Kutlu Karavelioğlu
Makine İhracatçıları Birliği (MAİB)
President

According to the consolidated data of the machinery manufacturing industry shared by the Machinery Exporters’ Association (MAİB), Türkiye’s total machinery exports, including free zones, amounted to 18.3 billion dollars in the first eight months of the year. Noting that this is the first decline in domestic machinery and equipment investments since the third quarter of 2019, MAİB President Kutlu Karavelioğlu stated, “According to the Medium-Term Plan, no increase in these investments is expected by 2025. In this process, where tightening and contraction in the domestic market are anticipated to continue, the relatively high growth target set at around 4% indicates that net exports will contribute more significantly to growth. This high reliance on exporters for growth creates an expectation that the pressure created by a strong Turkish lira will be alleviated through various supports for exports.”   

Kutlu Karavelioğlu

According to the consolidated data of the machinery manufacturing industry, Turkey’s total machinery exports, including free zones, reached 18.3 billion dollars by the end of the first eight months of the year, while the total machinery exports over the last 12 months amounted to 28.2 billion dollars. In August, the sector achieved an export of 2.4 billion dollars, which is close to the average for the last 12 months, with an average export unit price of 7.5 dollars per kilogram. The sector exported approximately 200 million dollars worth of machinery to the United States in August, bringing its eight-month exports to that country to 1.4 billion dollars, a 12.2% increase. Despite the economic stagnation in Germany, it maintained its leading position in Turkey’s machinery exports with 2.3 billion dollars during this period, while Russia ranked second with 1.4 billion dollars, despite a significant contraction of 17.9%. 

 Expressing that the data obtained from exports to the United States, which entered the last quarter with hopes of revitalization following interest rate cuts, has been a savior for the sector this year, Machinery Exporters’ Association President Kutlu Karavelioğlu stated:

 “The United States is not having a stagnant year from our perspective, despite experiencing negative expectations in some sectors due to a contraction in employment. While the reasons in Russia, Germany, and Israel are not sufficient to compensate for our known losses, the increase we achieved in the United States has been a morale booster for the sector this year. Although the negative developments in global machinery investments and trade have varying effects on our export markets and sub-sectors, we managed to maintain our record export level of 28.2 billion dollars reached by the end of 2023 in the last 12 months. We will soon start to see the negative impacts of our weakened competitiveness on our exports due to the decrease in orders and disrupted scales, particularly starting from the second quarter. The initiation of an interest rate cut cycle on two continents opens the door to a new era for us. If the sluggishness in global investments reverses as desired from this point forward, the only uncertainty will be our internal issues.”

DISINFLATION PROCESS EVEN MORE PAINFUL FOR INDUSTRIALISTS THAN COVID-19 PERIOD

Expressing that the disinflation process has been even more painful for industrialists than the COVID-19 period due to its side effects, Karavelioğlu noted that machinery and equipment investments have fallen below the levels of 2020, the year that experienced the longest shutdowns due to the pandemic. He stated:

 “For the first time since the third quarter of 2019, a decline has been observed in machinery and equipment investments. The 5.6% decrease in this data, which has been consistently rising for 18 quarters, is a significant indicator of the challenging domestic market and particularly the fate awaiting our machinery manufacturers. According to the Medium-Term Plan, no increase in these investments is expected by 2025. In this process, where tightening and contraction in the domestic market are anticipated to continue, the relatively high growth target set at around 4% indicates that net exports will contribute more significantly to growth. However, it remains uncertain how exporters, who have very limited power to finance their rising costs in foreign currency and have a significant portion of their capacity idle, will provide this contribution. The high level of reliance on exporters for growth creates an expectation that the pressure created by a strong Turkish lira will be alleviated through various supports for exports.”

“IMPORT DEPENDENCE ALSO REDUCES CONTROL OVER PRICES”

Karavelioğlu stated that the EU’s efforts to address the difficulties in competing with China and the US, which have been frequently highlighted in the reports of various NGOs in Europe, is a positive signal for the sector. He said:

“The report prepared by former ECB (European Central Bank) President Mario Draghi for the European Commission is a groundbreaking text under the title of the Competitive Strategy. The proposed measures to support innovation-driven growth in Europe should also serve as a guide for us. One of the most striking elements in the text is the emphasis on reducing dependence on critical imports. There is a particular call to reduce imports of critical raw materials from China and other geopolitical competitors, such as those related to digital technology and energy. Against the assumption that imported inputs are significant in combating inflation under a low exchange rate regime, we see that this creates a dependency relationship that reduces control over prices. It is already very clear that our machine imports have increased by 2.7% over the last 12 months, reaching $45.1 billion, without contributing to our competitiveness.” 

“WE WILL FIND WAYS TO TURN GERMANY’S RUSH TO OUR ADVANTAGE”

Karavelioğlu stated that they are continuing their efforts to increase commercial partnerships while trying to navigate this period of extremely narrow profit margins without losing market share. He said:

“As the use of artificial intelligence, robotics, and 3D technologies increases and becomes more widespread, the transformation in digitalization and sustainability is becoming decisive. Those wishing to sell goods to the EU, which is accelerating regulations stemming from the Green Deal, are racing against time to comply with these regulations. Germany, where machine exports fell nominally by 4.8% in the first half of the year compared to the previous year, wants to quickly recover the losses it has experienced, especially in EU countries. If we can accelerate in the “Twin Transition”, we can support Germany in its rush as we have done each time and permanently increase our share in its imports. To this end, we will host significant events in the last quarter with the brand of Türkiye’nin Makinecileri (Turkey’s Machinery Manufacturers) to develop our technical and commercial collaborations with Germany. Our machinery manufacturing sector is recognized by German institutions and sectoral organizations as the Turkish sector that is most integrated into their industry. Our Exporters’ Union alone has previously established protocols with nine different German organizations, including federations, technology institutes, academies, and investment agencies. One of these is the German Association for Supply Chain Management, Procurement and Logistics (BME), which has a purchasing volume of €1.3 trillion with nearly 10,000 members. We will hold two events in Berlin and Istanbul in collaboration with BME. The main agenda of these events will be concrete business development. I would especially like to invite firms from our machinery, electrical-electronics, and automotive sectors, which constitute our country’s technology ecosystem, to the B2B meetings to be held during the 1st Procurement and Supply Forum Turkey event in Istanbul on December 4. Our website for matching and registration is now accessible.”