Buy a refrigerator in the UK today and there is a one in 10 chance it was made in Turkey. The development of the Turkish white goods industry is one of the success stories of local industry and leading local manufacturers are now looking for a global role.
Rifat Oztaskin, general coordinator of the White Goods Manufacturers Association, recently said local manufacturers have built up solid experience over the past 40 years as they developed their capabilities from simple assembly to their own research, development and design. As the companies have grown and new local and export opportunities have opened, they have started looking for investments abroad.
In 2006, production in the main white goods categories - refrigerators, washing machines, ovens and dishwashers - reached 15m units, of which some 10m were exported to Europe. Turkey is now the leading manufacturer in south -east Europe and the Middle East and one of the top-three manufacturers in Europe. It still lags behind Italy, which produces 30m units a year but is competing for second place with Germany, which also produces about 15m units a year.
Oztaskin said the overall industry target is to reach 30m units over the next 8-10 years and become the biggest producer in Europe.
A breakdown of 2006 figures by items reveals refrigerators were the biggest sell (2.12m units), followed by washing machines (1.7m units), dishwashers (835,000 units) and ovens (709,000 units). White goods domestic sales registered a massive growth of around 70% in 2004, yet tailed off in 2005 and 2006. Domestic sales are declining as a percentage of overall sales but still, they remain vital for the five manufacturers who make up 95% of Turkey's production. The good news for the industry is that Turkey has a growing middle class and is in the middle of a construction boom in real estate.
Total white goods exports have seen steadier growth, with rises of 20% in 2004, 8% in 2005 and a strong 33% rise in 2006 to reach over 10.27m units. In 2006, refrigerators made up the largest export sales item (4.8m units), followed by washing machines (3.5m units), ovens (1.4m units) and dishwashers (570,000 units).
The industry is dominated by two local manufacturers. Arcelik, a subsidiary of Koc Industries, is Turkey's top white goods producer with a 57% share of the local market. It is also a major force in the export drive and recently announced it wants to be one of the world's top 10 brands by 2010. It produces under the Arcelik name mainly for the Turkish market while it uses the BEKO brand for export markets. It currently invests some _150m annually in its production facilities and aims at expanding its share of the world market from a current 1.6% to 2% under the BEKO brand.
Arcelik's strategy relies primarily on the acquisition of European brands, giving it access to an established name and distribution network in the local market. So far, it has purchased Germany's Blomberg, UK-based Leisure and Flavel brands and Austria's Elekra Bregenz. In some cases, production has been transferred to Turkey. For example, Arcelik moved capacity for 600,000 oven units from Austria and 400,000 oven units from Germany to its plants in Turkey to take advantage of lower production costs and proximity to export markets.
In addition, the purchase of the Romania's Arctic brand has provided Arcelik with another low-cost manufacturing base that will serve the local market and the greater Eastern European region.
Turkey's second largest white goods player, Vestel, which is owned by local industrial conglomerate Zorlu Holding, has also been powering ahead. It is Turkey's top electronics producer but is a relative newcomer to the white goods sector. It started production of refrigerators in 1999, added washing machines in 2003, ovens in 2005 and is now planning to add dishwashers and clothes dryers to its range. In early 2007, it inaugurated no less than five new factories at one time, boosting its production of ovens, dishwashers, refrigerators and plasma televisions, and brought total staff numbers at its Vestel City manufacturing complex to 18,000.
Meanwhile, Italy's Indesit has recently raised capacity at its Turkish plant to 1m units, while Bosch-Siemens Hausgeraete (BSH) has increased capacity at its Turkish plant to 3.5m units, making it one of the largest in its worldwide network.
However, they are not alone in wanting to make their mark on the global scene. China's Haier set up production facilities in nearby Jordan to serve the Middle East region and buy into Italian companies as a way into the European market.
At the end of the day, the long-term health of the industry will depend on even better design, branding and quality that will ensure customers are prepared to pay more for better products.
