According to the machinery manufacturing industry consolidated data shared by the Machinery Exporters’ Association (MAIB), Turkey’s total machinery exports, including free zones, reached $22.9 billion at the end of 11 months of the year. Stating that they welcomed the new year with the expectation of a slowdown in the global economy with the effect of the tightening trends in the monetary policies of developed countries, Kutlu Karavelioğlu, Chairman of the Machinery Exporters’ Association, said, “Even though the experts underline that the machinery and equipment investments will be stagnant in the first half of the year, the industrial relations we have strengthened thanks to the high performance we have displayed during the pandemic period will pay off in 2023. We believe we will see it all. Our increasing share in supply chains and our diversity in product groups will definitely balance our overall performance against possible fluctuations in demand.”
At the end of 11 months of the year, Turkey’s machinery exports increased by 9.1 percent compared to the same period of the previous year and reached 22.9 billion dollars. In November, when machinery exports of 2.4 billion dollars were realized, the increase on a monthly basis reached 57.9 percent in the USA, while this rate reached 135.7 percent in Russia. Last month, the industry broke another record by exporting a total of 600 million dollars of machinery to Germany, the USA and Russia, the largest export markets. In addition to these three countries, the threshold of 100 million dollars per month was passed in Italy and the United Kingdom.
Kutlu Karavelioğlu, Chairman of the Machinery Exporters Union, stated that they found the data obtained at the end of a year in the shadow of the high inflation in the world with the Russia-Ukraine War positive, and expressed his predictions about the global conjuncture that guides the 2023 targets of the sector as follows:
“With the effect of tightening trends in the monetary policies of developed countries, we welcome the new year with the expectation of a slowdown in the global economy. While the central banks of the countries that make up our biggest export markets continue to increase interest rates, we are trying to understand whether these countries will shrink or their growth will slow down. The only certainty is that these policies will not be relaxed until the end of 2023, which will negatively affect fixed capital investments. The strengthening of recession expectations limits commodity and commodity prices despite the high global inflation. Our optimistic scenario for 2023 is that global exports, which increased by more than 30 percent in value in the last 2 years, will decrease by 5 percent, while the amount of goods that increased by 14 percent in the same period will maintain its level. It is obvious that this situation will also reflect on global machine prices and competition will intensify.”
“Export-based growth policies should be insisted on”
Pointing out that the cost index, which was calculated as 136 percent in the general manufacturing industry according to TUIK data at the end of November, remained at the level of 82 percent in the machinery sector thanks to the high added value, Karavelioğlu said:
“A significant cost increase at the beginning of the new year will come from wages and severance pay. If the increase in Euro, which constitutes 70 percent of our export income, had not remained below 40 percent annually, we could shoulder this burden more easily. Closing the gap between exchange rate and inflation has a positive effect not only on our competitiveness, but also on Turkey’s total export and import figures. We are in a period where we can see the fruits of production power provided by our machinery and equipment investments, which increased by 49 percent during the two-year pandemic period and by 13 percent this year. We believe that the overvaluation of TL should be avoided and that our export-based growth policies, which have been successfully implemented in recent years, should be persisted. We want to be able to reflect the improvement that will be experienced here in the conditions of our qualified employees, for which we make great efforts to keep them in the country.”
“We have the experience and power to reverse all kinds of negativity”
Karavelioğlu stated that they shared their New Year expectations not to create pessimism, but to recognize and define the ground they will act on, and described the export roadmap of the sector as follows:
“In the EU’s fight against inflation, energy and gas prices will be decisive, but the energy costs suppression and financial support policy implemented in Germany will probably set an example for others. In such a period when the EU’s trade problems with China continue, if the measures to be taken by the member states of the union ensure the protection of the demand in the region, there will be no decrease in our orders. Besides; We are reaching more and more customers in Russia, where we managed to sell machines worth 100 million dollars every month, even under war conditions, and where we increased our exports by one and a half times this year.”
Karavelioğlu pointed out that although the experts underlined that the machinery and equipment investments will be stagnant in the first half of the year, the sector will produce solutions with its competitive structure and said, “We believe that we will see the results of the relations we have strengthened in every industrial field, thanks to the high performance we have displayed during the pandemic period, throughout 2023. At the end of 2022, we will reduce our exports due to the negative effect of the parity. Although we will close with an increase of around 10 percent, our monthly increases never fell below 15 percent in the last quarter of the year, when the exports of our competitors turned negative. Our biggest advantage will be the inexperience of our competitors in crisis management and the agility and resilience we gain in such periods. Thanks to our competitive power, we will reverse all kinds of negativities and close 2023 with positive results.”
“Demands in the field of sustainability will increase even more in 2023”
Pointing out that one of the main factors that provides this self-confidence is the product diversity that the Turkish machinery industry provides by specializing in different sub-sectors, Karavelioğlu said:
“Even in a scenario where the measures to be taken by EU countries do not reflect positively on demand, the impact of the economic slowdown on all sectors will not be the same and the order of critical goods in production will not stop. Our increasing share in supply chains and our diversity in product groups will surely balance our overall performance against possible fluctuations in demand. On the other hand, it is very important for machinery manufacturers to act agile in harmonization with EU legislation in this period. For example, the introduction of the German Supplier Law for large enterprises brings new obligations and our exporters are expected to have an ‘S-Rating’, that is, a Sustainability Rating. Demands in this direction will increase from 2023 onwards. We are taking very important steps to prepare our businesses for this transformation.”