According to the consolidated data of the machinery manufacturing industry shared by the Machinery Exporters Association (MAİB), Turkey’s total machinery exports, including free zones, in the first 2 months of the year was 4.4 billion dollars. Pointing out that the PMI data, which dropped to 46.5 percent in the Eurozone, has reached its peak in countries such as India, Brazil and Mexico, which have managed to attract large machinery investments in recent years, Kutlu Karavelioğlu, President of the Machinery Exporters Association, said: “While our customers in developed countries are slowing down, our competitors in developing countries are accelerating. “The fact that our machinery exports to Germany and the USA continue to increase in the fierce race among machinery exporting countries reveals the strength of our ties in the West as well as our power in technology development,” he said.
According to the consolidated data of the machinery manufacturing industry, Turkey’s total machinery exports, including free zones, at the end of the first 2 months of the year amounted to 4.4 billion dollars. Although the base effect of the high increase of 20 percent in the first 2 months of last year was observed, there was no decline in this period. Exports of construction and mining machinery, textile and clothing machinery and food industry machinery attracted attention with an increase of 29 percent in quantity and up to 22 percent in value. There was a decline of up to 28 percent in quantity and 25 percent in value in the exports of electric motors, generators and machine tools. Machinery exports to Russia, where exports continue to decrease due to sanctions, decreased by 130 million dollars at the end of February. The share of Germany and the USA, where exports including free zones were 950 million dollars in the first 2 months, in total machinery exports increased to 21.5 percent.
“Russian sanctions made our competitors hide data”
Referring to the effects of the sanctions on Russia, which is a strong market where machinery manufacturers can alleviate their commercial losses during the period when investments in the world are on the brakes, on world machinery trade, Kutlu Karavelioğlu, President of the Machinery Exporters’ Association, said:
“The machinery industry has recently been heavily affected by the restrictions on dual-use products that are assumed to be used for Russia’s defense needs. In this process, which turned into an unnamed embargo, the increasing uncertainty in the list of sanctioned products, the fact that a machine that was not included in this list while the order and advance was received, entered this vague list while waiting for the balance after delivery, and our money remaining in Russia, has been causing trouble for our industry for a while. The pressure exerted through the banking system reduced our machinery exports to Russia by 37 percent in the first 2 months; By the end of the year, our losses may exceed 1 billion dollars. Knowing the difficulties of taking back this large market that it left to China, the West does not give up looking for ways to send its machines without risking its businesses. This fraudulent situation causes significant deviations in machinery foreign trade data. “We attribute the hesitation of some European countries, which earn from trade rather than the manufacturing of machinery, to announce their foreign trade figures, to the shifts in trade routes.”
“While our customers are slowing down, our competitors are speeding up”
Stating that the first signs of financial recovery are emerging in the global tightening environment, Karavelioğlu said the following regarding the general outlook:
“According to World Trade Organization data, it is calculated that in 2023, when world trade in goods will decline by 5 percent, EU machinery and equipment production will decline by 1.4 percent in base effect-adjusted prices. In an environment where financing costs, polarization and regional conflicts are so high, it is natural for the risk appetite to decrease in developed countries. In fact, a decline in this direction for Europe began before the pandemic, and the weaknesses of the region became invisible thanks to urgent measures to address the disruption in supply chains. However, not every country’s machinery manufacturing industry is affected by this conjuncture to the same extent. PMI data, which dropped to 46.5 percent in the Eurozone last month, has reached its peak in countries such as India, Brazil and Mexico, which have managed to attract large machinery investments in recent years. In short, while our customers in our main market are slowing down, our competitors in developing countries are accelerating. “In the fierce race between machinery exporting countries, the fact that our machinery exports to Germany and the USA continue to increase demonstrates not only our power in technology development, but also the strength of our ties with the West.”
“The density of investments should not allow unfair competition”
Pointing out that the strategic approach towards the machinery sector, which is at the center of the resharing of production and the twin transformation, continues in the 12th Development Plan, Karavelioğlu added:
“Investments in machinery and equipment, which increased by 12 percent in total between 2019 and 2023 in the world, increased by 70 percent in our country, reaching 168 billion dollars annually. With this extraordinary performance, Turkey’s share in world machinery and equipment investments has increased to 3 percent in 2023. Since a significant part of these investments were made by our machinery manufacturers, in this difficult period dominated by crises, machinery production increased by 12 percent in terms of quantity in the world, while it increased by 65 percent in our country. The contribution of the incentive certificates issued in the same 4 years, with a total fixed investment amount exceeding 5 trillion TL, cannot be denied in this vitality. However, we must also see that despite all its benefits, incentive legislation can create an element of unfair competition by rendering dysfunctional the defensive measures developed against dumped goods in our import regime.”
“We are the only general manufacturing industry left that does not respect the locals.”
Underlining that the effects of technological polarization in machinery, which constitutes the largest item in world trade after oil, reflects positively on Turkey’s exports but does not benefit its imports, Karavelioğlu concluded his words as follows:
“In this environment where we are creating a good alternative among our Western competitors with our price, quality and technology diversity, our industrialists imported 12 billion dollars of machinery from China, where we could not sell machinery, and increased our foreign trade deficit to 17 billion dollars. In today’s world where sustainability redefines competitiveness, it is known that it is not possible to meet the requirements with cheap or low-quality machines.
Although it is not announced after the first 4 months of 2023, everyone should self-criticize the fact that the share of domestic machines allowed to be purchased with incentives is 89 percent in energy investments, 67 percent in services, 71 percent in mining and 96 percent in agriculture, while it remains at 39.6 percent in the general manufacturing industry. Within the scope of the 1.25 trillion TL investment incentive certificate issued in 2023, the share of the machines to be brought duty-free and VAT-free reaches 18 billion dollars. In January, when we imported 3.3 billion dollars worth of machinery, our production decreased for the first time since the pandemic and by a serious rate of 5.5 percent. “The contraction in our main market and the continued rise in imports while losing ground in Russia is a threat that may interrupt our superior performance of the last 4 years.”
