Alper ÇALIK / email@example.com
Turaç, which has adopted an export-oriented strategy since the day it was founded, adds new countries its customer portfolio where it has managed to sell its products. The company, continuing its production and exports uninterruptedly during the pandemic period, also significantly increased its presence in the USA, added 2 new countries to its customer portfolio, and managed to increase the total number of countries it exports to 73. Reaching an export rate of 80 percent as per turnover in 2021, the company has important goals for the US market in the upcoming period.
The share of exports in Turaç’s turnover was around 40 percent until 2018. The company’s export chart has started to show a significant increase since 2018. The company was Turkey’s export champion in small arms ammunition for 3 consecutive years between 2018 and 2020 according to the Turkish Defence and Aerospace Industry Exporters’ Association (SSI) data. Turaç also broke its own record in this regard with about $30 million of exports in 2019. The company’s annual exports amounted to $25-26 million by 2020 despite the effects of the COVID-19 pandemic, felt in every corner of the global defence and aerospace industry.
The two new countries that Turaç recently added to its customer portfolio were Bosnia and Herzegovina and the Philippines.
2021 Target, Breaking the 2019 Record
Reaching an export rate of 80 percent as per turnover, Turaç increased its exports in the first 6 months of 2021 compared to the same period of 2020. The company aims to break its record in 2019 with its total exports in 2021.
Fatih Altunbaş, General Manager of Turaç, says the following about the place of the company among the companies exporting in the industry: “We became the 13th among all the companies exporting in our sector in 2020 according to SSI data. We ranked 2nd in exports among the organisations that do not have any state support and have 100 percent domestic capital. In addition, we became one of the first 1,000 companies making export sales throughout Turkey regardless of sector according to the Turkish Exporters Assembly (TIM) data.”
Another important and recent development on the export front for Turaç was that the company sold its frangible type of ammunition for the first time to a foreign customer. The products were sold to the law enforcement agency of a gulf country. Currently, the frangible ammunition produced by Turaç in 9×19 mm and 5.56×45 mm calibres are generally preferred during special missions. The cartridge bullets of these shells are pulverised into dust at the moment of impact. In addition, these cartridge bullets can do enough damage to the target they hit. For example, the bullets do not penetrate the aircraft body if the shots fired by the security forces miss their targets during a hostage rescue operation that may occur on a passenger plane; however, they can easily neutralise the terrorists that have been hit.
Sterling’s Voice Echoes in the USA
Another success of the company was the increase in the sales of Sterling brand small arms ammunition in the US market. Turaç, which previously made small sales to the US market, greatly increased its presence there in 2020. The company made half of its total exports to the USA and the annual amount of exports reached $10 million in this market.
The sales channels in the USA also increased parallel to the increase in Turaç’s market share. It is now possible to buy Turaç’s Sterling brand pistol and rifle cartridges by ordering them online in the USA.
The Outcome of Long Years of Effort
Altunbaş, stating that they have overcome many problems in the entry to the US market, summarises some of them as follows: “Before that, Turkish ammunition manufacturers, who wanted to sell in the US market, always made contract manufacturing for American brands. At first, the Americans approached us with the same business model. However, we resisted this and wanted to take part in the USA with our own Sterling brand. And we achieved this at the end. Of course, the problems did not end with us starting to sell our products. Lawsuits were filed against our Sterling brand as our presence in the United States increased. We have owned this brand for years and they know it. However, they did their best to hamper us. Of course, we enjoyed it. This was one of the great proofs that we were on the right path.”
Altunbaş explains what they experienced in this process as follows: “One of the biggest events in the world in the field of small arms, hunting, shooting, and ammunition is the SHOT SHOW in Las Vegas, USA. We have been attending this exhibition every year since 2010 without exception. However, our products could not be sold in the quantities we wanted in the US market for many years. While we were at the exhibition, our foreign competitors stopped by our booth for years and said, ‘Are you coming here to the fair, or are you coming to Las Vegas for sightseeing? Were you able to sell any products in the USA?’ They kept making fun of us with questions like this. However, we finally achieved our dreams and managed to sell a small arms ammunition produced in Turkey with a Turkish brand in the USA.”
Priority in Exports: Other Countries
Turaç currently derives a total of half of its export turnover from the US market. Altunbaş, stressing that there is a great potential in this market, states that they are determined not to play all their cards on the USA: “We are currently receiving such a demand from the US market that if we want, we can sell all of our production to the USA. In fact, our USA customers say they want to order half of our total annual production and can make a single batch payment in advance. But we do not intend to take such a step. The ideal situation for us is to export up to half of our exports to the United States. Because we are not sure that this will continue in the long term even though we are currently selling very large volumes to this country. So there is no guarantee of its future. Therefore, our priority is not our customers who buy 100 containers of products from us at a time, but our customers who buy 1 container from us every year.”
The First Phase of a More Comprehensive Plan
Turaç carries out export activities related to the USA within the scope of a two-phase plan . The first phase, which has already been implemented, covers the sale of ammunition produced in Turkey to the USA. Turaç does not yet prefer to establish a company such as “Turaç USA” or to work with an American partner at this point. The company sells its products in the USA with a distributorship system implemented in the middle of 2020. The USA is divided into 13 different regions and there is a separate distributor in each region in this system.
Turaç’s next move in the first phase will be to establish a liaison office in the USA in 2022. This office will be able to monitor developments and needs in the market more closely and it will also enable Turaç to react faster to emerging demands.
Turaç will be in Charge in Joint Production
Turaç aims to make joint production in the USA with a local partner in the second phase, which it plans to implement in 2024. It is planned to finalise the assembly of the semi-finished products produced in Turkey in the facilities to be established in the USA under the Sterling brand in this phase.
“We started to receive persistent offers from different American investors about joint production as our products proved themselves with their quality.” Altunbaş states and adds that they have red lines in this regard and lists the issues that they will never compromise as follows: “We will always be the major partner in the joint production model that we will implement in the second phase. Our American partner will always be a junior partner. In addition, our products will still be produced under our own Sterling brand.”
Quality of the Products also Increase with Exports
Turaç has made various changes related to the quality of its products as its activities in the USA increased. The quality of Sterling brand products has been increased in line with the expectations of this market. Altunbaş, stating that “quality” is actually the customer’s expectation, says that they always have the infrastructure to produce better quality products; however, their customers did not have such an expectation previously. Altunbaş, stating that the US market is an instrument for this, continues: “We started to increase the quality of our products as we entered this market. We have seen the reflections of this in a very positive way. Of course, the increase in our product quality has been reflected in our costs. For this reason, we anticipate that in the near future, some markets with slightly lower quality expectations will fall out of our portfolio. We have also decided to take our chances.”
Same Cartridge Both in USA and in Turkey
Altunbaş emphasises that they do not only increase product quality for the US market: “We do everything the US market wants in terms of quality; however, we do not do anything specific to this market. We sell our product of the same quality both in Turkey and in other export markets. Versions of certain products sold abroad are of higher quality in some industries. We do not do that. In Turkey, we sell the exact same product that we sell in the US market.”
Turaç has also made changes its product boxes. The boxes of Sterling brand products have now started to be printed in barcodes since small arms ammunition can be sold in large markets in the USA. In addition, the information and warnings on the boxes are now written in both Turkish and English.
Altunbaş explains the change process in product boxes as follows: “We had already started to print on our boxes a lot of information and warnings in English, which were a necessity for this market and generally related to safety when our products first entered the US market. Later, however, the Americans asked us to remove the Turkish information on our products. We objected to this and did not compromise our red lines. In addition, we wrote ‘Made in Türkiye’ on our products instead of ‘Made in Turkey’ as they wanted.”
Exports Continued during the Pandemic
Altunbaş, indicating that many organisations experienced problems during the pandemic period, explains the secret of being able to produce and export in this process as follows: “We made a schedule about working every day during the pandemic. We said that the safest place in this period was at home and at work. We have entered a very busy working pace and have ensured that our employees come and go from home to work and from work to home. For this, we have allocated shuttle vehicles to all our employees so that they do not use public transportation. We have also paid great attention to vaccination. Companies often leave the initiative on vaccination to their employees and wait for long periods of time for all employees to be vaccinated. We took all of our employees, put them in vehicles, took them to the hospital and had them vaccinated. We convinced those who did not want to be vaccinated. Now we can see better the accuracy of our decisions. The vast majority of our foreign competitors remained closed in this process. They could not reach their old production performance after reopening. In addition, we have almost multiplied our production and export.”
Altunbaş points out the importance of the defence industry companies being able to sell to the commercial parties at this point: “Our presence in the civilian market made it easier for us to overcome this process during the pandemic. I think that this is one of the biggest deficiencies of our domestic defence industry companies. A company operating in the defence industry must have products for civilian markets and a presence in these markets. Otherwise, they will have big problems in such crisis periods when military projects slow down.”