on December 13, met with International Relations Officer and Developing Countries Director of Tehran Chamber of Commerce and Industry. Cengiz Gürsoy, Teh-

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ran Commercial Counsellor of Turkey also attended the meeting, where information about the Turkish firms in the delegation and their export products is provided. The trade delegation that visited two firms operating in the iron-steel and the food machinery industries at Shamsabad Industrial Zone after visiting the Tehran Chamber of Commerce met with Hosein Velayeti, Tehran Industrial Zones Supervisor.

EMGARGOES ARE REMOVED, AND THE EYES TURNED TO IRAN In the period following the removal of the commercial embargoes against Iran, MAIB works on increasing machinery export made to the respective country since 2015. Within this framework, MAIB attended Tehran Industrial Fairs held on October 5-8, 2016 and October 6-9, 2017 following the delegation visit on December 19-22, 2015.


11TH DEVELOPMENT PLAN PREPERATION WORKSHOPS STARTED Within the framework of the 11th Development Plan preparations, specialization commissions and work groups held their first round meetings between the dates of December 8-28, 2017 and their second round meetings between the dates of January 2-20, 2018.

M

achinery Work Group that is created for the machinery industry held its first meeting on December 26, 2017 under the presidency of Kutlu Karavelioğlu, Machinery Exporters Association (MAİB) and MAKFED Vice Chairman, TOBB - Turkish Machinery and Equipment Manufacturing Assembly President. Zühtü Bakır, MAKFED Secretary-General, took part as the Machinery Work Group Reporter at the meeting that 27 participants

identified by the Turkish Ministry of Development had also attended. Long-term development policies, which cover dimensions such as economic growth and international competition, humanitarian development and superiority of law, information society, industrialization and regional development, are created with a multi-directional mentality and carried out with an holistic perspective. In the global rebalancing process of the 11th Development Plan, the goal is to make it the main policy document that will reveal the

critical structural transformation areas that need focus so that Turkey gets the best of, and the respective policies, targets and strategies. With these 75 specialization commissions and work groups established in line with this perspective, the goals are to unite different groups of the society as the requirement of a democratic planning mentality, to receive expert information, to create inventory, to compile information about Turkey, to develop solution suggestions and to provide input to the plan.

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in english

MACHINERY EXPORTERS ASSOCIATION (MAIB ) HOSTED VIP DELEGATION FROM THAILAND Thailand delegation visited Turkey within the scope of the program coordinated by Ministry of Economy and organized by Machinery Exporters Association of Turkey (MAIB) . The delegation visited companies in Ankara, Konya, Burdur and Izmir between 12-15 December 2017.

T

he delegation interested in agricultural machinery sector visited agricultural machinery manufactures and also one company from defence industry for the in defence industry project in Mynmar. COMPANIES IN FOUR CITIES WERE VISITED Firstly, the delegation visited The Turkish Association of Agricultural Machinery and Equipment Manufacturers (TARMAKBIR) in Ankara. They had a chance to get detailed information regarding Turkish agricultural machinery sector. And then, the production areas of the companies in Ankara, Konya, Burdur and Izmir. Were visited and got detailed informations regarding the in production.

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ENTREPRENEUR INFORMATION SYSTEM IS NOW OPEN FOR INDUSTRIAL ORGANIZATIONS A protocol signed between MAKFED and Turkish Ministry of Science, Industry and Technology regarding "Directive on Accessing, Using and Sharing Entrepreneur Information System" on December 12, 2017. With this protocol, the Entrepreneur Information System is opened to the benefit of the machinery industry.

I

n accordance with the signed protocol, the expert personnel identified and accredited by MAKFED (Turkish Machinery Federation) and its members will be able to work on subjects approved by the Turkish Ministry. Zühtü Bakır, MAKFED Secretary-General told that having sufficient knowledge is essential for taking the right decisions and setting the appropriate strategies. "Even though the registry records in the field of the industry were being stored by the Turkish Ministry of Science, Industry and Technology, the efforts to create an Entrepreneur Information system aiming to collect and process all the information regarding the industry at one site began almost 10 years ago. Thus, first the technical infrastructure was established

by the Turkish Ministry of Science, Industry and Technology, and an agreement had been reached with organizations and institutions that will provide data regularly." said Bakır. Bakır, also, shared his opinions regarding the importance of this protocol: "While the Turkish Ministry of Science, Industry and Technology achieved a structure generation

information through the respective system, the other parties are also allowed to use the systems in a controlled manner. And we are happy for MAKFED to take the first step in its own field as an umbrella organization of the machinery industry, and to open the Entrepreneur Information System to the service of the machinery industry. Our federation that is very

well aware of its key role in the machinery industry will benefit ultimately from the Entrepreneur Information System in its efforts to generate information, to analyse the available data, and to make them more understandable and useful for developing right policies in line with the goal of making Turkey a strong country that is developed and industrialized."

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in english

MAKFED - ERDEMİR MACHINERY MANUFACTURING INDUSTRY EVENT IS HELD Erdemir, which continues its steel production operations in Turkey, welcomed machinery manufacturers at its Zonguldak facilities on 17 January 2018.

T

he event welcomed almost 70 representatives from the industry firms besides the 17 associations that are members of Turkish Machinery Federation (MAKFED). Zühtü Bakır, Secretary General stated that they had greatly benefited from this event that was really productive thanks to the successful organization and hosting of Erdemir, and reminded that Turkish steel industry is eight in the world and second in Europe after Germany in terms of tonnage. "Turkey is the ninth largest steel exporter of the world with 15.3 million tons." said Bakır. "Whereas it is seventh with its 17 million tons steel import. And China is the country that is exporting the greatest amount of steel with a figure of 108.1 million tons. In steel consumption per person that is also considered as a development indicator, South Korea is first with 1130kg and Turkey is sixth with 420kg. While 75 percent of the steel is produced for the construction industry in Turkey, 47 percent of the steel is also consumed by the construction industry in average. And machinery industry takes 21.5 percent share from consumption. So, machinery industry is affected greatly from the fluctuations in the steel market as one of its main customers."

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DEVELOPING JOINT OPERATIONS Bakır underlined that Domestic Producer Price Index (D-PPI) is way below the (D-PPI) values of main metal industry, electronics industry (components, circuit boards etc.) and industries providing the basic inputs such as the electrical equipments. "Especially the rapid increase, which is seen in the index values of the inputs provided by the main metal and electronics industries as of the end of 2016 and in the first three quarters of 2017, raised the machinery manufacturing industry's input costs significantly. And these costs were not reflected to the product prices of the industry. While the index value increase in the first three quarters compared to 2016 is 21.4 percent in the main metal industry, this figure stayed only in the level of 10.57 percent in the machinery manufactur-

ing industry." said Bakır. Bakır stated that they have plans to improve the competitiveness of and develop joint operations for these two interacting industries, and named these plans as follows: establishing a steel usage inventory for the machinery industry (quality, quantity, export rate), developing a good practice regarding supply of steel in the machinery industry, identifying the priority steel investment areas in line with the needs of the machinery industry, organizing joint training programs / seminars with the partnership of MAKFED and Turkish Steel Producers Association (TÇÜD). Bakır ended his speech by saying "given the important role of materials in technological developments, improving and continuing our training programs regarding the selection and use of materials including steel is also among our short term plans".


EXPORTERS MEET AT THE RUSSIAN ECONOMY AND INDUSTRY COOPERATION MEETING Russian Federation Trade Representative and Central Anatolian Exporters Union (OAIB) met at Russian Economy and Industry Cooperation Meeting held in Ankara on January 19.

S

enior managers of 50 companies representing various industries operating within the body of OAIB General Secretariat attended the meeting, where Russian Federation Trade Representative provided detailed information within the scope of commercial relations with the Russian Federation. In the meeting held at OAIB General Secretariat, Aydar Gaşigulin Russian Federation Trade Representative and Sevda Kayhan Yılmaz - MAIB Board Member provided detailed information regarding the commercial relations between

two countries. Gaşigulin, also, answered the questions of the par-

ticipants about the visas, customs and investments in Russia.

MAIB WELCOMES VIP DELEGATION FROM BOSNIA HERZEGOVINA

B

osnia-Herzegovina Delegation visited Istanbul within the scope of the " VIP Delegation" program coordinated by the Turkish Ministry of Economy and organized by Machinery Exporters Association of Turkey (MAIB). During the bilateral discussions continued for a full day at TIM Foreign Trade Complex, senior officers of 15 Turkish firms reviewed the possible cooperation.

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in english

INDUSTRIALISTS FROM ANKARA WILL BE SPECIALIZED IN NUCLEAR ENERGY "Nuc-IndusTRy Domestic Contribution Project which was initiated Ankara Chamber of Industry (ASO) in 2014 offers new visions to the industrialists in Ankara. While Nuclear Industry Cluster began operations in December in the coordination of ASO, important steps are continuing to be taken regarding the Advanced Technology and Nuclear Energy Center planned to be founded in the ASO Organized Industrial Zone I.

N

uc-IndusTRy Domestic Contribution Project, which continues within the body of ASO since 2014 with the goal of including the domestic industry into the projects for the Nuclear Power Plants that will be established in Sinop, Akkuyu/Mersin and Thrace Region of Turkey, creates a brand new vision for Ankara industrialists. Previously 30 companies from ASO had attended Supporting Development of Competitiveness (URGE) project that began on 13 November 2014 and was carried out within the scope of the UR-GE Notification No. 2010/8 of the Turkish Ministry of Economy, and these companies had received basic trainings regarding nuclear standards and certifications. And also a good-will agreement had been signed with the French Nuclear Power Industry while visiting experienced countries to introduce the nuclear industry to the firms. Assoc. Prof. Dr. Yavuz Cabbar, ASO General Secretary stated that they had also signed good-will agreements with Czech Power Industry Union, Russian Rosatom Contin-

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uing Training Center and Nuclear Industry Construction Workers' Training Center, and that their trip to Japan was enlightening for the URGE participants. NUCLEAR LEAP OF ANKARA INDUSTRY On the other hand, "Nuc-IndusTRy Domestic Contribution Project" initiated by ASO enabled Ankara industrialists to look at the nuclear industry with a brand new vision. Cabbar stated that a building had been purchased to establish an "Advanced Technology and Nuclear Training Center" at ASO Organized Industrial Zone I in connection with URGE project, and said that the supply and budget operations

regarding the equipments and devices required for the repairs and technical infrastructure had been completed and that the project will continue full speed after financing the required 14 million TL. At this "Advanced Technology and Nuclear Training Center" that will be established to enable domestic industrialists to take bigger roles in the construction of nuclear power plants in Turkey and to accelerate the domestication process, first the 20 thousand workers and technicians will be trained to take roles in the nuclear plant constructions in Sinop and Mersin. Moreover, the participant firms of URGE project will also continue their active trainings at this center.


COUNTDOWN HAS BEGUN FOR ISK-SODEX 2018 The details of ISK-SODEX that will be held at TÜYAP Exhibition Center on 7-10 February 2018 were shared with the press.

I

SK-SODEX, one of the global meetings of international heating, cooling, airconditioning, ventilation, insulation, pump, valve, fitting, water treatment and solar energy sytrttem industries, will be held at TÜYAP Beylikdüzü Exhibition Center on 7-10 February 2018. The air-conditioning industry that is continuing its preparations for this meeting shared the latest information regarding the fair during a press conference. In the conference that was held with the participations of Alexander Kühnel - General Manager of Hanover Fairs Turkey, Metin Duruk Chairman of Heating, Cooking, Airconditioning Research and Training Foundation (ISKAV) and Toros Utku - SODEX Director of Hanover Fairs Turkey, Alexander Kühnel made a speech and sated that they are restructuring ISK-SODEX in line with the growth rate of the industry as the largest air-conditioning fair of the Eurasia region. The air-conditioning industry that is composed of heating, cooling, ventilating and air-conditioning systems, equipments and installations is expected to increase its export 11.8 percent in 2017. The export performed by this industry reaches 455 million dollars in Germany where the installation, system and elements are ranked first in overall export. Alexander Kühnel underlined that the activeness

of exporter firms in international fairs plays a significant role in this export increase besides the qualified and young work force and the R&D efforts. ISK-SODEX PROGRAM IS ONCE AGAIN FULL Toros Utku, SODEX Director of Hanover Fairs Turkey, stated that they have been restructuring the ISK-SODEX Fair to fulfil all the changing needs of the air-conditioning industry and getting ready to welcome more than 80 thousand visitors from more than 20 countries. Meting Duruk, ISKAV Chairman underlined that the fair including various titles from windless technologies to energy efficiency, from state-of-the-art products to Industry 4.0 is held with an innovative vision every year.

"Our industry almost recovered with the recently increasing new investments and R&D efforts. We had achieved a growth of 11.8 percent by performing 3.9 billion dollar export in 2017. Of course, the supports and efforts of organizations and institutions supporting us, and especially our Ministries were very important. And ISK-SODEX is one of the best examples to this. We believed that ISK-SODEX gathering is very important in terms of the future development of the air-conditioning industry. We will bring the purchasing teams that we care deeply about in our industry, the opinion leaders from significant markets and VIP groups to Turkey once again with the support of Hanover Fairs Turkey, introduce them to our producers and find the chance to display our products." said Duruk.

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in english

CRITICAL THRESHOLD IN COMPETITION: AFTER-SALES SERVICES After-sales services are extremely important in gaining loyal customers today. Aftersales support defined as the availability of a product warranty and spare parts in the past is now defined as the 'continuity of relations between the company and the customer' to ensure service quality increase and excellence in customer satisfaction.

A

fter-sales services may be defined as all the technical support provided to the customer in the period of following the sales of the product. Among these, there are services such as warranty, insurance, product updates, maintenance/repair, and options offered by brands to the consumers such as call center, shipment and various communication channels. After-sales services are among the most important factors in creating loyal customers. Building empathy by understanding the customers and giving the assurance of a solution by creating a sense of

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trust are very important in providing a sound after-sales service. It is highly probable to convert customers that find solutions to their issues and get the required support when they need into loyal customers. It is also an important factor for the customers to be able to communicate with the seller after the purchasing process. Thus, it is required to build various communication channels including a website. The first ones to come to mind for such channels are online support lines and call centers. Responding customers and trying to solve their issues fast are two of the very important steps that need to be taken to ensure customer

satisfaction in after-sales services. Packaging and shipment of the products is an another point that needs ultimate attention. A VALUABLE INFORMATION SOURCE Recently, many machine manufacturers understood that creating a professional after-sales service department will also generate the significant part of their profits throughout the life-cycle of the sold machines. It is a known fact that the after-sales services are much more resistant to cyclical factors compared to normal machine sales. Economic recessions, geopolitical crises and lowering growth rates in some countries keep the growth at the sub-segments of the machinery manufacturing industry under significant pressure. And this causes the after-sales services stand out as a significant revenue and profit source. Perfected after-sales service generation is a strategic success factor for the machinery and industrial product manufacturers. Offering professional after-sales services provide benefits much beyond the revenue potential. As you know, the technical qualities of new products can be copied by rivals. The recently increasing operations of the manufacturers es-


pecially in Far East is a clear proof of this problem. The fact that the products can be rapidly replaced by rival products keeps the prices under pressure and damages customer loyalty. Thus, a customer-oriented after-sales service differentiates companies from their rivals and improve their prestige before the customers. Machinery provide revenue and profit to the companies throughout their life-cycle thanks to the sufficient technical-service. Most of the time, the companies find the resources required for investment with the contribution coming from after-sales services (for example: high-margin spare part sales). The after-sales service provided throughout the years long use of the machinery (spare part, maintenance, renewal) can also be used to improve the relations with the customers. The customer satisfaction ensured with the communications established with the customers and the customer loyalty following this are all determinant at this point. Moreover, the path to sell new products to the customers also passes from the quality of the technical services provided during the use of the previously sold products. We can even talk about the brand loyalty of buyers, who had this satisfaction. These customers may also support the companies in winning new customers by sharing their satisfaction with other potential buyers. After-sales services are very valuable information sources. Along with the provided technical support, various information such as the ones about the machinery performance, customer demands and required investment areas can be obtained from first hand. And such information may be used by the manufacturers to develop serviceoriented products, develop the market and manage the process.

In order to achieve sustainable success in after-sales services, the companies should define various important points such as the service strategy, service portfolio, service pricing, service organization, processes, service audit and performance management. AN IMPORTANT PROFIT ITEM Professional offer of after-sales services increases profitability of the companies significantly. Especially spare part pricing (that constitutes almost 60 percent of the after-sales revenue) is very important. While a perfect spare part pricing should be value-based, parts are evaluated based on specific criteria and the spare parts are classified based on different impact factors in line with the evaluation results. The most important quality that makes this method practical stands out as its partial automation. We can say that many machinery manufacturer firms recently made considerable investments to establish a self-supporting service infrastructure. It is known that service department and even individual service companies were founded for this purpose. While even importance of after-sales services were discussed com-

pared to sales and other functions before, now the importance of after-sales services is an undeniable fact for everyone. At this point, one can discuss if separation of service organization from other add value to the customers or not, and how much integrated the organization model should be for a successful service. And the point that is more important than organization model is the creation of excellent and total service processes. Thus, the focus of companies in this subject are installation and loading, spare part supply and stock, on-site maintenance, repair service and complaint/return processes. If all these processes are fast, secure and cost-efficient, then it means excellence is achieved. And these can be ensured by acting in line with customer demands, minimizing interfaces and redundant coordination, and optimizing the IT system. On the other hand, performance measurement indicators to be at optimum transparency is essential for excellence in service. These indicators can be grouped under four main titles: overall business achievement (revenue, profit etc.), processes (total duration, capacity use, installation time etc.), cus-

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in english

tomers (customer satisfaction, complaints etc.), employees (work efficiency etc.). AMONG THE FACTORS AFFECTING COMPETITIVE POWER In the "Machinery Industry Inventory Study" prepared by the Turkish Machinery and Turkish Machinery Federation (MAKFED) prepares in 2017 to enable more systematic performance of industrial operations by identifying product profile along with the general state of machinery manufacturers and exporters, a perspective is provided regarding the general status of after-sales services in Turkish machinery industry. Almost five of the ten companies interviewed within the framework of this study are active in trade and service besides manufacturing. It is recorded that 75 percent of these companies reporting operations in the service field provide after-sales service, 71 percent provide spare parts and accessories, and 68 percent provide assembly service. And 17 percent of the study participants name the effectiveness of after-sales services among the factors affecting their

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competitiveness. While 43 percent of the companies state that they are in better condition in after-sales services compared to their foreign rivals, 52 percent state that they are at the same level and 3 percent state that they are in worse condition. On the other hand, "Machinery Industry Macro Market Analysis, Current State Assessment and Strategic Recommendations" report, prepared by Turkish Machinery and MAKFED on April 2017 to offer strategic recommendations by identifying improvement areas of the machinery industry, provide various data regarding the after-sales service offers of companies in this industry. 10 percent of the companies that participated to the study state that they import since they believe after-sales services for the machinery are not sufficient. According to the study, the most important deficiency in the value chain of the companies is revealed as after-sales support with a rate of 21 percent. While the report names the most important factor in purchasing decision of Turkish customers as product price with 67 percent, after-sales support services follow this with 14 percent.

MAKFED IS READY TO CONTRIBUTE TO THE REGULATION ON AFTER-SALES SERVICES! Zühtü Bakır, General Secretary of MAKFED, stated that the Regulation on After-Sales Services issued on Official Gazette No. 29029 on 13 June 2014 based on the Law No. 6502 on Protection of Consumers dated 7 October 2013 only covers the consumers. "In other words, the legal entities such as the industrialists, merchandisers, shopkeepers, public institutions, schools, hospitals, foundations, associations, building administrations and farmers remaining outside the scope of the consumer definition in the law are excluded from the application of this legislation." said Bakır. Bakır reminded that Consumer Law was also covering industrial goods in the past, and that the after-sales services of industrial products are addressed only in Turkish Commercial Code and Turkish Code of Obligations today. "In this sense, import operations to be carried out without establishing any after-sales infrastructure besides the issues faced by the parties and SMOs that are not classified as consumers regarding the after-sales services of purchased products negatively impact the competitiveness of Turkish industry. Thus, Turkish Machinery Industry's Strategy Document and Action Plan (2017-2020) issued on Official Gazette No. 30017 on 24 March 2017 includes a provision titled Action 2.3 'A study will be conducted regarding the application of after-sales services for industrial goods / warranty conditions'." said Bakır. Bakır stated that they are ready to support the study that will be carried out by the Turkish Ministry of Science, Industry and Technology, and both the preparation and application of the legislation as MAKFED.


MACHINERY AND ACCESSORIES EXPORT FIGURES OF TURKEY

PRODUCT GROUP

Source: All Exporter Unions Database JANUARY 1-NOVEMBER 30, 2016

JANUARY 1-NOVEMBER 30, 2017

QUANTITY (1000 Tonnes)

QUANTITY (1000 Tonnes)

VALUE (Mil $)

$/kg

VALUE (Mil $)

$/kg

(%) CHANGE

QUANTITY

VALUE

ENGINES, ACCESSORIES AND SPARE PARTS

116

1.840

15,8

134

1.983

14,8

15,0

7,8

INDUSTRIAL AIR CONDITIONERS AND COOLING MACHINES

437

1.785

4,1

450

1.836

4,1

2,9

2,9

OTHER INDUSTRIAL WASHING AND DRYING MACHINES

446

1.241

2,8

470

1.318

2,8

5,2

6,2

OTHER MACHINES

145

981

6,8

167

1.125

6,7

15,1

14,7

CONSTRUCTION AND MINING MACHINES

206

772

3,7

245

833

3,4

18,6

7,8

PUMPS AND COMPRESSORS

89

621

7,0

99

734

7,4

11,9

18,3

MACHINE TOOLS

85

579

6,8

92

633

6,9

7,9

9,3

AGRICULTURE AND FORESTRY MACHINES

120

557

4,7

132

600

4,5

10,4

7,6

TURBIN, TURBOJETS, TURBO PROPELLERS

12

371

30,7

15

566

38,3

22,5

52,7

TEXTILE AND CLOTHING MACHINES AND ACCESSORIES

86

461

5,4

96

541

5,7

11,8

17,5

REACTORS AND BOILERS

54

408

7,5

59

471

8,0

8,4

15,4

VALVES

47

397

8,4

49

452

9,3

3,1

13,9

FOOD INDUSTRY MACHINES, ACCESSORIES AND SPARE PARTS

63

368

5,9

82

441

5,4

30,2

19,8

WEAPONS AND AMMUNITION FOR THE DEFENSE INDUSTRY

34

545

16,0

20

393

19,6

-40,9

-27,9

ROLLER AND FOUNDRY MACHINES, MOULDS

35

257

7,3

38

309

8,1

8,6

20,1

INDUSTRIAL HEATERS AND COOKERS

33

244

7,3

40

286

7,2

18,1

17,3

LOAD LIFTING, CARRYING AND STOWING MACHINES

45

208

4,6

60

253

4,2

33,5

21,9

PACKAGING MACHINES, ACCESSORIES AND SPARE PARTS

7

130

18,9

8

154

19,5

14,7

18,5

GUM, PLASTIC, RUBBER PROCESSING MACHINES

12

131

10,8

14

148

10,8

13,8

13,0

OFFICE MACHINES

3

130

41,9

4

138

37,8

17,5

6,0

BEARINGS

10

114

11,2

11

121

11,2

6,6

6,4

PAPER MANUFACTURING AND TYPOGRAPHY MACHINES

8

58

7,0

12

79

6,6

43,4

34,9

LEATHER PROCESSING AND MANUFACTURING MACHINES AND ACCESSORIES

2

11

5,8

2

13

5,4

33,8

24,7

2.096

12.210

5,8

2.296

13.428

5,8

9,5

10,0

TOTAL

127

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