OSTİM Chairman Orhan Aydın and OSTİM Investment Inc. General Manager Abdullah Çörtü were live guests on Bloomberg HT Television's Hande Berktan program. Aydın and Çörtü shared their views on the general state of industry, SMEs, technology, and exports. The program focused on the need for a paradigm shift in industry and production, and discussed perspectives on 'industrialization' processes.
The program first addressed the September export figures and, in this context, the 2016 targets. Noting that Iraq stood out in the September figures, Çörtü said, “Germany is Turkey’s largest export market. After that comes the UK, Italy… Iraq has fallen to fourth place. A few years ago, Iraq surpassed Germany. This is a concrete example of how the problems in neighboring countries are negatively affecting our exports.”
Raw materials from abroad, cheap labor from within
Reminding that another issue for Turkey is related to raw material procurement, Çörtü pointed out that imports from Russia and China are very high in this context. The General Manager of OSTİM Investment made the following assessment: “We buy raw materials, process them with cheap labor, and then sell them to Western countries. A paradigm shift is needed here. When we change this paradigm, we will escape the middle-income trap.”
Abdullah Çörtü, also commenting on SMEs' access to finance, said that this is a critical issue not only for SMEs but also for Turkey as a whole. Identifying the biggest problems as access to finance and the savings gap, Çörtü underlined the observation that, "While 98% of all businesses are SMEs, 60% of the total credit volume in Turkey is used by SMEs."
“The Real Sector Cannot Invest”
Çörtü responded to the question, “How was 2016 in terms of real sector investments?” with the following: “While Turkey aims for 5% growth, we have been struggling to grow at around 3% for the last 5-6 years. Looking at the sub-components of these figures, it becomes clear that there hasn't been much trouble with private consumption spending in the last five years. There is no problem with consumption. But private investment spending has come to a standstill, it is very weak. This negatively affects growth. The real sector cannot invest. There are economic and social reasons for this. There are reasons related to expectations and uncertainty. For the real sector to invest, it needs to be able to see what lies ahead.”
“What will we sell in Industry 4.0?”
OSTİM Chairman Orhan Aydın, responding to the program host's question, "We need to discuss a new model in industry. Is there an investment climate in terms of technological infrastructure? We are stuck in the assembly industry. Is there an investment climate within the framework of Industry 4.0? How can we create this?", emphasized that manufacturing industry and production are very critical concepts that require careful attention.
Aydın, touching upon the fact that the middle-income trap cannot be escaped unless the importance of the manufacturing industry is well understood and properly developed, pointed to 'developing a new mindset and strategy' as the way to surpass $10,000.
Orhan Aydın stated: “It wasn't easy to get here. We've arrived, but to make a new leap forward from here, we must take new steps. In Industry 4.0, we will be talking about higher technology, more automation, and machines that communicate with each other. When you match this with Turkey's profile, the following situation emerges: If foreigners are going to sell us the machines we buy here, if foreigners are going to come and give us the software, what will we sell there? What will we sell in Industry 4.0? The answer to this question worries me. We need to be involved in the machines that make machines, in the software; it needs to belong to us. This brings us to the issue of quality workforce and education. How will we get through this critical stage? We must do things differently than we have done so far so that a different result emerges. I believe the magic key to this is that we need to revise our industrialization paradigm.”
Citing the example of the Undersecretariat of Defense Industry, Aydın stated that Turkey has achieved great success in the defense industry, but the expected progress in strategic areas on the civilian side has not been achieved.
“We cannot create added value by purchasing”
Aydın stated that “we need to develop a different strategic mindset regarding industrialization,” and added that it is impossible to create added value by purchasing high-tech products such as wind turbines, rail systems, medical devices, and energy machinery from abroad and including these technological products in our exports.
Aydın proposed a model similar to the Undersecretariat of Defense Industry for industrialization during the program: “We export a lot. But imports are also increasing. Why? Because we cannot produce the technological equipment in the products we export ourselves. The way to solve this is to establish a new strategic industrialization order. We will implement the practice we did in the Undersecretariat of Defense Industry on the civilian side, within and above our Ministry of Industry.”
Our minister is a key figure from the Undersecretariat of Defense Industry; we believe and expect that these things will be done there. If we don't do this, it will be impossible for us to catch up with others by imitating their products, repeating them, following in their footsteps, and tracing their path. A paradigm shift is needed here. For this, we must transfer our 'industrialization' strategy and model from the defense industry model to the civilian sector.”
“We brought the production ecosystem together”
Aydın, describing the educational institutions and technoparks in the region, explained that Ostim Technopark was established in collaboration with 6 universities. Aydın stated, “We are trying to achieve this by bringing together the components of the production ecosystem. There are things companies can do alone and things they cannot. We have collaborated with 11 universities in Ankara,” adding, “We are a region composed of SMEs. We have a wide variety of production branches. We are focusing on areas where we can be competitive. We have focused on and created clusters in defense and aerospace, medical industry, renewable energy, rail systems, rubber technologies, and construction machinery. We need to focus on manufacturing industry and production.”
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