According to the consolidated data announced by the Machinery Exporters’ Association (MAIB), Turkey’s total machinery exports, including free zones, reached 25.3 billion dollars at the end of 2022. In 2022, when the world averages remained in single digits; Stating that the growth in machinery and equipment investments has been recorded as high as 13 percent in Turkey, Machinery Exporters’ Association Chairman Kutlu Karavelioğlu said, “It is pleasing to be one of the countries whose global machinery export share exceeds 1 percent. We are ahead of developed country sectors such as Denmark, Finland and Norway; If we can maintain our speed, we will pass Sweden and Spain in a short time. Whatever the conditions in the world, we are confident that we will get better results than our competitors and increase our market share on a global scale by the end of 2023, when we will celebrate the 100th anniversary of our Republic.
According to the consolidated data of the machinery manufacturing industry, the industry increased its exports, including the free zones, by 9.6 percent compared to the previous year, to $25.3 billion at the end of 2022. Excluding exports from free zones, annual machinery exports reached 2.9 billion dollars for Germany, 1.5 billion dollars for the USA and 1.3 billion dollars for Russia. Machinery exports from free zones to these three countries exceeded 600 million dollars. Exporting 250 million dollars to Russia, which achieved a 62.4 percent increase in exports in 2022, only in December, machinery manufacturers reached the highest data of all time in commercial relations with this country.
Machinery Exporters’ Association President Kutlu Karavelioğlu stated that there was an increase of 5.2 percent in global machinery and equipment investments in 2022, and an increase of 4 percent in machinery industry production. The growth in machinery and equipment investments was recorded as high as 13 percent in Turkey, and the buoyancy in machinery production continued until the end of the year with the effect of additional supply demand for our country. According to the data announced by TURKSTAT, the production increase in machinery and equipment manufacturing was 16.5 percent at the end of November, when the total production of the general manufacturing industry grew by 8.3 percent on an annual basis.
Karavelioğlu underlined that the competitive advantages of the machinery sector did not reflect on the export amount at the targeted rate at the beginning of last year, due to the negative effects of the developments in the world, recession pricing and the cross rate.
“There are many factors on our results, such as the effects of the Ukraine-Russia war and the pressure on demand from inflationary monetary tightening trends in the EU and the US. Despite these factors, although we increased our exports by 3 percent in terms of quantity, the negative impact of only the Euro-Dollar parity on our exports was over 2 billion dollars. As a result, it is gratifying to be one of the countries whose global machinery export share exceeds 1%. We are ahead of developed country sectors such as Denmark, Finland and Norway; If we can maintain our speed, we will pass Sweden and Spain in a short time. Whatever the conditions in the world, we are confident that we will get better results than our competitors and increase our market share on a global scale by the end of 2023, when we will celebrate the 100th anniversary of our Republic.”
“Recovery will find the second half of the year, global fiscal easing next year”
Karavelioğlu, who stated that while setting our New Year targets, they expect a shrinkage in the world in the first quarter and a stagnation in the second quarter, commented on the foreign market strategy of the sector as follows:
“There is a hesitant optimism in the global organizations that we follow closely to follow the industry agenda in the field of mechanical and plant engineering. For example, 86 percent of 600 manufacturers in Germany, whose opinions were asked, say that they are not pessimistic about 2023. Despite the disruptions in production due to problems in the supply chain and shortage of materials, the main factor feeding this perception is the expectation that there will be a recovery in the second half of the year. In any case, we expect fiscal easing in developed countries to begin next year at the earliest. We predict that the recession may be prolonged if risks such as Europe’s energy crisis, the war that has affected the region and the ongoing epidemic in China increase.
“Our competitors will be more aggressive to enter both our close geographies and our country”
Pointing out that the capacity utilization rate in the machinery sector, which has increased its production by 16.5 percent in the last 12 months, is at the level of 75 percent, Karavelioğlu said:
“In this period when the economic and geographical unions all over the world tightened and the barriers to imports were on the rise with protectionist policies, machinery imports in Turkey, which entered the market easily thanks to the exchange rates, increased by 10 percent and reached 37 billion dollars annually. We were able to keep the coverage ratio at 70 percent with our import and export increases that are very close to each other, but we think that our competitors will conduct much more aggressive campaigns both in our nearby geographies and in our country this year, when it has become difficult for everyone to receive new orders. We have to urgently fortify the domestic market in order to maintain the competitiveness of our industry, which increased its production by 64.2% and its exports by 29.3%, compared to the data of 2019 before the pandemic. The fact that the rate of increase in the basket exchange rate remained at 37 percent in the last 12 months, when our cost index increased by 92 percent, shows that an important weakness in this matter is due to the horizontal movement of the exchange rate.
“We must have enough room to finance our qualifications”
Karavelioğlu stated that a balance in which exchange rates increase in parallel with inflation will be a factor that will strengthen the hand of exporters on both fronts.
“We think that domestic demand and growth expectations in the Turkish economy will be high in the first half of the new year. Developing a model that will prevent the overvaluation of TL in this vibrant environment; It ensures that the rise in imports can be brought under control and that exporters whose costs increase in all areas, especially in the workforce, can maintain their competitiveness. Our features that distinguish us positively from our competitors; Our flexibility stemming from our scale structure, our ability to respond to global demands in a wide sub-sector group and our domestic added value ratio approaching 80 percent. If we have enough room to finance these qualifications, we will not lose our customers to our competitors.”
“Those who do not intend to transform will close the European ledger in a short time”
Karavelioğlu stated that the European Union will continue to bring new regulations on sustainability in this process, where competition will continue to be fierce, and said, “We are committed to our sector and stakeholders, which provide a strong integration with Europe with the stable relations it has established in the international arena, to the agenda within the scope of the European Green Agreement in order to protect the EU’s own competitiveness. We made our reminders about the regulations he brought long ago. We even defined this situation as a kind of tsunami of regulations and directives. These mechanisms have gradually gained momentum,” he said.
Karavelioğlu drew attention to the fact that with the new year, Germany has implemented the Law on the Obligation of Due Diligence on the Supply Chain, which imposes responsibility on importers, starting from companies with large business volume, on whether or not they observe the environmental and employee rights from the beginning to the end of the value chain for the goods they will bring into their country:
“Considering that 26 percent of Turkey’s machinery exports come from parts and components and that our members have gained important places in their value chains, we can say that we will encounter Sustainability Rating requests more intensely. Our assignments will increase systematically in all areas. This development, which will connect all industrial branches, diversifies and expands the efforts of sectoral organizations and exporters’ unions. If we still have businesses that do not intend to transform in terms of sustainability, they will unfortunately close the European ledger in a short time.”
