4 February 2010

Future Projections of Turkish Defense Industry : Regional Interest

The continuation of stable development of Turkish defense industry, which has been rapidly improving since 2002, is dependent on improving export and having the capability of design; thus, to this end, we aim lowering the dependency on critical sub-system, component and technology and increasing the number of indigenous products with the improvement of design capability. These domestically designed products is planned to contribute to sustainable growth of defense industry with the support of firms that produced them and the realization of modernization. When, national defense industry reach the level of developing product based strategies, studies will be done in becoming world leader with the support of products that are developed by supplier industry or main contractor and have the potential for being world leader. Products that are developed by national industry has a serious success in export, thus we can observe this fact by looking at the year by year increasing export volume. We believe that the deterrence of Armed Forces would increase with the equipment of products that are nationally developed.

2009-2016 Strategy

“2009-2016 Sectoral Strategy Document”, which was published by the Undersecretariat in order to lead the defense industry, sets out particular goals and aims. Generally these are;

- Indigenous development
- SME and supplier industry approach
- Export and offset
- R&D concept
- Test and certification
- Standards
- Human resources
- Expectations from sector firms
- Sub-sector strategies

The document also includes aims and goal under the general strategies for Sub-sector strategies; Land, Air, Navy, Electronic warfare and sensors, Battle Electronic Information Systems and Missile, Ammunition and Weapon Systems. In accordance with these aims and goals, possible investment items have been presented to Turkish defense industry.

Strategies that are developed according to these aims and goals are:

- Sustaining complete sub-sector production in land vehicles
- In the naval sub-sector, complete production of surface platforms with domestic facility and capabilities.
- In the air sub-sector, production of unmanned aerial vehicles (UAV) and modernization of planes.
- In the electronic warfare and sensors (EW&S) sub-sector, domestic production of all EW&S systems.
- In the battle electronic information system sub-sector, production of electronics and software of all systems that are procured and performing system level design, integration and tests of a satellite by domestic capabilities.
- In the missile ammunition and weapon system sub-sector, design and production of short and intermediate range missile systems and every calibre of weapons.

Moreover, “2009-2016 Sectorial Strategy Document” of Undersecretariat of Defense Industry aimed specialization of defense industry firms. In case of possible investment are satisfies certain criteria, Undersecretariat would give priority in supporting such investments. Criteria are:

- There is no other similar project within the selected field (Originality and uniqueness)
- Advantageous in respect of costs
- There should be items that would bring high-technology
- Having critical importance.

Furthermore, Undersecretariat of Defense Industry is supporting defense industry for the realization of aims and goals that are set out by the “2009-2016 Sectoral Strategy Document”. Decreasing financial problems and the risks of firms during the investment is aimed through credit support to firms,which satisfy criteria provided that their resources are adequate.

Target Countries

Turkish defense industry have a vision of export to third states through strategic cooperation rather than state to state export under the light of latest sectoral improvements of the industry.

- The primary goal in respect to Europe is improvement of bi-lateral trade with states that the volume defense industry cooperation is high and balancing of reciprocal trade.
- Furthermore,improvement of export volume would be realized by taking part in procurement chain of multi-national corporations, which dominate the market, in the process of our defense industry firms’ integration to Europe defense market.
- In addition, our firms have export opportunity at the multi national platforms like EU and NATO and it would be beneficial to utilize this opportunity.
- Gulf States, Caucasus, Near and Far East (Pakistan, Malaysia, Indonesia, South Korea etc.) North Africa, South Africa Republic and through co-operation sub-Saharan Africa are the main targeted cooperation areas. Thus, in recent times, export oriented visits and delegation meetings have been intensified.

Civil Sector Cooperation

Today, when we look at the defense sector, interactions and cooperation with civil sector is often observed. Turkey is one of the states that can effectively utilize this relationship. For example, in Turkey, a firm that operate in automotive sector is also producing tanks and a firm that produces boats and yachts is also producing gun boats.

As the Undersecretariat of Defense Industry, we are aware of the necessity of providing every possible support and contribution for pairing up, integration, structuring and improvement of high quality and technology that defense industry bring and sharer sectors outside of the defense industry (like automative, energy, telecommunication etc.) Consequently, in line with main aims that are set out in 2007-2011 Strategic Plan, we published 2009-2016 Defense Industry Sectoral Strategy Document and Sub-Industry Integration Principles Document.

Private “Design Offices” will be encouraged for finding indigenous domestic solutions in the scope for facilitating integration of main contractor, SME and sub-industry.

“SME Consultancy Center” was founded by the end of 2009 with the coordination of chambers of industry and defense industry organizations for realization of aims; facilitating integration of main contractor, SME and sub-industry, establishing design offices and providing compatibility in defense industry quality and standards.

The undersecretariat is supporting clusters for aviation, marine etc. for increasing of the effectiveness of both defense sector and civil sector firms.

Furthermore, industrial events are being held as a part of Projects. Such industrial events, in accordance with the aims of Undersecretariat of Defense Industry, seek for meeting system, sub-system and components need through domestic capabilities and increasing the level of domestic production through informing defense firms that desires to take part in our Defense Industry sector and civil sector firms.

In conclusion, as the Undersecretariat, we are not only cooperating with defense industry sector but at the same time cooperating with civil sector, which would like to work with the defense industry. Activities for reaching the level of domestic production and transcending this level in the future also includes interaction and sharing with other sectors, which is one of the main policies of our Undersecretariat.

Defense industry products and services, which required high level of experience, technology and know-how, and operation of defense industry firms that provide such products and services in civil sector would increase, as a natural consequence of job, their rate of competitiveness and rate of turnover.

Furthermore, the Undersecretariat is supporting dual-use products, which could be utilized in both defense industry and civil sector, since it would provide cost-effectiveness.

As the Undersecretariat of Defense Industry, when we look at defense industry firms, we observe that they are also operating in civil sector, especially in telecommunication and energy sectors. Consequently, we are providing consultancy to the firms for the sustainment of operations in such sectors.

Non-NATO Target Countries

Financial crisis in 2008 had serious affects on national budgets. Like in every sector, defense sector also went through cost reduction measures. Decrease in defense procurement level have been observed in even the leading European states in defense sector like Spain, the United Kingdom and Germany. Consequently, pressures of increasing costs and global stagnation direct states to develop more joint projects. With in the international defense market, there is a serious trend in joint production. In addition, tactical reconnaissance, command and control systems, strategic air defense, space and intelligence issues are gaining priority within the sector.

In accordance with meeting the needs of Turkish Armed Forces through utilizing Turkish Defense Industry’s already existing facilities and capabilities, workings are continuing in establishing the structure that would carry out Defense Industry to 21st century and increasing the use of resources, time and personnel to optimum level with in the framework of Bi-lateral and Multi-lateral Defense Industry Cooperation activities.

In accordance with the Strategic aims of the Undersecretariat, involvement in international projects and participating as a leader country at least in one project are important issues. Departing from this point, possible projects either within the framework of NATO or transatlantic cooperation are being followed.

As it’s known, multi-lateral cooperation projects are important tool that enables states to acquire cost effective high technology in a short period of time with lower costs. Because of this, multi-national platforms gains prominence especially among the states that have developing defense industry.

Furthermore, Turkey is participating A400M project, which would meet the Europe’s demand for strategic airlift need in great extend, under the auspices of Organization for Joint Armament Cooperation (OCCAR). Another project is Joint Strike Fighter (JSF) Project. They are important with respect to former being European project and latter being transatlantic cooperation project under the leadership of the United States. Turkey have significant responsibilities in both projects and we started to observe positive concrete reflection of these projects in defense industry. Our firms have significant work share in both projects. Similar Non-NATO multi-lateral projects that are being tracked are evaluated as investments for the future of our country. On this path, SSM is continuing its efforts in assuming leadership in various international project. During the past periods, there have been intense contacts with various states for cooperation. Export element is gaining importance on the basis of balanced and equal cooperation for meeting joint needs and taking into consideration of third countries’ needs within this framework.

International projects should not be perceived as only acquisition of high technology or the possibility of rapid integration to international defense sector. When, we consider that projects are being done within a joint pool, it is a fact that these would lighten defense burden on the national budgets.

Murad Bayar

Undersecretary of Turkish Defense Industry (SSM)

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