COUNTRY REPORT Turkey

42 October 2017
And the
twain
have met
It is widely believed that Turkey’s strategic location, at the
crossroads of Europe and Asia, and its skilled workforce
constitute a winning formula for its HVACR industry

By Hannah Jo Uy | Features Writer

October 2017 43
 COUNTRY REPORT Turkey

S
▶ ISunset over the Blue Mosque, Turkey
traddling Europe and
Asia, Turkey is widely
regarded as being able
to offer the best of
Serdar Kumbaraci both worlds, in terms of culture. HVACR
manufacturers in the country are proving
to be no different with regard to the
products they are purveying, and this
characteristic, in many ways, seems to be
the reason for the sector’s resilience in the
midst of global economic challenges.
“While the HVAC&R market in Turkey
shrank by five per cent in 2016, 2017 has
already seen some improvement and a
Ganim Dokuyucu positive trend in growth rates,” says Serdar
Kumbaraci, Director General-UAE, Turkish
Trade Center (TTC). “In the third and the
fourth quarters of 2017, this trend is likely
to continue, and we expect a growth
rate of 4-5% by the end of the year.”
Kumbaraci says that in 2016, the export
volume of the sector had reached USD 3.6
billion and that the overall expectation for
2017 is USD 4 billion. reliable investment environment, which has
Serkan Uzun Ganim Dokuyucu, General Manager, supported the growth of the HVAC sector.
Mechanical Engineer for Ulpatek, echoes “HVAC producers are very pleased with
this buoyant view, saying that the HVAC the situation, because this positive air has
sector has gained good momentum increased the presence of Turkish companies
for an increase in recent years. “In the in foreign markets,” he says.
January-August period of 2017, Turkey has Elaborating on Uzun’s words, Dokuyucu
exported about USD 2.5 billion [worth of says that Turkey is in the 24th place, in terms
products], an increase of eight per cent, of HVAC sector exports to all over the world
compared to the same period and that the sector has set a target for USD
of 2016.” 25 billion by 2023. “The HVAC sector is one
Serdar Tümen Touching on the dynamic nature of of the fastest growing markets in our country
Turkey’s HVACR industry, Kumbaraci in recent years,” he adds. “The fact that this
emphasises that there has been a 10%
increase in export figures in the first six
months of the year and that the TTC is
optimistic that the trend will continue in
the second half of the year.
On the other hand, he says, most of
the products manufactured by the sector
are the so-called comfort products. As a An annual growth
Serkan Altintel result, political instabilities and economic
recessions could result in a dramatic rate of 4-5% is
decrease in trade volume, he adds.
In the face of such difficulties,
only possible by
however, Kumbaraci stresses that a careful selling products,
analysis of the Turkish market will reveal
that foreign exchange rates have been and especially
stabilising and “last year’s hardships
have been overcome, which secured an
technological
atmosphere of stability”. products abroad
Kadir Akpinar Adds Serkan Uzun, Export Sales
Director of Üntes: “Despite the slowdown
of the global real estate market in the
last 10 years, Turkey has provided a

44 October 2017
 market is constantly developing has recently
attracted the attention of producers in
Europe.”
Kumbaraci adds that the buoyant
atmosphere, aside from attracting more
foreign investors, is resulting in higher
sales figures and the construction of new
facilities. “The Turkish HVAC-R market
has grown rapidly, and many companies
around the world, having witnessed these
developments, have invested in Turkey,”
he says. “Currently, a great number of
firms are manufacturing in Turkey. The
subsequent technological investments, and
the competitive environments [have] resulted
in considerable improvements in terms of
product quality. The Turkish HVACR sector
exports a remarkable portion of its products
to European countries. This is another
indicator of the quality of Turkish
HVACR products.”
Kumbaraci says that Turkey’s growing
attractiveness to investors is largely owing
to the support measures available for

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October 2017 45
 COUNTRY REPORT Turkey

foreign investors, noting that a large number

▶ Istanbul, Turkey
of leading global companies in the sector
have made Turkey a production base through
partnerships or purchase of firms. Kumbaraci
names the Atlantic Group, Baymak, Bosch,
Carrier, Daikin, Ferroli, Grundfos, Johnson
Controls, KSB, LG, Ross, Schako, S&P,
Systemair, Vaillant, Viessmann and Wilo as
among those who have a strong presence in
the country.

A GLOBAL MODEL
The positive trajectory of the country’s
HVACR sector is apparently a result of
the growth model adapted by Turkish
manufacturers, which puts a strong
emphasis on export. “The only way to create
a country that is able to sell its products
abroad and secure foreign currency inflow
is to manufacture quality products, in
accordance with the legal provisions and
needs of purchasing countries and sell these
products through the right channels,” says
Kumbaraci. This, Kumbaraci adds, means that
manufacturers take into consideration not
only the European Union standards, but also
the specific rules and regulations of other
countries.
“An annual growth rate of 4-5% is only
possible by selling products, and especially
technological products abroad,” he stresses.
“I am happy to say that we have travelled
a long distance towards this objective.
Turkish products are now sought after and
preferred in many markets across the globe.”
The biggest importers of Turkish products,
Kumbaraci says, include Germany, Britain,
Iraq, Italy and Romania, adding that a
significant portion of the country’s export
goes to Member States of the European
Union, in addition to Turkey’s bordering
neighbours.
Docuyuku believes that the ability
of Turkish manufacturers to adapt to
international standards is a positive feature
that makes it stronger in the market. “We
have a chance to learn innovations instantly,”
he says. “The standards that are published
in Turkey about our sector do not pose
any problem for adaptation, because the
directives are based on these international
standards. The existence of these standards
is actually an opportunity for companies that
do their job properly.”
Manufacturers have seconded this,
with many noting that a bulk of their
clients is abroad. Serdar Tümen, Business
Development of Friterm, shares that 45%
of the company’s sales comes from Europe.
Serkan Altintel, Project Sales Manager of
Frigo Mekanik, says that his company is

46 October 2017
 Adds Sadath Hussain, Senior Sales
Engineer, TTC: “If you compare Turkish
companies, in terms of quality, they are
on par with the other international brands.
When it comes to pricing, they have an
advantage, because it is better than that of
other manufacturers.”
Sadath Hussain Tümen adds to this by saying that
energy-wise and in terms of labour costs,
Turkey has an advantage over many other
European countries. As Mohit Kumar, Senior
Sales Engineer, TTC, points out, the cost
of labour is only a third of what it is in the
rest of Europe. This gives the country’s
manufacturers flexibility in terms of the
solutions they are able to offer.
Further, the country’s strategic location
also lessens transport costs. “Turkey is
playing an active role in the market because
of its connection to Europe, Asia and the
African continent as a location,” says
Ertuğrul Koçak, Project Engineer, Korkmaz
Panel. “Being close to big markets
opens the way for companies to sell.

Mohit Kumar

Ertuğrul Koçak

exporting to more than 60 countries in

the world. Kadir Akpinar, Director Foreign
Trade, FAF Valve Company, says that 40%
of the company’s sales is spread across 60
countries. Uzun adds that his company is
directly exporting to 45 countries and that
it continues to cultivate strong channels
in Europe, South America, Middle Asia,
Australia and the rest of the
MENA region.

QUALITY AND COST: THE

BEST OF BOTH WORLDS
The manufacturers believe that other
factors, such as a skilled workforce and
cost-competitiveness contribute to
Turkey’s upswing in global acceptance.
“The values that underpin the excellence
of the Turkish HVAC industry are high-
quality human power and world class
production experience,” says Uzun. “We
understand that foreign investors have
chosen Turkey as the production base
in the region, and in the following years
Turkey will continue to be a safe harbour
in this sense. The competitive advantage
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of Turkish brands comes not only from
price competition, but also from the
competitive power of quality product
production.”

October 2017 47
 COUNTRY REPORT Turkey

Efforts to produce in European standards

▶ Istiklal Avenue, Istanbul,Turkey

increase the quality of manufacturing
companies.”
Hussain adds that another advantage
offered by the strategic location is a
shorter lead time. “I have spoken to
many clients that say they are not
able to place an order, because some
manufacturers take a very long lead time
to deliver the material,” he says. “That’s of investors, due to the increasing demand
not a problem you will face with a Turkish for real estate. This has led them to focus
manufacturer.” their investment on less-energy-consuming
technology and production of systems that
TRENDS IN TURKEY are fully compatible with the EcoDesign
With its growing export market, Turkey’s directives.
manufacturers say they are continuing Kumbaraci says that inverter-based
to adapt to global trends, characterised technology has seen a rapid spike, with
by a call for products that are energy the use of inverter-based splits being
efficient, help the cause of curbing made mandatory in Turkey. He shares that
emissions and promote good air quality. the VRF market is also rapidly growing.
Kumbaraci confirms this when he says: “VRF market in Turkey is the biggest VRF
“Our companies are principally focusing market in Europe,” he stresses. “In the short
on, and investing in, R&D and innovation. future, more investments will be made in
As in other parts of the world, the VRF manufacturing. The VRF market has
importance of Internal Air Quality (IAQ) grown more than central air conditioning
is better perceived in Turkey, recently.” systems in the last 15 years. The combined
As a result, Kumbaraci says, there is an operation of VRF exterior units and
increase in products and processes that air conditioning switchboards is also
target provision of not only hot and cool developing and affecting the penetration
but also clean air with minimum energy trend of the market.”
consumption.
“There are many legal regulations ON THE COLD CHAIN
in Turkey that affect the sales and FRONT
technology of many products,” Tümen echoes the increasing recognition
Kumbaraci says. “Legal regulations, of energy efficiency with regard to cold
such as prohibition of Freon gas in air stores. “In Turkey,” he says, “companies are
conditioners, energy labelling practices in always asking about energy efficiency, and
buildings and CE branding have laid the energy prices are increasing.” Thus, he says,
foundation for products with improved Turkish companies are always taking energy
levels of technology, trustworthiness and efficiency into consideration, which has led
quality, which result in more and more to an increase in demand for ammonia-
people preferring these products.” based systems.
Kumbaraci shares that project The refrigeration industry has a lot of
developers, mechanical companies and solutions, Altintel says, adding that they
manufacturers in the country are also are tailor-made in nature. No one project,
working to catch up with the growing he says, can be the same as the other.
clamour for zero-energy buildings. Therefore, the engineering is the most
Additionally, Kumbaraci observes that important thing, especially the experience
within commercial HVACR devices, energy and the reputation of the manufacturer.
efficiency (EER, ESEER) performance Speaking on the trends related to cold
values are becoming more and more stores, Altintel adds that though there is a
important. “The use and manufacturing move towards ammonia-based systems, his
of energy-efficient products in the company is careful to address unique needs
Turkish market, which has been growing in terms of capacity.
and developing for long years, is also Hussain, speaking on behalf of Frigo,
increasing,” he adds. says that the strategy is to normally
Uzun confirms this trend, adding that recommend ammonia for larger-capacity
Üntes has invested heavily in factories to plants, in an effort to reduce overall
increase the production of energy-efficient operating cost. “We are targeting the
products and to improve IAQ in the audience based on their requirement,” he
buildings, in an effort to address the needs says. “If it is a small cold room, we suggest

48 October 2017

going with Freon-based equipment, and
if it is a sizeable project then we advise
ammonia refrigeration.” Hussain admits
that there is a challenge when it comes
to going for ammonia refrigeration,
as some are wary of its hazardous
properties, but that they are also aiming
to educate people that technologies do
exist to avoid such mishaps.
WHAT DOES THE
TURKISH GROWTH
STORY MEAN FOR THE
GCC REGION?
With Turkish manufacturers aiming to
address global standards, it is evident
that they are leveraging their competitive
advantage, in terms of quality and
pricing, to GCC region countries and
making a proactive move to enter the
market. “The Gulf region is very close to
my country as a location,” Koçak says.
Altintel says that Frigo Mekanik is
looking towards exploring the potential
of the UAE market, owing to the
country’s position as a global business
hub. He adds that he expects to see a
higher demand for cold storage in the
GCC region. “Storage is life,” he says.
“Outside, it’s about 38-40 degrees C,
and in here, you are comfortable. It is
important to ensure thermal comfort
for food, meat, poultry, fruit, vegetables
and dairy. Everything has to be under
control.” Hussain says that Turkey has
also observed massive developments
within the hospitality sector with a large
number of new hotels coming up in the
UAE. “It means,” he says, “there will be
huge scope in the storage sector.”
Tümen adds that Friterm has been
selling to the Middle East, though
indirectly, with many of the contractors
buying products for installing in cold
store projects they are involved in. “We
want to expand our business in the UAE
and across the Gulf,” he says, adding that
this is the reason that he, along with fellow
Turkish manufacturers have joined the TTC,
which has recently opened its base in the
UAE.
“We are trying to promote all these
developments by means of sectoral
associations and Turkish HVAC-R exporters
(İSİB),” says Kumbaraci with regard to the
goals of the TTC. “To be frank, we have to
admit that we have not been fully successful
in advertising these developments in the GCC
[region] countries. Additionally, thanks to the
Turkish HVAC-R Trade, which has opened in
Dubai, we as a sector will be able to share all
these developments with the GCC [region]
countries in a more effective way.”
HAVE YOUR SAY!
We welcome your views on the article.
Write to editor@cpi-industry.com

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October 2017 49