Şebnem ASİL / firstname.lastname@example.org
Prepared with the 2020 data, the latest version of the Performance Report, which is published annually by the Defence and Aerospace Industry Manufacturers Association (SaSaD), was shared with the public on June 28. Some of the data and results in the report raised a number of questions. SaSaD Secretary General Hüseyin Baysak answered these questions for MSI Turkish Defence Review readers.
MSI TDR: Only 85 of your 182 members at that time answered the survey questions according to the 2020 Performance Report. What percentage of industry turnover and industry exports do these 85 members represent?
Hüseyin BAYSAK: We evaluate that the data reflecting 90% or more of the industry performance are collected and that the report reflects the 2020 studies in a healthy way after we have examined the number and profile of the respondents. There is a difference between the Defence and Aviation Industry Exporters’ Association (SSI) data on exports and the overseas sales revenues we generate using the data collected from our members, and a slightly higher figure emerges compared to the SaSaD data. We consider that this small difference may be due to the sale of some air platforms (business jets and the like), which are included in SSI data, but cannot be reflected in SaSaD data due to the fact that they are not within the scope of sales from manufacturing.
We share the data collected from our industry with the AeroSpace and Defence Industries Association of Europe (ASD) in their own format. The report, published by our association, is shared with all our members, relevant state institutions and organisations, the press and interested foreign company organisations and institutions. The report is followed with interest as the only publication in which the performance data of our industry are collectively included and analysed.
MSI TDR: Are the companies that did not answer the survey questions predominantly in SME status or were there any main contractor or platform manufacturer companies among them?
Hüseyin BAYSAK: It is a known fact that there are occasional difficulties in obtaining the data of some organisations that are in the position of manufacturers and exporters and are public institutions. We are trying to eliminate this deficiency by including the data submitted by these organisations in the past years with a projection in our analysis. Some of our platform and main system manufacturer members sometimes also hesitate to share their information with us. In addition, the data of a significant part are included in our study through the Presidency of Defence Industries (SSB).
I would also like to emphasise here that: We do not share the individual metrics of the institutions and organisations that share their data with us with other institutions and organisations or individuals, and only publish consolidated data and analysis.
MSI TDR: What measures are planned to be taken in the upcoming years to increase returns to the survey? For example, can this issue be included in the scope of programmes such as EYDEP (Industrial Competency Assessment and Support Program) and can it be ensured that companies return to the surveys to create positive scores in various evaluations?
Hüseyin BAYSAK: The fact that larger parts of the industry players respond to our survey will enable the metrics related to the industry to be collected are healthier and more diversified, and therefore, our analyses evaluate the whole industry. More intensive participation is also important for putting much more accurate data in front of decision-making authorities. Therefore, I should say that we are trying to increase participation in the survey. We consider that SSB will play a very active role in ensuring participation in this context. We consider that if the SSB conveys the message that it cares about answering the survey to the industry players, we can get answers to our survey from all of the industry players. In this context, the SSB may also convey instructions to the companies that are or will be in the EYDEP portal.
Orders and MRO Activities are Supports Civil Aviation
MSI TDR: Civil aviation exports amounting to $655 million in the report, an increase of $43 million compared to the previous year’s export amount of $612 million in this area. Meanwhile, both the domestic airline traffic of the countries and international flights were negatively affected by the COVID-19 outbreak and the civil aviation industry faced serious turnover losses. How should we interpret the increase in civil aviation exports in this picture?
Hüseyin BAYSAK: First of all, I should mention that this increase is below our expectations and the increase curve observed in previous years. Our industry players were heavily affected by the effects of the pandemic on the civil aviation industry in this respect. Achieving a turnover slightly above the previous year’s level is the result of replenishing existing orders and meeting normal maintenance repair and overhaul (MRO) needs.
There has been an unprecedented stagnation in the world, especially in civil aviation, in both service and manufacturing, perhaps unprecedented, due to the pandemic. This situation has also negatively affected many of our companies operating in this field in Turkey and producing and exporting to world aviation giants. We have had patients and employees who died due to COVID 19. This period negatively affected our morale and motivation. However, we believe despite all these negativities that we are coming out of this normalisation process with minimal losses and that we will be stronger than before in a relatively short time; our companies and factories will continue to move forward in line with our 2023 goals with a great morale.
MSI TDR: The report shows that the industry makes the highest turnover in the field of “Land Systems”. Platform manufacturers in this area support and expand their ecosystems and reach high domestic rates. Why does Land Systems rank third in the turnover of SMEs in this table?
Hüseyin BAYSAK: The manufacturing and sales made by the companies to another manufacturer or directly to the customer are calculated separately in the evaluation made on the basis of sub-industries. SMEs are the solution partner of platform manufacturers and contribute to a significant part of the solutions of the industry as a level 1 or level 2 supplier in general.
The place of SME-scale companies in the ranking is noteworthy, as you stated even though the Land Systems sub-industry is the industry that uses the most common subcontractor network.
Unfortunately, this issue has not yet been evaluated by us with a detailed analysis. We plan to make this evaluation as soon as possible. However, it can be said at first glance that the work packages transferred to SME suppliers in the Land Systems sub-industry consist of technologically and relatedly lower products in terms of monetary amount.
MSI TDR: The ratio of exports to turnover is approximately 43.7% in SMEs. What kind of figure emerges and how should this figure be interpreted when we include the systems that SMEs deliver to domestic companies and then exported (indirect exports)?
Hüseyin BAYSAK: We will not be able to answer this question due to the lack of data on the indirect export amount, in other words, the SME share breakdown in the main contractor’s exports.
MSI TDR: What measures does SaSaD propose to take against the developments that will challenge the industry in the upcoming years, especially the “decrease in orders received” emphasised in the report?
Hüseyin BAYSAK: It is seen that the orders received predominantly come from within the country and the level of foreign orders is close to the domestic orders. However, the fact that the total order amount is at a level that will cause concern about the sustainability of the industry draws attention. We anticipate that defence and aviation will decline in the budgetary priorities of countries after the COVID-19 outbreak. We consider in this environment that industry players should focus on neighbouring industry needs such as medical devices, automation, homeland security, cyber security, etc. as well as putting intense efforts into increasing the internal and external orders of defence and aerospace in order to increase the order potential.
MSI TDR: Is there anything else you would like to add?
Hüseyin BAYSAK: SaSaD is an organisation that has been operating in the fields of land, sea, air, space, and security with the mission of contributing to the development and strengthening of the industry since its establishment in 1990. SaSaD organises various activities and initiatives so that its members can carry out their activities in a more appropriate work and working environment. It tries to solve the problems related to the industry by bringing them to the attention of the relevant authorities and represents the industry with all its fields at home and abroad. SaSaD is an active member of ASD and it also contributes to shaping the opinions and suggestions of the industry in the European Union Commissions through this organisation. It also helps the international expansion of its members with the protocols signed with similar organisations of other countries. SaSaD is gathering 205 manufacturing companies and organisations and 6 clusters under its roof today. It represents an industry that is vital for the defence of Turkey and where advanced technology studies are carried out with its high added value manufacturing of $8.856 billion, foreign sales revenue of around $2.265 billion, and employment of 77,566 people.
The Turkish defence and aviation industry will continue to contribute to the country’s security and economy and will continue to develop and continue its work in neighbouring industries. The most important advantage of the industry is the direct support of the Ministry of National Defence, the Presidency of Defence Industries and all institutions and organisations of the state in addition to the personal incentives and supports of our President. We do not consider the point we have reached sufficient, and we believe that we need to work much harder.
On behalf of our readers, we would like to thank SaSaD Secretary General Hüseyin Baysak, for taking the time to answer our questions and for providing us with such valuable information.
|2020 Performance of Turkish Defence and Aerospace Sector|
|Orders Received||$6.175 billion|
|Foreign Sales Revenues||$2.266 billion|
|Product and Technology Development Expenditure||$1.241 billion|