Volume 8 Issue 36 - IMMIB Special Issue

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INDEX PUBLISHER TurkofAmerica, Inc.

12 TURKEY’S FOREIGN TRADE MINISTER ZAFER CAGLAYAN

CO-FOUNDER & GENERAL MANAGER Ömer Günefl – omer@turkofamerica.com

Turkey’s Foreign Trade Minister Zafer Ça¤layan, who spoke to

CO-FOUNDER & MANAGING EDITOR Cemil Özyurt – cemil@turkofamerica.com

TURKOFAMERICA magazine about the trade issues between

GENERAL COORDINATOR Tolga Ürkmezgil

both through state-wide private sectors and through the fed

the two countries, said “We are carrying out our activities eral government in order to gain more benefits from exports,

ART DIRECTOR Sinem Ertafl EDITOR Patricia Russo, DEPUTY PHOTO EDITOR Necdet Köseda¤ SENIOR ASSOCIATE PHOTO EDITOR Ayhan Kay

and we will continue these efforts with the same momentum.”

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16 JOSE W. FERNANDEZ, ASSISTANT SECRETARY OF STATE Turkey is one of six “Next Tier Markets” identified as

WRITER-REPORTERS Ayfle Önal Zambo¤lu, Ali Ç›nar, Demet Cabbar, Duygu Uçkun, Maureen Ertürk, Melda Akansel.

priorities by President Obama’s New Export Initiative (NEI).

CONTRIBUTORS Burcu Gündo¤an, Güner Özdemir, Halim Özyurt, Muharrem Kayili, Yasemin Civcik.

identifying growth opportunities in specific sectors.

This initiative recognizes the importance of the Turkish market to the United States and provides resources for

ADVISING COMMITTEE Ali Günertem, Egemen Ba¤›fl, Ekmel Anda, Ferhan Geylan, G. Lincoln McCurdy, Hakk› Akbulak, Mahmut Topal, Mehmet Çelebi, Osman (Oz) Bengür, U¤ur Terzio¤lu. MAIN OFFICE TURKOFAMERICA, Inc. 115 River Road, Suite 1206 Edgewater, NJ 07020 Tel: +1 (201) 917 5483 Fax: +1 (917) 322 2105 info@ turkofamerica. com www.turkofamerica.com

20 ISTANBUL IRON AND STEEL EXPORTERS’ ASSOCIATION Steel products are exported to more than 160 countries in the world. Namik Ekinci, President of Istanbul Iron and Steel

16

Exporters’ Association answered TURKOFAMERICA’s questions.

32

REPRESENTATIVES IN THE U.S.

46 ISTANBUL CHEMICALS AND CHEMICAL PRODUCTS EXPORTERS’ ASSOCIATION The industry exported 4.9 billion in 2008 and this increased by 7.5% in 2009, reaching 5.2 billion dollars. On the other

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hand, Turkey's chemical industry imports totalled $20 billion in 2009, falling by 21 percent when compared the previous year.

50 PETKIM PLANS TO CREATE A REGIONAL FORCE IN PETROCHEMICALS

NEW YORK (Rochester) Ersoy Yildiz – eyildiz@turkofamerica.com Tel: +1 (585) 414 4300

The Turkish petrochemicals market is one of the fastestgrowing in the world, with a twofold GDP multiplier over the

EUROPE: Yasin Ya¤c› – yyagci@turkofamerica.com Tel: +31 (624) 66 92 23

last decade. Petkim Petrokimya Holding A.fi., the leading petrochemical company in Turkey, has been exporting

TURKEY GENERAL COORDINATOR Nuri Özyurt – nozyurt@turkofamerica.com

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MARKETING & SALES P›nar Özçelik- turkiye@ turkofamerica. com

TURKOFAMERICA is a member of Independent Press Association. TURKOFAMERICA is a member of Turkish American Chamber of Commerce Industry.

different petrochemical products to the US market for 20 years.

52 ISTANBUL ELECTRICAL-ELECTRONICS, MACHINERY AND INFORMATION TECHNOLOGY PRODUCTS EXPORTERS’ ASSOCIATION The Electrical-Electronics and Machinery Industry is

SUBSCRIPTION & DISTRIBUTION Hüsrev Gerede Cad. Soydan Apt. 102/4 Teflvikiye Istanbul, Turkey Tel:+ 90 212 282 37 11 PRINT: ‹maj ‹ç ve D›fl Ticaret A.fi. ‹maj Center Macun Mahallesi 3. Cadde No:2 (A Girifli) ‹stanbul Yolu 6. Km. Yenimahalle - Ankara - Turkey Telefon: + 90 (312) 397 91 40 Fax: + 90 (312) 397 41 52 E-Mail: info@imajas.com.tr

mining industry in Turkey is expected to grow by 71.3% reach a value of US $12.76 billion by 2013.

CALIFORNIIA (San Fransisco): Ayfle Önal Zambo¤lu – aozamboglu@ turkofamerica. com Tel: +1 (650) 938 1764

MASSACHUSETTS Mustafa Aykaç – maykac@turkofamerica.com Tel: +1 (857) 205 8318

According to Business Monitor International forecasts, the between 2009 and 2013. The industry is expected to

CALIFORNIA (Los Angeles): Barbaros Tapan btapan@ turkofamerica. com Tel: +1 (213) 924 8027

CONNECTICUT Ali Ç›nar – acinar@turkofamerica.com Tel: +1 (203) 722 4339

32 ISTANBUL MINERAL EXPORTERS’ ASSOCIATION

considered to be one of the major sectors of Turkey, as it is the source of information technology used by the developed nations to ensure competitive advantage.

74 ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010

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74

Istanbul with its great importance in world history and unmatchable cultural heritage is already one of the world’s metropols. I would like to repeat what we say to the European society to our American friends as well: “Make Istanbul your next stop!”


FROM EDITOR

How Should Bus›nessmen Overcome the D›ff›cult›es of Enter›ng the U.S. Market? By Cemil Ozyurt

cemil@turkofamerica.com

hey have a very good point in asking how to enlast year’s U.S. import numbers, even though it decreased 23 percent compared to 2008 and it was not a good year for the U.S. or the rest of the world, either, the country’s imports totaled 1.9 trillion dollars.

Tter the U.S. market. When we look at

To consider only one month, May 2010, the U.S.’s importing of goods and services reached $194.5 billion. Imports increased to $194.5 billion in May from $189.0 billion in April. The U.S.’s monthly imports figures equal or surpasss Turkey total yearly exports, which was 102 billion in 2009.

The U.S. market is a very attractive market for businessmen all over the world who want to get a piece of the pie. Whenever I meet manufacturers overseas, their first question is, how they can sell their products to the U.S.?

The numbers are enough to get foreign exporters who have not yet encountered the market excited, but the real point is, how can they get started? Anybody who does business in the U.S. could give you a very long list about what a businessman should do. First, find a lawyer, then an accountant, and so on. Those are crucial elements, but I have two simple pieces of advice. First, be patient, and second, find someone who knows marketing and don’t forget that you have to spend money to make money. I have already assumed that you are patient, so I’ll go into the second one, marketing. One of the most important decisions that a Small and Medium-size Business (SMB) has to make is how much money to allocate for its marketing budget. "How much should I spend on marketing?" Scott C. Margenau, the founder and CEO of ImageWorks Studio and award-winning web design and branding firm, says both the Counselors to America's Small Business (SCORE) and the U.S. Small Business Administration (SBA) define the variable for a proper marketing budget to be between 2% and 10% of sales, noting that for B2C, retail, and pharmaceuticals, it can exceed 20% during peak brand-building years. Most Fortune 500 companies typically spend about 5 – 7% of expected gross revenues on marketing.

This could be a good starting point for companies that are just thinking of expanding their businesses into the U.S. market. According to Tony Fannin, President of BE Branded, who specializes in integrated marketing and work with Fortune 500 companies, if you are introducing a new line, a new service, or a revamped brand position, it takes about an additional 12 – 15% in marketing investment. If I give a specific example for a mid-size Turkish company, the revenue of which is between $5 to $7 million, the company should spend at least $300,000 to $500,000 a year on marketing. INTERNET TECHNOLOGY SPENDING Once you decide to spend money on marketing for market reports, research, advertising with newspapers, magazines, and printing coupons, then the Internet has to be on the other side of marketing. Investing in technology is a smart move for many small businesses. The U.S. has a population of over 300 million, and 240 million of them, 77 percent of the country, are internet users. If you want to establish a good business model, the Internet must be an indispensable marketing tool for you. Forrester Research, an independent technology and market research company, conducts an Interactive Marketing Forecast which makes predictions for the next five years. Forrester Research estimates social media marketing to grow at an annual rate of 34 percent – faster than any other form of online marketing. Forrester estimates that $716 million will be spent on the medium in 2010, growing to $3.1 billion in 2014. Social media will be a bigger marketing channel than both email and mobile. Using all the tools of marketing helps your business grow, but first you have to be confident in your products and services. If you believe in your product; I wish you good luck and welcome to the United States. ! TurkofAmerica • 09


TURKISH TRADE MISSION IN THE US

Turk›sh Trade Delegat›on V›s›ts Four States Friday that Turkey's aim was to raise its exports to United States to 32 billion USD first and then to 62 billion USD. Turkey's State Minister Zafer Caglayan visited Coca Cola headquarters in Atlanta, Georgia, and said Turkey's exports to the United States were actually around 3.2 billion USD. "We have the potential to raise our mutual trade to 100 billion USD," Caglayan said during his visit. Caglayan referred to a business council two countries would set up with participation of two ministers and 12 businessmen from each countries, and made public the first Turkish businessman to take part in the council as Coca Cola's CEO Muhtar Kent. Also speaking in the meeting, Kent said Turkey needed a politically and economically strong United States, and the United States also needed a strong Turkey. Kent said Coca Cola had invested more than 1 billion USD and employed 2,500 people in Turkey. Zafer Caglayan with Muhtar Kent.

State Minister Caglayan visited California, Texas, Illinois, and Georgia, and met executives of several U.S. companies including Boeing, Kraft Foods, American International Radio, Investigroup, MacLean Power Systems, Coca Cola, Exxon, JP Morgan, General Electric Oil and Gas, AECOM, BP, Shell, ORR Textile Co. Ltd., and Shaw Energy and Chemicals Group. 10 • TurkofAmerica

he Turkish state minister for foreign trade defined

Tthe aim of his visit to the United States as an oppor-

tunity to discuss investments in Turkey. "The aim of this visit was also to raise U.S. awareness about Turkey," Turkey's State Minister Zafer Caglayan told. Caglayan said he visited four states and held important meetings, particularly with the executives of leading U.S. companies. This was the first time a Turkish trade delegation headed by a minister visited the four states in USA. Caglayan said his visit was a part of Turkey's export strategy, and Turkey would welcome American businesspeople after they organized such visits for a few more times.

"Istanbul is the head of operation group of Eurasia and Africa, and 96 countries are connected to Istanbul," Kent also said. Before the meeting, Kent introduced several U.S. businessmen to Minister Caglayan, including head of CNN International. With net annual revenues of nearly $31 billion in 2009, the Coca Cola company is the largest nonalcoholic beverage company in the world. Consumers enjoy 1.6 billion servings a day of the company's more than 3,300 products, which include sparkling and still beverages such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. (AA)!

The minister said many companies would visit Turkey in coming days, and hoped that Turkey would continue to be a power in its region. "We should increase our trade relations with the United States," Caglayan also said. Caglayan visited California, Texas, Illinois, and Georgia, and met executives of several U.S. companies including Boeing, Kraft Foods, American International Radio, Investigroup, MacLean Power Systems, Coca Cola, Exxon, JP Morgan, General Electric Oil and Gas, AECOM, BP, Shell, ORR Textile Co. Ltd., and Shaw Energy and Chemicals Group. COCA COLA’s CEO MUHTAR KENT The Turkish state minister for foreign trade said on

Muhtar Kent with Cemil Ozyurt, TurkofAmerica's Co-Founder & Editor-in-Chief.


Turkish Trade Mission at World of Coca Cola building in Atlanta, GA.

Kent with one of his guests.

Trade Minister Zafer Caglayan with businessman Emin Kahyaoglu.

Muhtar Kent and Zafer Caglayan pose with Coca-Cola mascot, the Coca-Cola Polar Bear.

With 60,000 square feet, the World of Coca-Cola features more than 1,200 artifacts from around the world.

TurkofAmerica • 11


SPECIAL REPORT

Turkey Sells Products to the World but Its Exports to The U.S. Market Decreas›ng

As of the end of 2009, Turkey’s total share in US imports is as low as .24 percent and Turkey is rated 47th among the countries that the US imports from the most.

Turkey’s Foreign Trade Minister Zafer Caglayan.

12 • TurkofAmerica


hen we look at the developments in our economic relations

Wwith the USA, we see that since the year 2000 the rate of our exports to the US has been steadily decreasing. While Turkey’s overall exports between the years of 2000 and 2009 have increased 267.8 percent, its exports to the US increased only 3 percent. Turkey’s exports to the US was once 11.2 percent of its total exports, but this percentage decreased to 3.1 in 2009. Turkey’s Foreign Trade Minister Zafer Ça¤layan, who spoke to TURKOFAMERICA magazine about the trade issues between the two countries, said “We are carrying out our activities both through state-wide private sectors and through the federal government in order to gain more benefits from exports, and we will continue these efforts with the same momentum.” Ça¤layan told TURKOFAMERICA about Turkey’s export strategy: What is the importance of the North American market for Turkey’s strategy? The strategy that was adopted by all countries as one of the best ways to get out of the global crisis was to export and gain more through global grade. In order to eliminate the likely negative impacts of the crisis on our country, we are also following a similar method and trying to continue our efforts to both increase the number of our export partners, as well as to make our export potential more competitive and concentrated on value-added production. We have great goals with regards to our exports and these goals are not necessaryly in accordance with contemporary situation; they are based on a 13 year project plan. For the time being, we are working on our plans for the year 2023 and we are receiving all of the information and support that we need for these efforts from those that we export to; they are our main partners and we are all preparing our action plans together. If we take into consideration the possibility of competitor countries having similar goals, what would need to be done until the designated year 2023? When the world economy goes into a steady growth period in the future, there will be both new opportunities and threats for our country, but it is certain that the situation in the future will be a lot more challenging than now. More countries will be into exporting. On the other hand, developing countries and the rising economies will be our competitors, as well as markets for us. There is no doubt that when we take into account all of these improvements, in addition to the need to maintain the current export markets while continuing our efforts, every year in a disciplined manner, towards reaching our goal of $500 billion export value, we must also try to find out about the markets that have not been discovered by our exporters and increase our exports of new products. “TRADE RELATIONS ARE FAR FROM REFLECTING THE TRUE POTENTIIAL” Which countries will be targeted under the goal of $500 billion value? What is the signifance e of the USA under this plan? Under the framework of this goal, we are working, in coordination, towards determining new potential markets and we are conducting analyses concerning how we can get into these markets. Among the 15 countries that are being focused on, as a result of these ef-

forts, are countries that are considered to be the world’s industrial centers: the USA, Brazil, Russia, India and China; as our country is one of the most important trade and economic partners among these countries, the USA has an especially important place. However, trade relations between our country and the USA are far from reflecting the true potential. What is the difference between the increased rate of Turkey’s overall exports and its exports to o USA? When we look at the developments in our economic relations with the USA, we see that since the year 2000 the rate of our exports to the US has been steadily decreasing. While Turkey’s overall exports between the years of 2000 and 2009 have increased 267.8 percent, its exports to the US increased only 3 percent. Turkey’s exports to the US was once 11.2 percent of its total exports but this percentage decreased to 3.1 in 2009. Also, our country had increasing levels of trade between the years 2000 and 2004; however, since the year 2004 until the end of 2009 we observe a trade deficit in the amount of $5.3 billion. When we look at the first 3 months of the year 2010, our exports compared to the same time period of last year have increased 12 percent and reached $825 million in value. What is Turkey’s share of imports to the world’s greatest importing country, the US? As of the end of 2009, Turkey’s total share in US imports is as low as .24 percent and Turkey is rated 47th among the countries that the US imports from the most. Additionally, we see that these numbers have not changed in a significant manner within the past 6-7 years. As reflected by these data, it is obvious that our country does not receive a sufficient share of the US market, which is significantly important. Determining the reasons for our low share in US imports in the face of our overall increased exports and ensuring a trade balance is very important. In accordance with this goal, our Counselate studies each US state whose importing practices are as active as a developing country as well as distribution and consuming habits, which are are diverse and unique. TURKEY CONCENTRATED SIX US STATES Can you give us more information about the US states that you concentrate on? We’ve concentrated particularly on 6 US states. California’s import value is $277 billion and this amount is twice that of Turkey’s 2010 import amount, which is $140 billion. New York’s import value is $211 billion; Texas’s is $254 billion; Georgia’s is $53 billion; Florida’s is $43 billion; and Illinois’s is $97 billion. In Turkey, we want to pay more attention to these states whose importing levels are as high as these and we want to increase our opportunities. Our observations that are found through our work are shared with our import shareholders and action plans that are prepared within the framework of state-wide observations are used for designing strategies for entering the US market. What are Turkey’s opportunities during this process? With its GDP of nearly $14.2 trillion, the US takes up about 20 perTurkofAmerica • 13


SPECIAL REPORT

Turkey’s Foreign Trade Minister Zafer Ça¤layan with Ömer Günefl, TURKOFAMERICA Magazine General Manager.

cent of the world’s economy and its import value of $1.6 makes it the world’s greates importer. We are carrying out our activities both through state-wide private sectors and through the federal government in order to gain more benefits from exports; we will continue these efforts with the same momentum. The standards and the business procedures in this market being different from our traditional markets and the European Union countries, to which we mostly export, each US state having its own unique system, and the presence of great competition are of course among the most important issues for our companies. On the other hand, the opportunity to have access to all the information about the US market, following along with its rules and working under advanced financial opportunities are making this market a great target for our exporters. Will the importance of the European Union countries for Turkey’s export strategy remain the same e in the future as well? With countries like Germany, France, England, and Italy among its members, the 27 member-state European Union has been keeping its place and importance for our exports. Although the ratio of the EU countries in our exports, which was 56 percent in 2000, decrea14 • TurkofAmerica

sed to 46 percent 2009, this market is still very important for our exports. The impact of the global crisis began to lessen little by little by the beginning of 2010; however, since there is a new wave of crisis in some Euro zone countries, such as Greece, Portugal and Spain, and since this crisis leads to shrinking of domestic demands in certain EU countries, observing any kind of developments in these countries is more important than ever. As is the case with any period of crisis, the contemporary situation in the Euro zone also embodies new opportunities for exports. In the EU market, with which we especially have long historical trade relations and in which our exporters have more say day by day, we are trying to increase our country’s share both in terms of investments and trade. We are treating our traditional US and EU markets not as rivals or alternatives of each other but rather as each very valuable economic partners. So, as I mentioned previuosly, in order to reach our export goals for the year 2023, we are continuing our efforts to increase our shares in our traditional markets, such as those in the EU and USA, and also to ensure the establishment of a system that would mostly have value added products.


Within the past few years, Turkey has tried to have interdependency in exports in countries other than those of the EU members. Can you tell us about the real contribution of this strategy to the eco onomy? With the impact of the global crisis, there has been a real shrinkng in world trade. As the demand in the European Union countries –with which we have the greatest share- have decreased as a result of the crisis, our export levels have also dramatically been affected. For this reason, our goal under our regional strategy has been to ease down the pressure on our exports by targeting new markets. Under this framework, our goal has been to increase trade with neighboring and regional countries, as well as African and Asia-Pacific countries, and to permanently add on to the ratio of these countries’ shares within our trade value. Our regional strategies, that brought great success in terms of diversifying our markets, have been quite beneficial in ensuring the least damage possible from the shrinking of the EU market. As a result of efforts carried out under this direction, our foreign trade value has increased from $20 billion in 2000 to $88.3 billion in 2009. Our exports to Africa, which had a value of $2.1 billion in 2003, increased to $9 billion in 2008 and to $10.1 in 2009. Also, the previously set up strategy created an opportunity to be able to shift our exports to other regions; while our exports to the 27 EU countries in 2009 decreaed at a rate of 26 percent, our exports to the African countries have increased 27.3 percent. As of now, African countries are in the proper conditions for our country’s investments. We believe that increasing the existing investments in this region, which has great natural resources, would also impact our political, economic and commercial relations in a positive way. When we look at the situation with the Asia-Pacific countries, our efforts to increase commerce and economic relations led our trade volume to increase to $22.3 billion in 2005, and it increased to $41 billion in 2008; however, due to the negative impact of the global crisis, this number was $32.5 billion in 2009. EXPORT INCREASED TO $56.7 BILLION WITH REGIONAL COUNTRIES What are the improvements in efforts to advance trade relations with neighboring and regional countries? Advancing the current relations with neighboring and regional countries is important not only for trade but also for maintaining prosperity and peace in the region. Our strategy for the neighboring and regional countries, which was established in 2003, includes 52 countries as of now. Under the framework of this strategy, our exports value of $6.9 billion (2000) with these 52 countries increased to $56.7 billion in the year 2008; and our imports from 13 of these countries reached $73.5 billion. The ratio of our exports to these countries increased from 24.7 percent to 43 percent between the years 2000 and 2008. Our relations have benefited positively from our new policy of no-visa regulations with Syria, Libya and Lebanon. The increased rates of our exports to some countries from 2008 to 2009 are as follows: to Egypt, 84 percent; to Afghanistan, 71 percent; to Libya, 67 percent; to Palestine and Turkmenistan, 43 percent; to Ethiopia, 40 percent; and to Syria, 28 percent. Our exports to Iraq increased 31 percent in 2009, in comparison to 2008, and with the 5 percent export ratio among the countries we export to, Iraq has taken the 5th place.!

WHAT FACTORS DECREASES THE ATTRACTIVENESS? Factors such as distance, as well as lack of information about the US market, decreases the attractiiveness of this market. Is it possible to have alternative stimulating and supporting programs that are specially for the North American market? When we consider the contemporary dynamics of global trade, it is obvious that geographical remoteness or lack of information about the export markets would not entail as large an obstacle to entering the market as before. On the other hand, according to the ‘gravity model’ in trade, as the distance between the two countries increase, the trade volume has a tendancy to decrease. However, the volume of the US economy overcomes these disadvanteges greatly. Additionally, in order to reach the historical level of exports reached in 2008 and achieve our set goals for the following terms, it is definitely necessary to diversify our markets and inform our exporters about the business opportunities in these markets in an efficient and quick manner. So, I do not think that the attractiveness of the US market lessens because of the geographical remoteness or lack of information. It is actually possible to assert that the US market, especially in terms of having access to information and practicing trade relations in accordance with the international norms, has great advantages for the exporters. We see that our exporters follow the dynamics of this market very closely, consulting groups speed up their work in the US markets, and the private sector carries out comprehensive activities to establish interactions with the leading importers. We are happy to see our civil groups open up branches in this market and increase the frequency of their visits to the US in order to closely monitor developments. For all of these efforts, what is important is the continuation of these activities and the establishment of a long-term approach. We will act in accordance with a particular program, pay attention to the conditions required by the World Trade Organization treaties, European Union and Commerce Treaty, which make up the main axis of our trade policies; and we will take strategic steps by working with our exporters more closely than ever.

TurkofAmerica • 15


JOSE W. FERNANDEZ, ASSISTANT SECRETARY OF STATE

Turkey Is One of S›x “Next T›er Markets” for the Un›ted States By Jose W. Fernandez*

he tempo of economic engagement between

TTurkey and the United States is steadily

increasing. There is a level of excitement that translates into potential cooperation in many areas – from renewable energy to developing the financial sector, promoting new and existing small and medium sized companies, and economic cooperation in third countries. While U.S. trade with Turkey was sharply impacted during the economic downturn, two-way trade has risen by 37.8% to $5.6 billion for the first five months of 2010.

Turkey is one of six “Next Tier Markets” identified as priorities by President Obama’s New Export Initiative (NEI). This initiative recognizes the importance of the Turkish market to the United States and provides resources for identifying growth opportunities in specific sectors.

16 • TurkofAmerica

As much as 25 percent of Turkish exports enter the U.S. duty-free each year under the General System of Preferences (GSP) program. In 2009, the United States imported over $644 million in goods from Turkey under the GSP program. President Barack Obama and President Abdullah Gul recognized the potential for our cooperation to grow and prosper when they agreed to raise our economic partnership to the strategic level during their first meeting in April 2009. Following this commitment, we held the fifth meeting of the Turkey-U.S. Economic Partnership Commission on June 8 in Ankara, which Ministry of Foreign Affairs Deputy Undersecretary Hakki Akil and I co-chaired. This new strategic economic partnership has a number of concrete components: Turkey is one of six “Next Tier Markets” identified as priorities by President Obama’s New Export Initiative (NEI). This initiative recognizes the importance of Turkey's market to the United States and provides resources for identifying growth opportunities in specific sectors. POWER PROJECTS The U.S. Export-Import Bank (Ex-Im) has identified Turkey as one of nine countries with extraordinary potential for U.S. exports. Our goal is to offer attractive financing options to Turkish businesses and banks to facilitate the purchase of innovative goods and services. In a time of constrained private sector lending, Ex-Im's infrastructure financing can help create sustainable growth and a higher standard of living in Turkey. Power projects supported by Ex-Im over the last 14 years account for an estimated 20 percent of Turkey's gas-fired

power generation. The U.S. Overseas Private Investment Corporation (OPIC) is providing a $100 million facility through Garanti Bank for lending to Turkish small and medium-sized enterprises (SMEs). We recognize that financing for entrepreneurs is essential to support a vibrant business sector in Turkey, where opportunities are constrained by a lack of venture capital and conservative lending practices. OPIC also continues to support U.S. banks that have arranged loans to Turkish banks. U.S. financial institutions see stability in the Turkish banking sector as an opportunity for growth and have expressed interest in Istanbul’s emergence as an international financial center. OPIC has two loan originators based in Turkey ready to work with U.S. companies and their Turkish joint venture partners to package loan applications for OPIC consideration (see www.EDNACCESS.com). OPIC also has three OPIC-backed private equity funds with offices in Istanbul to oversee their business operations in Turkey and the surrounding countries. ENTERPRENEURSHIP SUMMIT In April, President Obama's Entrepreneurship Summit brought entrepreneurs from Muslim communities around the world to Washington to meet with American counterparts and develop ideas that will lead to real economic growth. We are pleased that Prime Minister Recep Tayyip Erdogan agreed to host next year's Global Summit to advance the work begun at this year’s summit and showcase the success of Turkey’s economy and its entrepreneurs. I have also invited the Turkish Industrialists’ and Businessmen’s Association to the Maghreb Entrepreneurship Summit. At the same time, in our government meetings we continue to address a number of issues of interest to the private sector. We have discussed our concerns with Turkey's new regulation governing products derived from agricultural biotechnology and the lack of transparency in its development and implementation. We also continue to discuss Turkey's efforts to gain additional access to the U.S. market for its agricultural products, and we welcome its desire to increase business with the


U.S. in third country markets including Iraq, Afghanistan, Pakistan, and Central Asia. Success in this area will depend on bringing our two private sectors together. I have received a warm welcome from our Turkish hosts during my visits to Turkey. Both sides agree on the objective of achieving concrete, measurable results. I am encouraged by the increased tempo in our economic relations and look forward to even more active private sector involvement as we continue to grow our economic partnership. *Assistant Secretary of State for Economic, Energy and Business Affairs!

JOSE W. FERNANDEZ Jose W. Fernandez leads the Bureau that is responsible for overseeing work on international trade and investment policy; international finance, development, and debt policy; economic sanctions and combating terrorist financing; international

energy

security

policy;

international

telecommunications and transportation policies; and support for U.S. businesses and the private sector overseas. Fernandez came to the State Department after having served as a partner in the New York office of Latham & Watkins, and Global Chair of the firm's Latin America practice. Fernandez was named one of the "World's Leading Lawyers" by Chambers Global for his M&A and corporate expertise, an "Expert" in International Financial Law Review's "Guide to the World's Leading Project Finance Lawyers", and one of the "World's Leading Privatization Lawyers" by Euromoney Publications. He is recognized as a leading Corporate Finance attorney in the Latin American market in the Chambers Global 2008 legal guide and a leading Latin America attorney in the Chambers U.S. 2008 legal guide. He was featured by Hispanic Business Magazine in its "100 Influentials List" for 2006 and 2007. Fernandez graduated magna cum laude with high honors from Dartmouth College, earning a bachelors degree in history, and also received an honorary degree from the college. He earned a J.D. from the Columbia University School of Law, where he received the Charles Evans Assistant Secretary for Economic, Energy and Business Affairs Jose W. Fernandez

Hughes Prize and a Parker School Certificate of International Law with Honors.

TurkofAmerica • 17




ISTANBUL IRON AND STEEL EXPORTERS’ ASSOCIATION

Can Turkey Become A Producer ›n the North Amer›ca Market? uring 1980s, the Turkish iron and steel industry

Dshowed great progress, which paralleled the

establishment of the electric arc furnace mills and developments in the economic structure.

“To be a producer in North America is a dream of most Turkish producers. We hope that these dreams will become real in the near future.”

Today, with its integrated plants that have capacities ranging from 1 million tons up to 3 million tons and with 16 electrical arc furnaces whose capacities run from 400.000 tons up to 2 million tons, the iron & steel industry has become one of the most developed sectors of Turkey and makes a significant contribution to the Turkish economy. The Turkish Iron and Steel Industry has reached 10th in world steel production and is 2nd in Europe, in 2009. Turkey’s share of the world’s crude steel production rose 1.9% and finished steel consumption rose to 360 kg per capita in 2007; this is expected to rise to 420 kg per capita in 2010. The Iron and Steel Industry is the third largest exporting sector in the Turkish economy and is becoming one of the major driving forces among Turkish total exports. Steel products are exported to more than 160 countries in the world. Namik Ekinci, President of Istanbul Iron and Steel Exporters’ Association. answered TURKOFAMERICA’s questions. The iron and steel sector was one of the sectors that was living deep inside of the financial crisis which the U.S. mortgage crisis spread across whole world. Can you tell us about how you’re doiing in the in post-crisis period?

Before the mortgage crisis, our most important markets were Dubai, Europe and America. As the crisis spread out of America to other countries, the building sector significantly slowed down, and this resulted in the halting or postponing of new projects. The construction material suppliers were severely affected by the contraction in the sector due to the very low demand for their products. As a result, the production was cut down and suspended for some periods by the producers. The iron and steel sector was the most affected of all, as it naturally relies on stocks. As the stocks with very high costs were sold off for very low prices, very huge losses occurred in the sector. How have the experience of overcoming difficulties such as econom mic crises, the shrinkage of the market, increases in raw material prices, and anti-dumping investiga ations, made an impact on your future strategic plans? Such incidents caused us to be more cautious and act more prudently; we kept our determination instead of backing down. About strategic planning, we will search for and cultivate new markets for export for the products for which we have a high production level, and we will also give more importance to calculating our costs and planning our pricing in order not to be subject to antidumping investigations. We will work with consulting companies to overcome the inherent and artificial obstacles present in our existing and potential export markets.

Nam›k Ekinci, Chairman of the Board of Directors of Istanbul Iron and Steel Exporters’ Association

20 • TurkofAmerica


Turkey is among the world's 10 leadiing steel producer countries in the industry. Over the next 10 years, how will Turkey be transforming? While China, Brazil and India increase their share of the market, how will the other major playerrs’ efforts affect Turkey? Turkey is a country that supplies its raw material and most of the input for its manufacturing from the outside; however, at the same time it successfully exports most of its production. This position will be positively affected and our success furthered by the collaboration of the trade associations and organizations. Although China, Brazil and India have very high production levels, they will also need imported steel for their future development. As other countries continue their development plans as well, steel consumption will remain at significant levels. This will result in the installation of new facilities and modernization of the existing ones. It’s known that certain Turkish product items in North American market have very strong following and that there are in demand. However Turkey still has some potential prod duct groups to export to the U.S. market which aren’t available yet. What should be done to export th hese product groups? The production levels should increase, production quality should be suitable to the requirements of the importing country and the export prices should be competitive compared to rivals. When these factors are met, these products will take their place in U.S. and world markets. In 2009, the iron and steel wire rod, steel pipe to the U.S. declined between 18 to 79 percent when compared to the previous year. By the end of 2010, what sort of figures should d we expect? In the year 2009, as for most steel products, there were sharp decreases both in quantity and value of wire rod and tube exports, compared to the year 2008. However when we look at Turkey’s export to the U.S. in the first seven months of 2010, we see a significant recovery, especially in the wire rod exports, as the export value of the first 7 months has already tripled the total export value of the year 2009. For this reason, we believe that the de-

ficit of the previous year will be easily covered by this year’s export value for this product. There is also a good amount of increase in tube exports in 2010. When we compare the first seven months for 2009 and 2010,we see that this year there is %20 increase in value thus we expect that the total export value of tubes will exceed previous year’s levels as well. The industry’s total export was $19.3 billion in 2008. How much time will be needed to reach 2008’’s figures? The reason exports hit $19.3 billion dollars in 2008 was due to high unit prices. Now our export quantity is slightly higher compared with those years, but the total export value is lower due to low unit prices. In order to reach those previous levels, with the provision that the effects of the world crisis are lessened, the existing facilities should operate at full capacity, new ones should be in a position to start production as soon as possible, and then prices should reach the previous levels. After that, $20 billion dollars in exports will be easily exceeded. After a period of trading goods with the United States, can Turkey become a producer in the North America market? Do you believe Turkish companies have the ability, experience and knowle edge to make this happen? To be a producer in North America is a dream of most Turkish producers. We hope that these dreams will become real in the near future, because it is important not only to make investments in Turkey, but also to be present in the countries where there are markets with high demand and where production inputs are available. Would you like to add anything? Our association is undergoing a restructuring period and working on different areas concerning our sector. While our main objective is the increase of our exports, we also work on providing the necessary market information for structuring of the existing steel industry and new investments.! TurkofAmerica • 21




AMERICAN INSTITUTE OF STEEL CONSTRUCTION

Construct›on Industry Has No Prospect for S›gn›f›cant Growth unt›l 2011

“The significant opportunity that exists for the Turkish structural steel industry is not in the export of material, but rather driving demand by increasing your domestic market share.”

Hearst Tower in New York City, New York is located at 300 West 57th Street, 959 8th Avenue, near Columbus Circle.

24 • TurkofAmerica


he American Institute of Steel Construction (AISC), headquartered in

TChicago, is a not-for-profit technical institute and trade association es-

tablished in 1921 to serve the structural steel design community and construction industry in the United States. Current market share for structural steel in the non-residential marketplace is 59%, based on square footage of construction starts. This September 24 marks the second annual day dedicated to the America structural steel industry. During the first ever SteelDay last fall, at more than 170 different locations across the nation, steel fabricators, mills, service centers, galvanizers, HSS producers, bender-rollers, and others opened their facilities, jobsites, and offices, offering free tours and inviting the AEC community and general public to see how the structural industry contributes to building America. It was a massive event that provided tremendous exposure for the structural steel industry. John P. Cross, PE, Vice President of American Institute of Steel Construction talked to TURKFAMERICA about the structural steel industry. Last year will forever be known for the collapse of the construction market. Could you telll us about the American structural steel industry’s expectations for 2010? American Institute of Steel Construction (AISC) only represents the structural steel segment of the steel market. The outlook for construction activity and therefore the demand for structural steel for 2010 is similar to the demand that was experienced in 2009. Clearly the construction industry in the US is bouncing along the bottom of the recession with no prospect for significant growth until 2011. We anticipate the volume of construction starts in the US in the non-residential sector to be down 2% to 5% compared to 2009 with a small increase (2% to 4%) in industrial construction. How has the financiall crisis affected the steel industry? Do you think the industry will recover? Obviously for the structural steel market the downturn in construction has reduced demand and lowered the utilization rates of domestic structural steel mills. Likewise, structural steel fabricators have faced a signi-

ficant downturn in orders and increased competition. But in the face of these challenges, both mills and fabricators remain viable and well positioned to supply domestic demand in the decades to come. What is the biggest obstacle the industry has to overcome in the near future? The largest obstacle facing the US structural steel market in the near future is a loosening of credit in the US for developers to again begin to invest in construction projects. Until funding becomes available, construction volumes will remain low, creating downward pressure on the structural steel demand. Turkey is the one of the leading steel producers and Turkish investors are seeking business opportunity in the United States. What would be your advice to them if they wish to invest or to export their products to o the the US? My advice would be to focus on and invest in your domestic marketplace and increase the demand for structural steel within Turkey. US market share for structural steel is near 60% of the construction market on a square footage basis. The significant opportunity that exists for the Turkish structural steel industry is not in the export of material, but rather driving demand by increasing your domestic market share. The most efficient manner of increasing market share is to engage structural steel professionals early in the design life of structures to influence and optimize the project for structural steel. What did the industry learn from the recession? We are part of a cyclical segment of the economy that goes through natural periods of growth and natural periods of contraction. Successful firms manage with a long term perspective that allows them to weather these cycles. What is the the structural steell industry’s share of the construction market and what does your organization do to increase it? Current market share for structural steel in the non-residential marketplace is 59%, based on square footage of construction starts. We employ a staff of regional engineers throughout the United States who work directly with owners, developers, architects and structural engineers promoting the benefits of structural steel. We support their efforts through the services of the AISC Steel Solutions Center, which provides both conceptual approaches for projects using structural steel as well as answers to technical questions relating to structural steel on a complementary basis. In addition we support the marketplace with current design specifications and tools for the use of structural steel. AISC is an almost 100-year-old organization. How do you see the industry's future? Will the strucctural steel industry become more important? Structural steel is a highly recycled product with a low environmental footprint that will meet the needs of construction on a sustainable basis for the foreseeable future. !

CONTACT AMERICAN INSTITUTE OF STEEL CONSTRUCTION One East Wacker Drive Suite 700 Chicago, IL 60601-1802 John P. Cross, PE, Vice President of American Institute of Steel Construction.

Phone : (312) 670-2400 Fax

: (312) 670-5403

www.aisc.org TurkofAmerica • 25


WORLD STEEL ASSOCIATION

“The Turk›sh Steel Industry Has Shown Outstand›ng Performance”

World Steel forecasts that global steel demand will return to a trend of growth in 2010 but this growth is expected to be moderate.

26 • TurkofAmerica


he World Steel Association forecasts that apparent steel use

Twill increase by 10.7% to 1,241 million metric tons (mmt) in

2010 after contracting by -6.7% in 2009. With these projections, world steel demand in 2010 will exceed the pre-crisis levels of 2007. In 2011, it is forecast that world steel demand will grow by 5.3% to reach a historical high of 1,306 mmt. The resilience of the emerging economies, especially China, has been the critical factor enabling the earlier than expected recovery of world steel demand. The World Steel Association represents approximately 180 steel producers (including 19 of the world's 20 largest steel companies), national and regional steel industry associations, and steel research institutes. World steel members produce around 85% of the world's steel. Turkey has also been an important player in the international steel trade. In 2009, Turkey’s finished and semi-finished steel products exports amounted to around 17.5 million tons (the 7th largest in the world). Nicholas Walters, Communications Director of the World Steel Association, talked to TURKOFAMERICA. Could you give us some idea of the industry outlook for 2010? Global steel demand in 2010 is forecast to grow by 9.2% to 1,206 mmt, which is a recovery to the level of 2008. World Steel forecasts that global steel demand will return to growth in 2010 but this is expected to be moderate. As before the financial crisis, the emerging economies, especially China, will be the critical factor in driving world steel demand in the near future. Apparent steel use reflects the deliveries of steel to the marketplace from the steel producers as well as from importers. This differs from real steel use, which takes into account steel delivered to or drawn from inventories. Is the financial crisis over for global steel industry? The global economy is on the road to recovery and so is the global steel industry. Global steel production has shown a steady increase over the last few months but not all major steel producing countries have yet reached pre-crisis levels. Although a positive growth in steel demand has been projected for 2010 and 2011, uncertainty still remains, in particular in Europe and North America. As steel demand growth increases in emerging countries, how will this shape the growth rate between BRIC countries and the rest of the world? Steel demand is closely linked to economic growth. Key drivers for steel demand are automotive, construction, transport and energy. There are large variations globally depending on the state of economic development of a country and its pattern of industrial production. Countries with large scope for economic growth would have growing steel demand which would help develop the steel industry. Emerging markets have been forecast to experience bigger economic growth than already developed nations like Germany, the US, Japan, etc.

Could you share your prediction of growth rate for the region in the next 10 years? World Steel does not issue a forecast on steel demand looking 10 years ahead. Global steel production has been growing for the last 50 years. In the 1950s, world steel production was about 200 mmt. In the last 10 years, the pace of growth has accelerated and in 2009, the figure stood at 1,220 million metric tons. The future growth in demand for steel will be driven mainly by the needs of the developing world. The steel industry must continue to grow by 3-5% worldwide and by 8-10% in China, India and Russia to satisfy these needs. What is the importance of the Turkish steel industry for the world steel industry? Turkey is now the world’s 17th biggest economy with a GDP per capita surpassing USD 12,000 (at purchasing power parity). Since 2002, the Turkish economy has experienced a very high level of growth that has come with a low and decreasing level of inflation. A long list of reforms, re-structuring and stability programs has been implemented as a response to the financial crises the country had experienced in the late nineties and in 2001. With its diversified economic base and stable banking system, Turkey is expected to be among the first to recover as credit market and global demand conditions stabilize in 2010. 2011-2012 growth rates may reach pre-crisis record levels of over 6%. However, the Turkish economy may also be faced with more negative conditions in 2010 if the global economic crisis, in particular the recent European debt crisis, leads to a continued decrease in the demand for Turkish exports. By the close of 2009, Turkey was the world’s 10th biggest steel producer with a total production of around 25 million ton, 2.2% of global steel production. The Turkish steel industry has shown outstanding performance and growth over the last 10 years and the industry continues to grow fast. Crude steel production capacity has grown from about 20 million ton in 2002 to around 35 million ton in 2009, while its production grew by more than 50% during the same period. How do you see Turkey’s position as an international steel trader? Turkey has also been an important player in the international steel trade. In 2009, Turkey’s finished and semi-finished steel products exports amounted to around 17.5 million ton (the 7th biggest in the world). The primary export markets for the Turkish steel industry are the European Union, MENA and Gulf countries. The industry is well positioned with its status as the bridge between Europe and the Middle East and hence is in prime position to take advantage of any growth going on in the Middle East and Northern Africa. One of the main opportunities is the ongoing rebuilding in Iraq. Turkey’s steel consumption has grown even faster than production since 2001. Turkey’s steel consumption per capita has more than doubled since 2001, from a poor 137 kg per year to over 300 kg in 2007. The consensus among the local experts is that Turkey has the potential to reach a per capita consumption of 600 kg per year. TurkofAmerica • 27


WORLD STEEL ASSOCIATION

Nicholas Walters, Communication s Director of the World Steel Association

2008 and 2009 have been very hard years for the steel industry worldwide. However, Turkey's recovery appears to have started in the third quarter of 2009 and is expected to be rapid and strong. Turkey’s major steel-using sectors are forecast to grow more than 10% both in 2010 and 2011. As a result, steel consumption in Turkey, which dropped by 9.5% in 2009, is forecast to recover strongly by 13.5% in 2010. A strong growth of 13% is forecast for 2011, which would enable Turkey to reach a record high. What are the major concerns for the world steel industry? The two major concerns for the global steel industry are climate change and raw materials. The first one is climate change. To address the issue, World Steel has established four building blocks for its climate change policy, which involves actions by the world steel industry and may have policy implications for governments. They are 1) actions to reduce the CO2 intensity of steel 2) sharing best practices within the industry, 3) research and development on new breakthrough technology and 4) use of steel and new steels to save energy in transport, power generation, buildings, machinery and appliances as well as mitigating activities to manage the impact of climate change. The second one is raw materials. The stability of the raw materials supply is a key issue for the steel industry. Iron ore and coking coal are essential materials for steelmaking and the purcha28 • TurkofAmerica

se of these two material amounts to more than a half of the overall steelmaking production cost. The recently imposed price increase by the iron ore suppliers could hinder the recovery of the global economy. World Steel supports free and fair trade in steel. Competition between steel companies promotes innovation and efficiency. It promotes growth in steel use and serves steel’s customers and society as a whole. World Steel has also supported the consolidation of steel businesses but not to the extent of endangering competition. Even the largest steel company in the world today accounts for less than 15% of total world steel production. !

ABOUT WORLD STEEL World Steel represents its member companies worldwide and acts as a forum for discussions and best practice. World Steel represents and speaks for the steel industry on issues which affect the industry. These include climate change, sustainability, technology, safety, and health. As the industry becomes more global, there are more issues out there that have to be treated globally. The World Steel Association represents approximately 180 steel producers (including 19 of the world's 20 largest steel companies), national and regional steel industry associations, and steel research institutes. World Steel members produce around 85% of the world's steel.



BORUSAN MANNESMANN

A 38 Year Old Turk›sh Brand ›n Amer›ca’s Steel P›pe Market orusan Mannesmann Boru (BMB) has been exporting

Bproducts to the US market since 1972. BMB is a firm

Borusan Mannesmann Boru (BMB) is a firm that has been exporting welded steel pipes from Turkey to the US market for the longest time. BMB is the first firm to export 24 m (80ft) long pipes to the US.

30 • TurkofAmerica

that has been exporting welded steel pipes from Turkey to the US market for the longest time. Their exporting started 38 years ago in small amounts and reached 200,000 tons in 2008. Borusan Mannesmann Boru is the first firm to export 24 m (80ft) long pipes to US. The Director of BMB’s Pipeline Projects, Ozgur Fidanoglu, answered TURKOFAMERICA’s questions: How long have you been exporting to the US market? What are the annual increase rates of your exp ports? Borusan Mannesmann Boru has been exporting products to the US market since 1972. So, we can say that it is a firm that has been exporting welded pipes to the US from Turkey for the longest time. In that sense, we believe that we led the sector. Their exporting started 38 years ago in small amounts and it reached 200,000 tons in 2008. Can you talk about the usage of the products you export and their significance for the US ma arket? The products we export may vary in time in accordance with the changes within the market. Our exports to the US market, which at first consisted of industrial and standard pipes, such as water pipes, fire extinguisher pipes, cable pipes, and well pipes, now include natural gas and petroleum transportation pipes in various sizes and quality, such as petroleum pipes, natural gas search pipes, and OCTG pipes for matching the API pipes which are used in production. Especially within the past few years, we have achieved a great deal in exporting large natural gas pipes and our exports of large pipes that are plated inside and outside have reached, just by itself, 150,000 tons within the past three years. We are the first and only Turkish firm

that has been successful in exporting large pipes from Turkey. The US market is known to be very competitive. In terms of competition, what are your advvantages in comparison to other companies? The American market is one of the most competitive markets we do business with. However, we can say that since we have been active in this market regularly for a long time, making our brand known to the newcomers, and working with the right networks, we do receive advantages along these lines. Due to our products’ quality and our ability to adapt quickly to the needs of the market, we have made ourselves a solid place in the market even though we primarily produce items that demand more know-how. The distance between Turkey and the US and the lack of knowledge about the US market are listed as the most significant obstacles to trade. What needs to be done in order for trade in your sector to be improved? The US market is a very challenging in terms of the requirements for entering it. The protectionist structure of the market, conservative behaviors of the clients when selecting producers and the reluctance of clients to change habits make it hard to enter this market. BMB’s completely transparent and public-oriented institutional structure means that we would always remain accountable for the quality of our products. Americans place great value on transparency and trust in their suppliers. Regardless of how successful you are as a firm with your sales, it is very important to prove your trustworthiness throughout the years and to show that you would stay alongside your customers in the bazaar no matter what


the conditions are. BMB has been exporting to the US market for 38 years and it has not left the market in any way, building long term and dependable relations with its customers. In order for trade to increase, we not only advance our products in accordance with the changing needs of the customers but also provide different solutions when the customers need them. Since we have the greatest range of products among the Turkish producers, we have flexibility when it comes down to it. We are aiming to be able to predict the needs of the market and produce accordingly. We have completed the export of 313 km of 42" and 36" large diameter spiral gas pipes in 2009 in USA. To do this we built a temporary factory in the US; we provided the customer with more than they expected by delivering the product before the deadline and in this way we benefited greatly in value. We became the first firm that was successful in exporting 24 m (80ft) pipes to the US market. All the other export firms produced their pipes in 18 m (60ft) sizes. So, we gave the customer a great advantage in manufacturing cost. As BMB, our goal in all markets is not only to be competitive in terms of costs but also to provide our customers solutions, services aside from production, and be part of the solution by taking on the risk along with the customer; and by doing these we increase our value and get a special place in the competition. When you can do this, the customers see you as their partners in solutions and sustainability in supplier-customer relations is achieved. What is the greatest obstacle in trading with the US? We can say that the greatest obstacle for doing free trade with US is the antidumping cases. The method of calculating the anti-dumping taxes in these cases can at times end up in a great amount of taxes and this impacts trade negatively. We believe that despite the anti-dumping tax regulations, the best way to increase trade with the US in the pipe sector is to invest in quality and diversify the products. Both the dynamics of the market and the changing conditions of the customers, with the impact of the economic crisis as well, alter a lot more rapidly. The firms which have a diverse selection of products and invest in quality are in the market longer and are able to create relationships with their customers that are based on trust. Has the ere been a reduction in your exports due to the economic crisis? The economic crisis that emerged during the last quarter of the year 2008 has created changing conditions in the US market. According to our calculations, the large pipes sector in the US decreased from 2 million tons to below 1.5 million tons; however, five local factories were built in the US while the demand was still high and created a better capacity. For this reason, although we have been exporting 150,000 tons of these products over the past 2 years, our exports of large pipes decreased in the aftermath of the crisis. However, in terms of commercial products, despite the rising stocks in the US after the crisis, as BMB, we increased our share in the market. What kind of structure do you have e in terms of your relations with the customers in US? Can you tell us what you do in order to mee et the demands and needs of the customers on time and to keep customer satisfaction levels high? When we are determining our sales through different channels, we also consult our most recent customers about the products. This both enable us to understand the expectations of the latest customers of the product and to learn the things we need to advance and to take precautions accordingly.

Ozgur Fidanoglu, the Director of BMB’s Pipeline Projects.

Also, in order to monitor our customers’ long-term projects, we are to open up an office in Houston, where we have many of our customers, and we are aiming to be closer to our customers through this office. In particular, at the end of the completion of the three natural gas projects, which we finished recently, we believe that we will be able to follow the new projects through our office. We will serve our customers closely and will have a chance to serve professional services to customer from pre-sales to after sales service. What are the working habits and trade related practices of the American firms that do or do not ma atch with those of Turkish businesses? Can you list us some differences that caught your attention? The difference between the two cultures and the way of doing business may be causing difficulties. Also, the metric system and the norms with regards to many products used in the USA being different from those in Turkey could be creating problems as well. The distance between the two countries also adds quite a value cost to the freights and lessens our competitiveness. And when we take into account the fact that it takes one ship to reach the east coast of America about one month, the distribution time frame is also extended. Especially after the crisis when the demand fell, there emerged a somewhat invisible pressure to ‘buy American’ products domestically. And this is a factor that poses a difficulty for sales. What three pieces of advice can you give to a firm that has never sold products to the US but wiishes to enter the market? I would recommend that firms that would like to enter the US market should develop a long-term strategy and find the right sales channels in accordance with this strategy; advance the quality of their products regardless of whether their customers are traders, distributors, or end-users; take precautions to help make their brand known; and focus on the customers primarily, rather than on tonnage. Investment doesn’t only happen by building a factory; investing in people and developing a long term investment strategy also accounts for a serious investment. The firms that desire to enter the US market need to be interested in making that kind of an investment and to search for resources. I wish success to all those Turkish firms who are on this long path.! TurkofAmerica • 31


ISTANBUL MINERAL EXPORTERS’ ASSOCIATION

Amer›can Consumers’ Cho›ce:

Natural Stones of Turkey

“The variety of offered products combined with inexpensive pricing gives even ordinary Americans affordable options to buy natural stones, although one might think such stones should be more expensive than other covering materials.”

Erdogan Akbulak, board Member of Istanbul Mineral Exporters' Association.

32 • TurkofAmerica


ccording to Business Monitor International forecasts, the mining

Aindustry in Turkey is expected to grow by 71.3% between 2009

and 2013. The industry is expected to reach a value of US $12.76 billion by 2013. Currently there are 20-25 mining companies from Canada, the U.S., the UK and Australia operating in Turkey. The experience that they bring and the relationships formed with local companies are in turn enhancing the mining industry and transforming Turkey into a notable mining nation. The US market reached up to $400 million in exports from Turkey, but dropped approximately 30% after the economic crisis. Mehmet Özer is the Chairman of the Board of Directors of Istanbul Mineral Exporters' Association since April 2010. Erdogan Akbulak, board members of Istanbul Mineral Exporters’ Association and Chairman of Silkar Madencilik San. ve Tic. A.fi., one of Turkey’s leading companies in natural stone industry serving with a variety of products including granite, marble, antiqued stones and mosaics, answered TURKOFAMERICA’s questions. The U.S. is the leading market in a list of 10 countries and imports 10 different mining prod ducts from Turkey. What is the primary reason for this? When you compare the export statistics of Turkey to the U.S., especially in the mining sector, it is apparent that almost more than 80% is natural stones; marbles and travertines respectively. The reason is that Turkey has ample reserves and a large production capacity for finished products of good quality. In past years, before the economic crisis, there was steady and remarkable growth in the U.S. market that enabled Turkish manufacturers to invest more in production by increasing their capacity and the variety of their offerings. In fact, Turkey owns a large portion of the world’s calcareous stone reserves, and with vertical integration, has contributed to a good quality/price ratio for finished products, especially in tile and slab formats. The variety of offered products combined with inexpensive pricing gives even ordinary Americans affordable options to buy natural stones, although one might think such stones should be more expensive than other covering materials. Many of these materials could also be available in home improvement centers. Therefore, the penetration of Turkish stones is increasing and American consumers are getting access to top quality products as the economies of scale applies. Why are Turkish stones less expensive tha an other countries’ products in the U.S. market? One of the reasons Turkish stones are less expensive than other countries’ products, such as those of Italy, Spain and Greece, is that there are hundreds of manufacturers in Turkey producing similar products who are all in direct competition with each other. Product affordability seems good for the end-users, but it’s also essential to combine affordability with product variety, design and innovative offerings to differentiate ourselves in the market from other competitors. This approach will drive and increase brand awareness of Turkish materials in the long run. What did you learn from the financial economic crisis? The U.S. market reached up to $400 million in exports from Turkey, but dropped approximately 30% after the economic crisis. Even given the economic recovery, it appears that exports will take several

years and beyond to reach the same figures; however, we believe that Turkey still can increase U.S. sales and will be able to introduce new materials into the market. The recession forced Turkey to enter new markets that resulted in an increased market share in the Far East. With China’s increasing demand for Turkish marbles and travertines, the Turkish stone industry was able to open hundreds of new quarries and increase the sale of raw materials to China, Taiwan, India and other countries. Obviously, this will contribute to introducing new Turkish processed stone materials into the U.S. market. In fact, the Turkish construction industry is very active in North Africa, the Gulf Area, Russia and the CIS countries, and became the second largest industry worldwide. During this recession, we also learned how to better meet the requirements of contractors for commercial projects, provided installation services for the ultimate satisfaction of the customer, and became their solution partner. What is your expectation for the mining industry in next few years? What could the industry do in the U.S. market to increase market share? As previously mentioned, Turkey must invest in affordability, design and innovation to drive awareness and strengthen the Turkish brands to compete with other countries. As natural stone is a green product itself, we believe there are increasing opportunities and potential for our materials to reach farther in both the U.S. market and worldwide through large U.S. architectural firms. These large firms specify materials for massive projects with environmental sensitivity in mind. It should be our responsibility to keep them informed about the development and progress of the Turkish stone industry combined with building confidence in our abilities among the developers, architects and manufacturers. Thus, Turkey can obtain a large portion of orders for stone materials in prestigious and large commercial projects that would result in the Turkish stone industry increasing its market share and becoming a world leader. !

MINERAL EXPORTS’ STATISTICS Years

Minerals' Exports ($)

Change (%)

Share of Metal Exports in Turkey's Total Exports (%)

1992

335.400.000

-

1993

301.600.000

-10.07

2.28 1.96

1994

376.100.000

24.70

2.07

1995

563.000.000

49.69

2.60

1996

541.600.000

-3.80

2.28

1997

596.729.725

10.17

2.17

1998

531.651.983

-10.91

1.97

1999

577.464.276

8.74

2.17

2000

568.945.463

-1.45

2.05

2001

574.882.846

0.89

1.83

2002

684,659,766

19.26

1.95

2003

847,249,000

23.96

1.81

2004

1.207.714.995

42.54

2.00

2005

1.525.279.014

26.29

2.06

2006

2.080.719.636

36.43

2.43

2007

2.715.484.019

30.52

2.56

2008

3.241.019.283

19.98

2.55

2009

2.445.365.830

-24.55

2.47 TurkofAmerica • 33


THE NATIONAL MINING ASSOCIATION

gy costs low, make US industries competitive and provide US households with affordable electricity. 2009 was the safest year ever for American miners. What ety? How much money do you do to improve miners’ safe has been spent on it? What are the fatality records in 2010? We had two consecutive record-breaking safety years in succession – ’08 and then ’09. A tragic accident in April of this year will clearly rule a safety record out for 2010. We have spent in the past two years about $1 billion complying with new safety requirements and technologies mandated in federal safety laws passed by Congress in June 2006.

Luke Popovich, Vice President of External Communications of the National Mining Association.

Amer›can M›ners Spend $1 b›ll›on comply›ng w›th New Safety Requ›rements The American coal industry produces 1.17 billion short tons annually and directly employs 135,000 people. The U.S. has the largest coal reserves of any country (28%), which is largely why coal is used to generate about 49% of all U.S. electricity.

34 • TurkofAmerica

Coal mining was much more important in past centuries. What should be done to transform the industry in the 21st Centtury in the U.S.? It isn’t much less important today given the roughly half of US electricity that coal generates. But we must develop carbon capture and storage technology and make it commercially available to power plants in order to meet or exceed environmental standards. Clean coal technologies will continue to be vital for the industry to prosper and retain its share of the electricity market. We expect to also supplement transportation fuels based on petroleum with coal-derived fuels, but the capital investment for this will be an obstacle although the environmental profile of coal-to-liquid fuels is superior to petrol-based fuels.

M

ining in the U.S. takes place in all 50 states, from gold mines in Alaska to sand and gravel mines in Florida. Half of U.S. electricity comes from coal. The U.S. has a 240year reserve of coal at our present rate of consumption, an energy resource that is both domestic and affordable. Luke Popovich, Vice President of External Communications of the National Mining Association, talked about the industry’s current and future role in the U.S. economy.

Coal-based generation, which already supplies half of America's electricity, is essential to maintaining reliable and affordable electricity. Can the mining industry continue to prosper in an increasingly competitive environment? Yes, with public and private investments in clean coal technology, we believe we can continue to use our price advantage and meet increasingly higher environmental standards.

Could you give us some current statistics about the American mining industry? Our coal industry produces 1.17 billion short tons annually and directly employs 135,000 people. Coal pays average salaries of between $68-72K annually, excluding benefits – almost two times the average wage paid in the states in which we operate. We have the largest coal reserves of any country (28%), which is largely why coal generates about 49% of total U.S. electricity. About 97% of coal mined here is for electricity generation; most of the rest is metallurgical coal used in steel production. Our exports have grown steadily for several years, with the exception of last year, owing to the recession, but exports still comprise only about 15% of production.

g industry in What could be the importance of the mining the next 10 years? It’s arguably our largest domestic fuel, so sustaining its development and production will enable the U.S. to become less reliant on imported fuels.

How important is the mining industry for economic recovery? How important is the mining industry for the U.S. ecconomy? Coal is the most affordable fuel for baseload power generation in this country, so coal is vitally important to keep ener-

Can you give some information about clean coal technologies? These are explained on our NMA website and include gasification technologies, scrubbers for power plants and of course carbon capture technologies that are being tested now. Your readers can visit at www.nma.org.!

CONTACT THE NATIONAL MINING ASSOCIATION 101 Constitution Ave. NW Suite 500 East Washington, D.C. 20001 Phone: (202) 463-2600 Fax: (202) 463-2666 www.nma.org


A NON-PROFIT ORGANIZATION

ile Partners for Humanity (TPFH) is a partnership between American tile industry and Habitat for Humanity International, a nonprofit organization working to eliminate substandard housing around the world. Since 2003, Alpharetta, GA based TPFH has donated more than $20 million in tile and related materials to Habitat for Humanity and other nonprofit organizations.

T

What exactly does TPFH do? The mission of TPFH is to enable donations of tile, tile-related materials, and labor to non-profit organizations such as Habitat for Humanity, to strengthen communities, and improve lives. Lynn Labuda, executive director at Tile Partners for Humanity, Inc., answered TURKOFAMERICA’s questions. Can you tell us about your organization's accomplishments? What is your mission? In 2003, TPFH made a 5-year pledge to Habitat for Humanity on behalf of the tile industry to donate more than $1.25 million of tile, tile materials and labor to HFHI and more than doubled that goal. In 2008, TPFH made a new 5-year pledge to Habitat for Humanity of $2.5 million in donations and we are proud to announce that we will meet and exceed this pledge in July, 2010. Since 2003, TPFH has donated more than $20 million in tile and related materials to Habitat for Humanity and other nonprofit organizations. The mission of TPFH is to enable donations of tile, tilerelated materials, and labor to non-profit organizations such as Habitat for Humanity to strengthen communities and improve lives. pports your organization? How many tile busiWho sup nesses work with your organization? TPFH is supported by the tile industry and accepts funding and donations of tile, tile related materials, labor and installation training as well as other constructionrelated materials. We are guided by six industry organizations (The Tile Doctor, NTCA, TCNA, CTDA, CTEF, and The Tile Heritage Foundation) whose representatives sit on the TPFH Board of Directors, as well as representatives from MAPEI, Pan American Ceramics, Habitat for Humanity International and Mountain Resource Center. TPFH partners with manufacturers, distributors, independent stores and contractors throughout the US. These industry partners provide tile, setting materials, tools, floor preparation materials, cleaners and sealers, and labor and installation training to Habitat affiliates and other nonprofit organizations interested in building with tile. nd needy people to help? How do you fin We have worked very closely with Habitat for Humanity over the past 8 years to assist affiliates in building thousands of homes. TPFH also partners with other worthy nonprofit organizations that request donations of tile materials.

Lynn Labuda, executive director at Tile Partners for Humanity.

T›les for Human›ty Can you give us an idea of the amount of your donations? Approximately $20 million in materials since 2003. Can international companies join your organization (for example, could a Turkish company from Turkey support your organization?) Today, TPFH operates only in the US, but we would love to partners with any Turkish companies that have a presence in the US and are willing to donate materials to help us achieve our mission. Would you like to add anything? Tile Partners for Humanity was formed in December, 2002 when Curt Rapp of The Tile Doctor and Gray LaFortune of the Ceramic Tile Institute of America realized that the industry’s excess tile disposed of in landfills could be put to much better use. They worked with Habitat for Humanity International (HFHI) to create the partnership which serves to utilize this excess inventory, raise awareness of HFHI within the industry and to solicit donations of materials, labor and other support for HFHI.!

In 2008, Tile Partners for Humanity (TPFH) made a new 5-year pledge to Habitat for Humanity of $2.5 milllion in donations. TPFH will meet and exceed this pledge in July, 2010. Since 2003, TPFH has donated more than $20 million in tile and related materials. TurkofAmerica • 35


HOW DID WE DEAL WITH THE CRISIS?

“The Cr›s›s Helped Us Recogn›ze Our Weaknesses and Strengths” president, says they did not feel the crisis until July of 2009 and from that point their sales performance dropped to 30% by the end of the year. “We started returning to the black at the end of March 2010 and my expectation is our business will steadily increase until the end of this year,” he says. AKDO deals directly with the trade and sells natural stone, glass, porcelain and mosaic to dealers and to the commercial industry. AKDO’s sister company, Silkar, owns and has exclusive rights to numerous quarries, is also looking to add new quarries to expand the supply of raw materials. AKDO is focused on expanding its commercial business within the US while utilizing the infrastructure and experience of Silkar. Hakki Akbulak answered TURKOFAMERICA’s questions. Do you think economic crisis is over? Or will it be over soon? It is not easy to make a prediction when the economic crisis will be over but I think it is helpful to look at the facts to provide the best estimate. There are serious hurdles on our way to recovery, the high unemployment, the European debt and the risk of double recession just to mention the significant ones. If we look at the US housing market, which is a huge part of the US economy, there are similar situations, including huge increases on foreclosures, difficulties in securing mortgage loans and the unwillingness of banks to finance new projects. On a positive note, the free fall is over and it appears the start to a slow recovery has begun. I personally do not expect any dramatic changes until end of 2011.

Hakki Akbulak, AKDO Founder & President

“We started returning to the black at the end of March 2010 and my expectation is our business will steadily increase until the end of this year.” 36 • TurkofAmerica

a leading industry importer, distributor

AKDOand designer of luxury stone products, has been developing fashion forward mosaics for over 20 years. Last financial crisis was not the first turmoil that they faced in past twenty years. Each crisis creates new opportunities for some businesses who want to take risks.

AKDO experienced two positive things during the crisis; they opened a manufacturing facility in in China and a distribution center in Germany. Hakki Akbulak, Bridgeport, CT based company’s

How is your companyy's performance in the first three months of 2010 compare to the same period last year? What is your expectation for the end of 2010? Actually, we did not feel the crisis until July of 2009 and from that point our sales performance dropped 30% by the end of the year. We started returning to the black at the end of March 2010 and my expectation is our business will steadily increase until the end of this year. What did you learn from this economic crisis? I think this was a wake up call for all of us. It helped us recognize our weaknesses and strengths in diverse areas. It forced us to make swift and decisive changes in areas where we did not have the right concepts, processes and structure. It was a good opportunity for us to learn that you need to change your mind set in order to survive if the surrounding environment


changes. Business as usual has changed and we had to adapt and adjust to what our customers need from us to also survive. What marketing or selling philosophies did you use in your company? We concentrated our marketing efforts on the top 15-20% of our clients and implemented the necessary cost cutting measures. Targeting our top clients allowed us to focus on those customers who are more inline with supporting our brand and values. For these clients, price is not the only factor to close a deal and we believe that focusing on the right customer who believes in the AKDO product quality offering contributed to increasing their dedication to our brand. We also launched customer loyalty marketing programs with these top clients that provided them with the opportunity to secure marketing tools for their showrooms based on set credit terms combined with a challenge to achieve sales goal by a set deadline. This was a win-win situation for both parties and is contributing to increasing our merchandising space in showrooms and guaranteed sales. What are the 3 toughest challlenges facing the company after this crisis era? Obviously, we want to see our sales figures increase but not just by sacrificing our margins. We still believe there is room to expand our business not only in the US but also abroad. We did two good things during the crisis; we opened up a manufacturing facility in China and a distribution center in Germany. We have to make sure in the upcoming months and years that all these entities, including our manufacturing facilities and quarries in Turkey are managed well. Turkey has several economic crises in the past 20 0 years and you have a sister company, Silkar, in Turkey. Operating in two countries within this glob bal economic crisis, did you need to develop different strategies? How did you manage the crisis in Turkey? I think as a short answer “globalizationâ€? would be the common denominator to these questions. Especially for our sister company Silkar, it was essential to reach out to the projects in Russia, CIS countries and when these markets were experiencing some economical problems, we concentrated our efforts on the projects in North Africa, Gulf countries and Far East. This approach helped us to survive the economical difficult times. Besides, the Turkish market was not completely dead so we were involved in some projects there too. What are the current goals of your sister company, Silkar? Do they have new projects or pla ans to invest? We have a defined set of goals that we outlined in the framework of our Turquality efforts, which we qualified for as the only company dealing with natural stone in all of Turkey. As I mentioned above, we have to implement efficient operations in all markets that we are already in and also plan properly when penetrating new markets. Silkar is concentrating on building their retail oriented business by networking and utilizing the AKDO brand mostly in European countries. Additionally, enhancing their efforts to intensify our relationship with the existing strategic partners combined with finding new partners in alternate markets. Silkar is also looking to add new quarries to expand the supply of raw materials. AKDO is focused on expanding our commercial business within the US while utilizing the infrastructure and experience of Silkar. This expansion is in support of our retail business and our approach in selecting the right clients by offering them better services and products in a less saturated market.! TurkofAmerica • 37


ADAMER

Izm›r’s Export K›ng of Natural Stone A new company should pay attention to is PAYING ATTENTION, because no one will forgive an error at the beginning of a business relationship when there are so many professional companies with zero errors around.

38 • TurkofAmerica

damer, an Izmir-based natural stone company,

Ais one of Turkey’s biggest exporters to the U.S.

market in the natural stone industry. They export approximately 123-130 containers of natural stone products to the U.S. market every month. Vedat Zor, CEO of Adamer, talked about his U.S. strategy and achievements. How long have you exported to the U.S.? What was the volume of your first export and what is it right now? We have been selling for seven years to the US market and we started with 4-5 containers monthly with a payment risk, due to that fact that we sold open accounts. Nobody wanted to buy material with any payment guarantee. They didn’t want to pay without seeing the material. Now we are selling approximately 125-130 containers monthly only to the US. What was the major problem at the beginning and how did you get over it? The biggest problem was a lack of trust in Turkish suppliers. We developed the trust of our customers with our reasonable prices, quality service, and ontime delivery.

What are the important rules for exporters in the U.S. market, which is very competitive? Actually the one and only answer that is that the key is Reliability, Reliability, and Reliability. If you can give this energy to your clients it means you have made the biggest step to stay safe in the sector. After that comes of course meeting the exact requirements of your clients, emphasizing that you are a logical, organized, and professional company. What is the imporrtance of your product which you sell to the U.S.? When you make comparisons with your competitors, what are the differences between your products? Our biggest advantage in this sector is giving the best service and the best high end materials for the best prices. Providing much material at one shot is also one of the reasons that makes us come into prominence. The materials that we send serve all kind of people in the U.S. We do not aim to reach only a specific class; our purpose is to introduce natural stone to everyone, and show that natural stone doesn’t always mean luxury. What should be done to increase trade volume between the U.S. and Turkey?


First of all, we have to wake up and really see that we have a treasure in our hands because only after we become aware of this fact we can make others aware. The marketing of a product that you really believe in will be always much more successful. And our country is a spring of natural stones. After this is said, we need people in charge of our export business who speak the language and know the customs of the country, who are up to date as to the requirements and credit standing of every buyer in their territories and who are in constant communication with all their clients. People who are ready at all times to take advantage of market fluctuations to secure new business and who are able to give accurate information, who can sell goods on merit without cutting prices, who can win and hold the confidence of their trade and who will never lose a customer once gained. After these attributes are established, there will be no reason not to increase our volumes with the expected prices

kish materials, and this isn’t helping anybody, not even the vendors in Turkey. They are making “Turkish materials” synonymous with “cheap materials.” What are your future plans for the U.S. market? Our aim is to increase trade by expanding market access and reducing costs. Of course we want to improve and strengthen our relations with our present customers, make new and strong agreements with new clients and to increase our variety of materials. What three pieces of advice would you give to a new company that wants to extend its business to U.S. market? The first thing that a new company should pay attention to is PAYING ATTENTION, because no one will forgive an error at the beginning of a business relationship when there are so many professional companies with zero errors around. So, double checking can be life-saving.

What is your company’s annua al growth rate? How many employees do you have? Also could you give us some information about your re evenue? We have 45 people and due to the economical crises we did not increase our capacity. We focused more on keeping it as stable as in previous years. We are the only exporting company with 18 billion dollars in sales yearly.

Secondly, I can say that new traders often get so caught up in the excitement and anticipation of trading that they let common sense go on holiday and trade with money they have no business putting at risk. Any money you put in to the markets must be risk capital, money you can afford to lose and not impact your basic financial situation. So be careful with which money you take risks

What would you like to say about the Turkish companies competing with each other in the U.S. market? I can only say, very briefly, that they’re killing the market for Tur-

Lastly, you will not be a successful trader if you do not have a system. They come in all different shapes and styles, but if you don’t have a system you cannot be organized.!

Vedat Zor, CEO of Adamer.

TurkofAmerica • 39


ISTANBUL PRECIOUS MINERALS AND JEWELLERY EXPORTERS’ ASSOCIATION

Turk›sh Jewelry Sector Wants US Custom Taxed To Be L›fted In the year 2009, the country that showed the greatest demand for Turkish jewelry was the United Arab Emirates. Last year, gold jewelry exports to this country reached a value of $170.5 million. The jewelry exports to the US were worth $114.2 million and to Germany $71.2 million.

hile Turkey is among the five greatest markets

Win the gold jewelry sector along with India and

USA, it is also competing with Italy in the production field. According to a report by the Exports Promotion Center of Turkey, although Turkey has a goldsmithing capacity of 400 tons annually it only produces 250-300 tons of gold jewelry. Turkey has a place among the first three leading gold jewelry producers in the world, with India and US being the other two.

40 • TurkofAmerica

In the year 2009, the country that showed the greatest demand for Turkish jewelry was the United Arab Emirates. Last year, gold jewelry exports to this country reached a value of $170.5 million. The jewelry exports to the US were worth $114.2 million and to Germany $71.2 million. As indicated in the same report, Turkey’s exports were worth $257.1 million in 1999; $352.5 million in


2000; $1.1 billion in 2005; and $1.6 billion in 2008. Due to the global crisis last year, Turkey’s exports of gold jewelry amounted to $1.0 billion.

two separate jewelry fair organizations in Istanbul. The Turkish jewelry sector should become aware of the importance of brand accreditation efforts within the world market and should continue its work more actively.

Turkey, with its exports valued at $1.5 billion in the precious jewelry sector in 2008, was in 11th place. As Turkey has one of the greatest production sectors, this sector employs 250,000 people and consists of nearly 6000 producers and 35,000 jewelers.

What are the advantages in terms of growing in the North America market? In entering this market, what is the biggest disadvantage aside from the customs tax?

Since the exports to the US under the Gold Jewelry and Materials category were removed from the Generalized Preference System and made subject to customs taxes, there was a 45 percent decrease in exports in 2008. “In 2009, the exports of USA decreased %30”

Ismet Naci Kurtulan: There is no disadvantage except for the customs tax. And there is no advantage either. The USA is the greatest importer in the sector of manufactured precious metal and jewelry. The biggest disadvantage is the special consumption tax that is applied to precious stones in Turkey.

TURKOFAMERICA asked Ismet Naci Kurtulan, the owner of Kurtulan Jewlery and a Board Member of the Istanbul Precious Minerals and Jewelry Exporters, Ilyas Gencoglu, the owner of Mioro, and Alen Bag, the owner of Bag Jewelry, about the expectations of Turkish producers from the US market.

Ilyas Gencoglu: The advantage in the American market is that the jewelry sector knows this market well and there are established partnerships. In the past, we used to have the advantage with cheap labor; however, since the alternative markets, such as those in China, India, Indonesia, and Malaysia, began production we no longer have that advantage.

Is there another strategy that is being considered to deal with the products exported to the US that have been in decline? Ismet Naci Kurtulan: As long as the US customs tax is in place, this problem will persist. I don’t think there’s much to do about it. Ilyas Gencoglu: Gold jewelry exports to the US are carried out under six categories. One of these categories has been removed from the Generalized Preference System due to exceeding the limit. This situation also influenced the 45 percent decrease in exports, though its actual share in the market does not amount to this ratio. The global crisis and the great increase in the prices of gold are the other two reasons for such a decrease. Alen n Bag: Not only the customs tax but also the increase of gold prices in record amounts affected the export level negatively. Minimizing the usage of gold products and considering silver and other precious metals as alternatives could be a strategy. What needs to be done in order to utilize the experiences of the sector in the North American market with an aim towards increasing exports in the future? Ismet Naci Kurtulan: If we do not take into account the customs tax, the problem is rather more about the shrinking of the US market. Ilyas Gencoglu: The North American market maintains its place as one of the most important markets of the world. Even though there has been a shrinkage in this market, it still remains important. For this reason, our sector must continue its activities in this market and try to gain back the share it has lost. The North American market has to be understood well, and the gold jewelry and decoration goods have to be produced according to customer preferences and purchasing power. This should be done by sales representatives that know the market well. Alen Bag: The efforts to lift the customs tax should continue. There has to be a solution for eliminating the negative effects on the

Ismet Kocak, Chairman of the Board of Directors of Istanbul Precious Minerals & Jewellery Exporters’ Association

TurkofAmerica • 41


ISTANBUL PRECIOUS MINERALS AND JEWELLERY EXPORTERS’ ASSOCIATION

billion in ten years. The markets of the developed countries are shrinking for our sector. The search for alternative markets for our sector continues. The ties with the markets of the North and Central African countries, the Eastern European countries and the Balkan countries are among the markets that should be advanced. Alen Bag: As it is the case for all sectors, countries where the people have a greater purchasing capacity and an eye for quality, such as China, India and Brazil, are the targeted markets. What are your expections from the US market?

Alen Bag: Turkey’s geographic location and its cultural heritage will affect sales and marketing efforts positively. This advantage should be utilized better. History and art should be the main theme of Turkish brands and our products should be introduced aside from their industrial identities. For example, the theme of Istanbul being the European Capital of Culture 2010 could have been used in our sales and marketing activities in North American markets. Today in New York, which is the heart of the gold sector, there are many businessmen, sales representatives, experts, and masters that have been to Istanbul’s Grand Bazaar. How could this potential influence an acceleration in trade volume? Is your sector using such networks in the US sufficiently? Ismet Naci Kurtulan: Those people must certainly be people that we feel a connection with, enjoy trading with and that have great potential. These networks could not only be used but also be advanced. Ilyas Gencoglu: Many of our Turkish colleagues continue their occupations in the US. Our ties with them have been utilized in the past and today. This market is very large and institutional firms are very strong. So, these networks alone are not enough to grow the trade volume. Alen Bag: No, they are not utilized. And such people do not only reside in New York but also in Los Angeles. These experts could be utilized in production design efforts. Despite the potential of the sector and the presence of many experienced firms, exports decreased below the $1 billion line in 2009 due to the economic crisis. What are the goals set for the coming 10 years? Which countries are considered to be developing markets? Ismet Naci Kurtulan: It is very difficult the foresee ten years in the future because our export level depends greatly on the prices of precious metals. The UAE, Russia, the Turkic countries and China are among the countries that will have greater importance for us. Ilyas Ge encoglu: We can say that exports hit rock bottom in the year 2009. We are expecting exports to increase 10% this year. So long that the prices of gold remain stable and fall a little, and the impacts of the crisis lessen, exports would reach the value of $3 42 • TurkofAmerica

Ismet Naci Kurtulan: As of the third quarter of 2010, I am expecting significant increases in our trade. Ilyas Gencoglu: The US market should be continuously given importance and there should be efforts to ensure its sustainability; it is a market with great purchasing power. We are aiming to account for 20% of the jewelry sector’s exports to the US market. Alen Bag: As morale in the markets rises, there will be more positive changes. However, since the jewelry sector is in the luxury consumption category, our sector would feel such positivity the last. What is the characteristic that would give the Turkish firms primacy in the US market? Ismet Naci Kurtulan: Our speedy and affordable production. Ilyas Gencoglu:: The most important characteristic of the Turkish jewelry sector is its ability to produce quality items, provide fast model developing capacity, and respond to the customer demands flexibly. Lately, arts and technology production methods have been paralled and as a result we have begun to produce unique products. Alen Bag: Since the firms’ owners mostly come from the production field, they would be able to reflect the changes of the market in production in a positive way. However, the personnel in the sales and production units have to work collaboratively; otherwise, there could be negative consequences. Is there anything you would like to add? Ismet Naci Kurtulan: Until about two or three years ago, North America was already a good market. I think it will regain its importance towards the end of 2010. Ilyas Gencoglu: The jewelry sector is a business field that requires innovation and dynamism. The entrepreneurial structure of our sector’s members has the strength to allow transformation. The obstacles in front of the sector should be lifted through the establishment of necessary legal steps and regulations. The jewelry sector is among the last sectors that are recognized by the industry and trade organizations. However, it has a potential to grow. It should be given importance by the state and it should be given a chance. Alen Bag: Thank you.!



JEWELERS OF AMERICA

“The Best Way to Understand the U.S. Market Is to Stay Informed” ccording to the Department of Commerce, the

Abulk of jewelry sales occur during the holiday

season, November and December, and account for about 32% of annual sales. Other key periods are early winter for Valentine’s Day and the spring when sales are boosted by Mother’s Day and weddings.

“Suppliers in Turkey who can help U.S. retailers to meet these market challenges and changes will have the greatest success. I would strongly encourage foreign companies who want to enter the jewelry industry here to do their homework.”

44 • TurkofAmerica

Robert Headley, Chief Operating Officer of Jewelers of America, says suppliers in Turkey who can help U.S. retailers to meet market challenges and changes will have the greatest success. “I would strongly encourage foreign companies who want to enter the jewelry industry here to do their homework. The best way to understand the U.S. market is to stay informed,” he added. Headley answered TURKOFAMERICA’s questions. What does the American jewelry industry expect in 2010 in terms of production, sales, employmen nt, and export-import? In terms of sales expectations, business has been steadily improving so far this year. In fact, IDEX Online Research analyst Ken Gassman has reported that sales were up nearly 8% for the first fiscal quarter of 2010, and they are tracking right now to reach total sales of around $63 billion for the year (up from $59 billion in 2009). Based on government forecasts, that number has continued to improve. What effect has the financial crisis had on the jewelry industry? Has the industry recovered yet? Like all industries, the jewelry business is not immune to the impact of economic cycles. But the underlining factor is that jewelry remains timeless and a gift of choice in celebrating milestone events. Despite the downturn, the long-term outlook for jewelry demand in the U.S. (and elsewhere) is positive.

Robert Headley, Chief Operating Officer of Jewelers of America

For example, bridal demand—which has remained strong—is rising sharply and will continue to do so. In the short-term, we’ve already seen an improvement from the holiday season of 2008. Specialty jewelers’ sales in the holiday season of 2009 were up 12.2% and the market has seen continuous improvement over the first half of 2010. Turkey is one of the most important producers in the jewelry industry in the world. What would be your suggestion to companies which want to expand their business to the U.S. market? What are the most important factors necessary to be successful in the market as a foreig gn company? A key factor to success in the U.S. market (which represents about half of the $140 billion worldwide jewelry and watch market) is researching and understanding the demographics and market influencers and how they are evolving. In looking at the U.S. market, some important considerations are when and why people buy jewelry, as well as the type of jewelry retailer. According to the Department of Commerce, the bulk of jewelry sales are during the holiday season (November and December, which account for about 32% of annual sales). Other key periods are early winter for Valentine’s Day and the spring when sales are boosted by Mother’s Day and weddings. In terms of where people buy jewelry in the U.S., specialty jewelers— those retailers whose main business is jewelry sales—account for about 48% of the market. The rest of the market consists of discounters (like WalMart), traditional department stores, mass merchants, online retailers and other outlets. The key drivers of jewelry demand in the U.S. are bridal (which includes engagement rings and wed-


ding jewelry), calendar events (like Christmas and Valentine’s Day) and life cycle events (such as birthdays, anniversaries and graduations). There are also a number of key trends impacting the jewelry business. These include consolidation, the growth of online sales, generational spending (shifting from older to younger consumers) and other demographic shifts. For example, while the downturn has stalled the trend somewhat, the rise of female purchasing power is just one demographic trend that will have a long-term impact on the U.S. market. There’s also the impact of technology and the Internet. Given these changes, jewelers in the U.S. are working harder than ever before to connect with customers in innovative ways—like social media—and are offering more choice and selection (from more affordable pieces to more customization). Younger consumers, in particular, want their jewelry to be unique and they’re more concerned about issues related to the sourcing of their products—they want pieces that are unique and beautiful and they want to feel good about their purchases.

ROBERT HEADLEY As COO, Robert Headley serves as Jewelers of America’s internal leader, reporting to President and CEO Matthew A. Runci. With Runci, he is responsible for developing Jewelers of America’s overall vision. Headley joined the association in February 2009, with the directive to integrate the association’s strategic plan with ongoing operations. Headley currently serves as co-chair of the Responsible Jewelry Council’s Standards Committee. He also represents Jewelers of America on the Boards of the Jewelers Vigilance Committee and the Manufacturing Jewelers and Suppliers of America. Headley worked for 20 years at Tiffany & Co., where he oversaw the brand’s revered, and stringent, quality control standards. There, he served as Vice President of Technical Services and directed quality assurance and manufacturing administration. Prior to joining Tiffany & Co., Headley spent eight years at Avon

Suppliers in Turkey who can help U.S. retailers to meet these market challenges and changes will have the greatest success. I would strongly encourage foreign companies who want to enter the jewelry industry here to do their homework. The best way to understand the U.S. market is to stay informed.

products, supervising efficient systems for ingredient manufacturing, packaging and corporate quality assurance. He is a former naval officer.

What are the biggest obstacles for the jewelry industry in near future? Some of the factors influencing the industry include the rise of technology and the internet, the need for more flexibility in terms of product offering (both in terms of providing unique and beautiful pieces and offering a range of prices), and the need for more accountability and transparency. While there are challenges, jewelers who embrace change will succeed. In fact, the latest research indicates that the market has stabilized and those who have made it through the downturn are the strongest and will continue to thrive and survive. How do you see the industry's future in the U.S. market? According to research compiled by Ken Gassman, the U.S. jewelry industry is expected to grow 4 to 5% annually. Could you give us some information about the association? Who can be a member, how many members does it have, the benefits of membership, etc. Jewelers of America is the national trade association for businesses and organizations serving the American fine jewelry retail marketplace. The association’s primary purpose is to improve consumer confidence in the jewelry industry. JA represents business interests of jewelry retailers and suppliers in the U.S. and our members must uphold high social, environmental and ethical business practices within our Code of Professional Practices (http://www.jewelers.org/about/j_whatwestandfor/codeofpractices.php), which they sign when they become a member or renew their membership annually. In addition to our leadership role on issues and government affairs, JA provides access to education, scholarships and certification and we offer business-enhancing and money-saving perks. You can learn more by visiting our website, www.jewelers.org! TurkofAmerica • 45


ISTANBUL CHEMICALS AND CHEMICAL PRODUCTS EXPORTERS’ ASSOCIATION

How W›ll the UN’s Iran Sanct›ons Effect The Turk›sh Chem›cal Industry?

Murat Akyuz, Chairman of the Board of Directors of Istanbul Chemicals and Chemical Products Exporters’ Association

n the last five years, Turkey's chemical industry

Iexports have increased by an average annual rate Turkey’s exports to the USA, Canada and Mexico in the chemical sector in the first 5 months has already exceeded the amount of 120 million dollars.

46 • TurkofAmerica

of 10%. These exports make up 10% of Turkey’s total exports . The industry exported 13.6 billion in 2008 and this decreased by 29% in 2009, reaching 9.6 billion dollars. On the other hand, Turkey's chemical industry imports totalled $20 billion in 2009, falling by 21 percent when compared the previous year. Turkey’s strong chemical industry touts soda ash, chrome chemicals and boron chemicals as some of its main products. Murat Akyuz, Chairman of the Board of Management of Istanbul Chemical Substances and Products Exporters’ Association, talked to TURKOFAMERICA about the industry’s current situation and future expectations. It’s notable that the Turkish Chemical Sector had a decrease of 29% in exports for 2009. What kind of export performance are you expecting for the end of 2010? The global crisis has also effected our companies in

a negative way, as it did in many sectors. Positive indications have started to be seen as of the second half of 2009 in the chemical sector, which had lost blood rapidly due to the crisis. When our exports are studied on a month-by-month basis, it stands out that our exports to countries, which are located close to us geographically, and in Africa, has increased. As for the last month of 2009, almost a chemical explosion has taken place. As a result of the activities of finding new markets, the exports of the sector has increased by 55.49% in terms of value and by 36.22% in terms of volume when compared with that of December of 2008.


When the exports during 2008 are compared with 2009 numbers, it is seen that there is a decrease of 22.23% in terms of volume and 29.12% in terms of value. While chemical exports valuing 13,610 billion dollars were made during 2008, this fell to 9,646 billion dollars during 2009. As for 2010, we are moving forward towards our target of 12 billion dollars by the end of year and with 1 billion dollars for each month with firm steps. When the latest statistics are studied, gun powder, explosive substances and their derivatives lead the product groups, where the sector exports to the USA the most. (829,000 dollars for the first three

months of the year) What are the product groups that have the most export potential to the USA markett for the sector, which has its activities in a very wide range of products, from pharmaceuticals to fertilizers, from artificial flowers to rubber? The exports of the chemical sector to the USA is at the level of 105 million dollars for the first five-month period of 2010. This means as an increase of 36% when compared to last year. Basic chemicals, that is organic and inorganic chemical groups. constitute 35 million dollars of this amount. The exports have been 22 million dollars for the rubber group and 15 million dollars for the plastic group. The product group, which you have mentioned, is the group that has achieved the largest export increment with an increase of 315%. In addition, the export of soaps and cosmetic products has reached a numTurkofAmerica • 47


ISTANBUL CHEMICALS AND CHEMICAL PRODUCTS EXPORTERS’ ASSOCIATION

ber that exceeds 5 million dollars during the first five month period of 2010. Pharmaceutical products, on the other hand, which is another group, has achieved an export value of around 2 million dollars with a increase of 70%. Iran is one of the countries that the chemical sector exports to. How would the sanctions that the e USA is trying to impose on Iran through the United Nations effect your sector? The exports we have achieved in the chemical sector to Iran during the first 5 month period of 2010 have already reached the amount of 200 million dollars. Obviously, interruption of trade due to political reasons would effect our sector and the economy of the country in negative ways. In addition, Iran is one of the leading suppliers for energy requirements, which is the most basic need for the industry. The situation should be analysed in all aspects in the long term and not just on the basis of exports. A possible instability in our region would create a seriously negative impact on the exports of our country all around of the Middle East. Is it possible to o say that there is an inclination for the exporters to turn their attention towards other countries rather than the counties of the European Union since the contraction in the European market due to the crisis? How much of a real alternative can North America be in this sense? The economic crisis has effected Europe and North America in rather serious dimensions as well as other geographical regions of the world. The chemical industry in the EU countries has slipped back by 3 – 4%. The Pacific-Asian countries, headed by China, have survived the crisis with a minimum of damage. The share of these countries for the chemical exports of our country has risen to 34% from 32%. But that of the EU countries has fallen from 29% to 27%. Up to 30% drops have been seen for the chemical exports of Turkey to EU countries due to the contraction of the demand in the EU countries. Our exports to the USA, Canada and Mexico in the chemical sector in the first 5 months has already exceeded the amount of 120 million dollars. For example, the first 5 monthly exports that have been made to Mexico have shown an increase of 195% as compared to last year. We do not look to this issue as an compulsory change of market during the crisis period. We think of this in the context of the dynamism of the trade and as a factor that alternative markets should always be held in hand. Can you extrapollate what kind of strategy the Turkish chemical sector would need to implement in order to grow durring the next 10 years by looking at its transformation during the last 10 years? The industrialization of the chemical sector in Turkey started during the 1950’s. It developed during the 1960’s and 1970’s. We have witnessed the setting up of two petrochemical plants that belonged to the state during the 1970’s and 1980’s as well as the establishment of a large number of small and middle-sized private companies. A decrease has been observed for the customs tariffs of the chemical products immediately after changes were made in the Customs Act in 1984. Hence, a fast growth has taken place for the production field and capacity of the Turkish chemical industry in parallel with the export potential. Our sector achieved a growth of 2.5% during 2008. Our sector had around 50 billion dollars turnover in 2008, with sales from the pro48 • TurkofAmerica

duction side of around 15 billion dollars. Exports of the Turkish chemical sector rose to 13.6 billion dollars in 2008. Around 500,000 people are employed in the chemical sector, and it continually increases its share of Turkey’s total exports. The employment is mainly achieved in the private sector. We are getting over the effects of the global economical crisis. Our sectors exports are showing a rather good performance since the beginning of the year. The exports of our sector, which has lived through a rapid return to the days before the crisis, has shown an increase of 47.57% in January and 43.64% in February, based on value. The biggest increase during the five monthly periods has been achieved during the month of March. The chemical sector exportations have increased 75.15% during March by breaking an important export record. The rise for the exports for the month of May of this very important and principal sector of our country, where it closed the month of April with an 41.52% export increase, has been 41.61%. We have determined the 2023 export target of the sector as 50 billion dollars. This means that we should keep up the average increase rate of 11% for every year. Our main target for the years ahead of us is to produce the products which create added value and catch the competitive advantage with these products in the foreign markets. We are aiming at being able to compete not only in certain regions but around the world as the Turkish chemical sector. The ch hemical sector is placed among the top three industries in the developed countries. The positions of the textile and automotive industries, which were the locomotive sectors of Turkey some time ago, are changing year by year. What are your expectations for the parallelism that should be shown betwe een the development level of the country and the growth of the chemical sector? The chemical sector is a sector which has strategic importance for every country, because it is one of the principal sectors and supplies raw materials for all branches of industry. The rise of the chemical sector to first place in parallel with the development levels of the countries is the main indicator for this issue. Therefore, I think that this type of progress will also be achieved in our country, which shows fast growth and which does not lose its courage despite the economical crisis. Moreover, the first steps of the development in this direction had been put forward before the crisis and the chemical sector had risen to third place as the sector that had achieved the highest export levels by leaving the ready to wear clothing sector. But this positive development was unfortunately cut back by the global crisis. However, we are able to see that the increase is at the top level when we look at the exports of the chemical sector together with the easing back of the effects of the crisis. Therefore, I believe that our sector will also reach in our country a level comparable to the rest of the world. Our aim is to provide every kind of support and help for our sector in this path. Points you would like to add ... Our sector will continue to increase its contributions to the economy of our country by gaining more strength every year. I would like to restate my belief at this occasion, that I believe that the sector would be much more effective with the cooperation of the public and private sectors. !



PETKIM

Petk›m Plans to Create A Reg›onal Force ›n Petrochem›cals How has th he current global financial crisis affected your business with the U.S.? What did you learn from the crisis and do you think it is over? Because of the global financial crisis and its harmful effects on the automotive industry, our C4 sales to the USA have been cut drastically between the third quarter of 2008 and the second quarter of 2009. Following a sharp contraction in the past year that prompted producers to consolidate their assets, realign their portfolios and reassess their business strategies, many economies are expected to recover from the recession. Consumer demand is recuperating, the global outlook is improving, confidence is recovering, yet there are problems in certain regions. This year will be a recovery for our industry, yet a return to the “good old days” of the pre-crisis period will not be easy. That will be difficult to achieve. Cash & inventory management, i.e. working capital management, cost cutting, and the implementation of flexible production models were the main priorities during the downturn. According to research, Turkey is the third-largest importer of petrochemicals globally. Almost 70% of the demand is met through imports. Is high demand in the local market a disadvantage to seeking new markets? The Turkish petrochemicals market is one of the fastestgrowing in the world, with a twofold GDP multiplier over the last decade. As a result, it has been a challenge for Petkim to maintain its markets share in an ever growing domestic market. Hayati Öztürk, Petkim’s General Manager.

he Turkish petrochemicals market is one of the fas-

Petkim’s vision is to create a regional force in petrochemicals operating world class assets by the year 2018. SOCAR & Turcas, Petkim’s shareholder, has aggressive investment plans in Petkim to increase competitiveness in the coming years. 50 • TurkofAmerica

Ttest-growing in the world, with a twofold GDP multip-

lier over the last decade. Petkim Petrokimya Holding A.fi., the leading petrochemical company in Turkey, has been exporting different petrochemical products to the US market for 20 years. Its main export product is C4, used in butadiene extraction for rubber production. Butadiene is the basic raw material of the automotive and tire industry. Petkim’s market share for C4 is around 3040% of the total C4 imports of the USA. Hayati Öztürk, Petkim’s General Manager, talked to TURKOFAMERICA. How long has Petkim had business relations with the U.S.? What kind of products does Petkim exporrt to the U.S. and what is the importance of Petkim's products for the American market? Petkim has been exporting different petrochemical products to the US market for 20 years. Export products are C4, benzene, py-gas and orthoxylene. The main export product is C4, used in butadiene extraction for rubber production. Butadiene is the basic raw material of the automotive and tire industry.

Although the company focuses mainly on the domestic market, it also exports its products to Europe, the US, Africa, the Middle East and Asia. Petkim’s capacity exceeds the domestic demand for some products and there are certain products that are not being used locally in the Turkish market and hence they are exported. Naturally the supply/demand and markets conditions will shape the market and the marketing policies What is your U.S market share in total export and could yo ou compare your products and services with your competitors? Petkim’s market share for C4 product is around 30-40% of the total C4 imports of the USA. The quality of the product is considered to be the best in the market by the end-users. Customer loyalty is one of Petkim’s big advantages. Petkim has a longstanding relationship with its customers, a reputation of producing high quality products and places great importance to on improving its customer service and customer relations. Petkim has been focusing on improving logistics capabilities, which would make it possible to supply customers’ needs in the most efficient and productive way possible. Most of the competitors downsized and reduced their capacities during the downturn and could not supply necessary products to their customers. However, Petkim, on the contrary, sup-


ported its customers by providing flexible payment terms, by meeting all their product needs, and increasing its after-sales services. Our motto is “customer satisfaction is above everything.” Can you tell us briefly about the completion of a refinery projecct at Petkim's Aliaga Complex ? Pektim’s vision is to create a regional force in petrochemicals operating world class assets by the year 2018. Our shareholder SOCAR & Turcas has aggressive investment plans in Petkim to increase competitiveness in the coming years. The Turkish Energy Regulator approved our shareholder SOCAR & Turcas’s operating license in order to build a refinery on Petkim’s premises, just next to Petkim’s petrochemical facilities, in June 2010. Petkim allocated an area of 130 ha to SOCAR-Turcas Refinery (STAR) for the construction of the refinery. The capacity of this plant will be around 10 million tons of crude oil per year (214.000 barrels per day), and the construction will be started in 2011. STAR will be operational in early 2015. It is a milestone for Petkim, integration with the new refinery will allow Petkim to secure all of its feedstock needs and increase efficiency by creating synergies between its petrochemical and refining assets. Petkim will also generate rental income from the allocated land in its Aliaga complex and some other revenues from the services and utilities provided to the refinery. The remaining part of the refinery’s products will be sold in Turkey and Europe. Construction of the refinery on Petkim’s premises is expected to produce a cost advantage of 30% compared to greenfield investments due to existing infrastructure and logistics. In addition to reduction of transport and warehousing expenses, expenses for security, laboratories, R&D, the number of staff, fire prevention, etc. will also be reduced. It will step up the competitiveness of our products.

In your industry, to increase trade volume between Turkey and the U.S., what should be done? Turkey and America have been allies for a long time. To increase trade volume between the two countries, the authorities of both countries should take necessary measures. American companies should take advantage of Turkey's strong chemical market to increase exports and imports of products and services. The existing bilateral relations between the two countries would be further expanded and consolidated in both depth and dimension. What is your vision and future plans for next 5 years (investment, exports, sales, etc.) Petkim’s growth plan has been developed within the framework of our vision for 2015. Petkim’s growth plan covers short term operation and improvement plans, which include improvements planned for the coming 23 years, and mid-to-long term operation and improvement plans, which cover improvements planned between 2011-2015 Petkim’s short term operation and improvement growing plans focus on production, energy, logistics, sales and marketing, the ERP Project, human resources policy, and environmental issues. In particular, Petkim had a plan to increase the capacities of some of the existing plants to obtain economy of scale in these plants, considering the production costs and the domestic demand for these products. Petkim’s mid-to-long term operation and improvement plan is to reach economic scale of production as well as becoming a regional player in the petrochemicals sector in order to increase its long-term competitive power by providing feedstock reliability (upstream investments) and widening its product range (diversification via high value added products, downstream investments). Wou uld you like to add anything? I want to thank TurkofAmerica for giving me the opportunity of this interview.!

TurkofAmerica • 51


ISTANBUL ELECTRICAL-ELECTRONICS, MACHINERY AND INFORMATION TECHNOLOGY EXPORTERS’ ASSOCIATION

her parts of the world, given that they tend to live in larger houses, drive longer distances and exhibit different social behaviors which impact the types of consumer products they choose to use. For example, top load and large capacity washers are still preferred in US vs. front load and small capacity washers in Europe.

Is Turk›sh Electron›cs Ready to U.S. Market? s the sector is not only that of a unique industry ha-

Aving a market share of 2,7 trillion USD, and holding “New entrants will have to heavily weigh the costs and benefits of each strategy and pick what suits them best. One other factor that is also very critical for new entrants is the risk profile of the North American market being different from other geographies.”

52 • TurkofAmerica

the rank of being the highest employer sector for the 21st century, but also has become the basic sector improving all the other sectors. The Electrical-Electronics and Machinery Industry is considered to be one of the major sectors of Turkey, as it is the source of information technology used by the developed nations to ensure competitive advantage. Electrical-Electronics and Machinery Industry is the main target sector that will ensure Turkey’s competitive advantage in export markets. Fatih Kemal Ebiclioglu, Chairman of the Board of Directors of Istanbul Electrical - Electronics, Machinery and Information Technology Exporters’ Association talked to TURKOFAMERICA.

Turkish electronic firms are particularly recognized brands in European markets. What should be e done to able to repeat the same success in North America? The North American consumer market is a highly competitive and mature market with most consumer niches already addressed by a plethora of very strong global and local manufacturers and retailers. Furthermore, the North American consumers’ needs and wants are different from their counterparts in ot-

Hence, any new entrant needs to create value for the consumer either through lower prices and/or better features and accomplish this by capturing share from existing players who are already pretty good at addressing the needs of different consumer segment. For companies which are based out of Europe and/or have strong European based manufacturing capabilities, they have to overcome four very big hurdles that they may not face when competing in Europe. The first is developing the products that the North American consumer would want in quantity; the second is managing the logistics around transporting bulky products and/or finding a way to have the products sourced in North America cost effectively; the third is finding retailer partners who are willing to create space for your products and the fourth is generating awareness and consideration for the brand in a very competitive media environment. Given these hurdles, you typically see strategies that are on the extreme ends of the spectrum. Certain players will overinvest on all fronts; for example Hyundai in building assembly facilities, pricing products lower, providing longer warranty periods, overinvesting in marketing and finally developing products that cater to the unique needs of the North American consumer. Certain players will stay niche and pick areas where they have less competition. For example, some European companies with European style high end products are working with niche retailers. Alternatively, certain players will try reinventing the business model by securing low cost supply chains, developing good products, figuring out how to communicate their brand


message with design and packaging and working with the club channel that has most to gain from a relationship with a low cost new entrant. New entrants will have to heavily weigh the costs and benefits of each strategy and pick what suits them best. One other factor that is also very critical for new entrants is the risk profile of the North American market being different from other geographies. The consumer protection laws and the legal environment also create some additional risks for any player, including established players, let alone new entrants. For example, recently very large scale recalls have hit some prominent players in the industry. What could be some disadvantages for industrries entering the North American market? Geographical location of manufacturing facilities, differences in consumer and business culture and legal know-how are areas of key disadvantages for Turkish electrical, electronics, machinery and information technology sectors. Overcoming these hurdles typically requires big investments and given the risk associated with winning in North America, not many Turkish companies have been able to get to scale in North America yet in these sectors. When the figures for 2010 were examined, one of the produ ucts with the highest sales to the U.S. were freezers. When you consider industry capacity and pro oduction of power, what product groups could be profitably sold to the U.S. market? Freezers have been potential growth areas for Turkish manufacturers to date. While energy efficiency and higher end features such as frost-free may help create additional demand for our manufacturers, the freezer market is still very much a price driven market. Most of the demand for freezers come from consumers who tend to use these products in garages or small business owners who use these as add-on freezer capacity out of sight. Hence for any player, bringing these products to market at low cost is key to continued success. The U.S. is the world’s number one consumer of electronic goods. Can the U.S. market be a new target after the European market to increase product sales for items such as refrigerators and televisions? Fridges are bulky products compared to TV’s. So logistic and supply chain issues must be analyzed before moving forward. Typically any product sourced from Europe will not have such a great chance to compete unless it is a high-end unit above a certain retail price. Innovative and energy efficient products could be targeted given Europe may be ahead of the curve in certain product segments like front load washers. In the coming years, is it possible for Turkish companies to establish research and development offices in the United States and to develop strategic partnerships with American companies? While the US is still the driver for innovation in many sectors, there are two main hurdles to considering R&D investment in US. The first is that the cost of skilled engineering talent is very high and the second is that white goods products are very much unique to the NA consumer. Therefore in considering alliances around technology with American firms and/or establishing R&D centers in US, all cost/benefit tradeoffs will have to be evaluated. We observe that many American firms move some of their R&D capabilities overseas to countries like India and China. When you examiine the development of the sector in recent years, what improvements you expect in next 10 years? How w do you expect the sec-

Fatih Kemal Ebiclioglu, Chairman of the Board of Directors of Istanbul Electrical-Electronics, Machinery and Information Technology Exporters’ Association

tor to look like 10 years from now? On one end, more environmentally responsible products (lower electricity, lower water consumption) coupled with improved features (e.g., better hygiene, larger capacity) and better design (e.g., inox) will continue to take a larger share of the existing replacement markets. For the environmentally conscious products, the speed of penetration will depend on the amount and type of governmental subsidies and/or environmental policies put in place. On the other end, there will be hundreds of millions of new households that will move into the middle class in countries like Brazil, China and India who will still seek basic products for their first purchases. Therefore, companies which will be successful in the future will have to cater to both trends. In 21st century technology, the electric-electronics and the machinery industry's importance are more critical than ever before. To keep pace with the rapid chan nge in this era of the sector, what are the biggest disadvantages? To drive new technology into households, the price/feature tradeoff needs to be right. Sometimes the better technology is more expensive and the consumers are unwilling to make the tradeoff en masse. So regulations and subsidies play a prominent role in driving technology to the next level. For example, for a smart grid to work, the standards must be developed before manufacturers could start investing to drive the penetration. Similar issues exist with energy and water consumption levels. Given that it is very hard to develop worldwide standards in the sector, our manufacturers have to have the scale to be able to address needs of multiple markets from product innovation to registration. What are the industry’s advanttages to get a bigger share of Turkey’s exports? The main advantages of our electrical, electronics, machinery and information technology sectors are; availability of skilled and low cost labor and engineering talent and a network of scalable feeding industries and supplier bases. Furthermore, logistical advantages in many markets including Europe, the Middle East, and Africa set Turkish exporters apart from their counterparts in East Asia, for example. Finally, Turkish producers have largely achieved scale economies given advantages in the export market as well as a large and growing domestic base.! TurkofAmerica • 53




ISTANBUL FERROUS AND NON FERROUS METALS EXPORTERS’ ASSOCIATION

approach has created an uncertainty in terms of exports as well. Another reason is the U.S. market is very far away from Turkey and the already high freight rates, especially in recent times, experienced significant increases. The shipping time is too long for such a volatile market. So when a product is exported to Europe, the price is relatively the same, but the profit margin in higher, while in the U.S. the profit margin is very slim. In this regard, not that of loss of market share, freight and energy costs have to be supported during the coming years. This would be very helpful. To enter the U.S. market, different marketing strategies should be developed. For example, when the industrybased trade missions examine the U.S. market, one-onone meetings with industry organizations and companies would increase the chances of Turkish products becoming competitive in the U.S. market.

Turk›sh Metal Exporters Get Ready for 2023 s Ferrous and Non-Ferrous Metals Exporters' Asso-

Aciation prepared their strategy in 2009, the in-

dustry’s share of Turkey’s total exports was 4.2%. They are aiming to reach a level of 5.6% in 2023. To achieve this target, Istanbul Ferrous and Non-Ferrous Metals Exporters' Association's board have established subsector committees in such areas as aluminum, copper, and kitchenware. Hayrettin Cayci, Chairman of the Board of Directors of Istanbul Ferrous and Non-Ferrous Metals Exporters’ Association, talked to TURKOFAMERICA.

Turkey’s total export target is 500 billion dollars in 2023 and our industry’s share is 25 billion dollars. Can their strategies, plan and vision make that happen?

When Istanbul Ferrous and Non-Ferrous Metals Exporters' Association's figures were examined, th he United States did not rank among the first 10 countries. What are the main reasons for this? What should be done in order to sell more goods to North America? When we look at the export numbers of the ferrous and nonferrous metal products group to the U.S., it is not among the top-ranking, but the U.S. is located in the top 10 countries to which we export copper knitted cords, copper wire, sheet aluminum, metal hand tools and metal gift items. The U.S. market in one in which giants compete with each other, only designing products that can stand out, and large-scale firms which have the production capacity to meet demands. They have a chance to compete. Especially after the global crisis, each country has taken various measures in order to protect producers. Protectionism in the U.S. is much more effective. In addition, the U.S. government discusses each calendar year whether to remove tariffs, which would be a big advantage to emerging countries such as Turkey. This

56 • TurkofAmerica

When the industry’s 2009 U.S.. exports are examined, copper stands out as the product that is exported the most. Keeping in mind of the potential of the industry, which products is it possible to sell to the U.S.? In the year of 2009 and January-June period of 2010, on the basis of product groups exported to the U.S., copper wire make up the majority of our export products, with $28.8 million and $17.3 million in exports to the U.S. In many other product groups, we produce worldclass products and export them, for example, steel and aluminum kitchenware, in recent years the importance of design has increased and this has helped to increase our exports. Turkey is right now a design pioneer in competition with other countries. I believe the United States is a high potential consumer market for kitchenware, aluminium sheets/plates/profiles and aluminum construction materials. Production and d sale of copper wire made by Turkish firms operating in the United States is known. In order to ente er the marker, what should companies with similar products do? The various supports mentioned above that have helped the sale of copper wire and have provided market access will no doubt also be helpful to companies entering the market. Apart from this, the country's geographical size and the high cost of customer visits to the United States bring a unique set of drawbacks. They can be resolved with the provision of travel incentives. Chinese firms are at the top of the market for the ferrous and nonferrous metals industries in the US. Are Turkish firms able to compete with the Chinese firms on a non-price base? How can a company make a difference in this resp pect? Yes, as in other sectors, China also bears the distinction of being a major competitor in the ferrous and nonferrous metals industry. To compete with China, value-


added products with reasonable prices can be produced. Moreover, the quality of the products we export, delivery terms to ensure continuity, and timely fulfillment of our commitments in this market will be of the greatest importance. On the other hand, knowledge of U.S. market conditions and opportunities and making deals with large retailers will have the effect of increasing our exports. The distance to the North American market and lack of information about the market significantlyy affects the sale of goods. What should be done to overcome these problems in order to reach a sattisfactory export volume? As mentioned before, an incentive to support freight costs would be useful. Apart from that, some countries began initiatives in Europe, and similar systems can be applied in the U.S. market. In this way, the products which are exported to the market by Turkish companies can be insured by Eximbank. In this way, the companies can benefit from quarantine insurance program. By the end of 2009 the industry’s exports totaled 4.3 billion dollars. Ho ow it is possible to get back to the good old days? The ferrous and nonferrous metals industry was affected by the world's financial crisis such the same as the rest of the world. It suffered a decline in exports, which was normal. On the other hand, when we look at the export figures in 2010, the 2009 crisis and the effects begin to lessen. When the industry compares the January-June period of 2009 with the current year, we can see a 40% increase. However, this increase us not enough. Therefore, while finding new markets with high import po-

tential, we need to increase our share in current markets. Turkey’s total export target is 500 billion dollars in 2023 and our industry’s share is 25 billion dollars. To reach this target, we, Istanbul Ferrous and Non-Ferrous Metals Exporters' Association's board, have established sub-sector committees in such areas as aluminum, copper, and kitchenware. We have also begun to form strategies for each subsector. Together, each representative of major sectors and major companies will create strategies to overcome barriers to the next stages, I believe we will reach our goal. What sort of strategy do you predict that th he industry will develop in the next 10 years? What are the biggest obstacles and advantages you see? As we prepare our strategy, in 2009, Istanbul Ferrous and Non-Ferrous Metals Exporters’ Associaton share of exports was 4.2%. We are aiming to reach a level of 5.6% in 2023. By creating original designs and manufacturing high value-added products, we want to succeed in the branding process. By increasing the number of high-technology products certified to international standards, we want to produce patented product. In addition, the sectors aims at increasing brand awareness by intensive promotional activities. In this process, to encourage the use of new technologies, we want to support small and mid-sized companies’ R&D activities. We want to work to increase the employment of qualified technical staff from vocational schools. Thus we are planning to make small businesses major exporters. In this context, together with the Ministry of Education within ‹MM‹B, we are building the Industrial Design School. !

TurkofAmerica • 57


SARKUYSAN

Sarkuysan W›res Turkey to Albany SGroup of Companies in Istanbul, Turkey's largest

years. As the global economicc crisis has had an effect on every business, how did you make this investment decision? This strategic decision was made after much research and evaluation. In particular, transport and logistic issues and the ability to ensure delivery on time were dominant factors.

Sarkuysan has been exporting products to the U.S. and other countries for more than 30 years. Sevgür Arslanpay, Sarkuysan’s Assistant General Manager, talked to TURKOFAMERICA’s about his American experiences.

Being an investor after experiencing many years as an exporter to the U.S. market, could you compare managing a plant in Turkey and in the United States? What are the differences and similarities? The US plant has the latest technology in our process and completely brand new machinery, just as we have in our Turkish plant. The product mix is pretty much the same with the same high tech products.

ark Wire Corp., a subsidiary of the Sarkuysan

The first year performance of Sark USA U.S.’s plant went as expected, and the plant is running as originally planned. Currently the company has 20 employees with an annual sale of $30 million based on current metal prices. 58 • TurkofAmerica

wire manufacturing company, opened its first U.S. operation in a former printing plant in Albany's west end in December 2009. The company, which makes electrical copper products, is opening a $10 million processing plant in Albany, N.Y.

How long has Sarkuysan exported its products to the U.S.? What is the importance of these produ ucts for the American market? Sarkuysan has exported its products since 1980. Our products are used in high tech sectors such as aerospace, automotive, computers, data transmission, and electronics. Sarkuysan has opened a plant in Albany in the United States. This iss one of the biggest investments a Turkish company has made in recent

How did govvernment and local officials approach your investment decision? What can you say about opening a busiiness in the U.S. (easy, hard, complicated, etc) Local officials showed a lot of interest and helped us in all aspects during the beginning stage of our investment.


Could you tell us about your plant’s performance in its first year? How many employees work for the plant, production capacity, sales, etc? The first year’s performance went as expected and the plant is running as originally planned. Currently we have 20 employees with an annual sale of $30 million based on current metal prices. What were your plans and expectations for the American markket and how are they being realized? Our main goal and expectation was to be a long term player in the marketplace and we are gradually getting to the level where we need to be. If a Turkish company wants to invest in the US, what would be e your advice? Any Turkish company which would like to make an investment in the US should have a strong and reliable background in the market. Otherwise, it is not so easy to enter the market by merely establishing a facility. What is your estimate for world copper output by the end of 2010? What will be the global demand and the Turkish demand? To boost exports to compensate for weak sales in the domestic market, are you considering expanding your interest into different markets? We estimate the world refined copper production and demand for 2010 to be 19,200,000 tons and 19,60,000 tons respectively. Turkish demand for refined copper is forecast to be approximately 380,000 tons. We are already involved in intensive export marketing activities in several countries to boost export sales.!

“Fast and reliable accounting, tax and audit” Dr. NEVZAT YILMAZ, YMM OZAN BACAK, CPA

3 Hudson St. (Corner of 565 Clifton Ave.) Clifton, NJ 07011 All kinds of corporate establishment, business consulting and tax return Book keeping – payroll

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TurkofAmerica • 59




FREE ZONE AT ISTANBUL ATATURK AIRPORT

How Were The Free Trade Zones Impacted by The Cr›s›s? ince the creation of the first trade free zone was per-

Smitted in the year 1987 up until 2009, the total trade The highest turnover per square meter among all of the free zones was attained by the Ataturk Airport Free Trade Zone with its $2.9 billion trade volume.

62 • TurkofAmerica

amount reached $216 billion. As a result of the conviences provided for foreign investments, a total of 598 firms with foreign capital have began doing business in these designated zones. The volume of trade in the 19 free zones, due to the impact of the 2009 global crisis, has shown a shrinkage of 27% in comparison to last year and decreased to $17.7 billion. It could be seen that the trade volume in the free zones was rebounding from the impact of the crisis between the months of January and June in 2010, with trade activity increasing by 5,5%. During the first six months of the year, the total amount of trade activity in the free zones reached $8.5 billion. As of May 2010, there were 43,714 people employed in the free zones. The highest turnover per meter square among all of the free zones was attained by the Ataturk Airport Free Trade Zone with its $2.9 billion trade volume. The founder and the General Director of the Istanbul Ataturk Airport Free Trade Zone, Selcuk Tur, told us about the crisis period and their practices: What sort of cautions, initiatives, and innovative steps

did ISBI take during the last two years during this period of global crisis? ISBI is one of the most dynamic corporate firms. And parallel with its reputation of being ‘dynamic,’ it still maintains such processes. In addition to the stimulus and advantages we give in the free trade zones, we are also providing services to our customers that would be helpful in a world trade field where competition is greatly felt. The point where world trade has come to in our days is commerce-oriented, and it indeed makes commerce mandatory. The concept of ‘One Stop Shop’ has entered our lives in every aspect. For this reason, firms consider those areas where they can purchase all services with the highest quality and under one roof as the ‘Right Investment Area.’ ISBI provides those firms under its roof with the necessary infrastructure to create trade, and the superstructure, storage services, value added services for storge and logistical services. Also, it is possible to fly to Europe, Russia, the CIS countries, the Near East, the Middle East and Northern Africa from here. In that sense the Ataturk Airport Free Zone is a very strategic spot for those trading firms in this vast geographic region. We combine this strategic advantage with our various service opportunities and provide our customers a tra-


ding field in which they would be impacted by economic fluctuations the least. Creating a working environment where all trade and logistics opportunities are in coordination has been our advantage during the crisis. What kind of gains did the firms receive during this period? During the crisis, we gave support to our firms in following the official procedures, obtaining licenses and making sure to keep their application process on the right track. Also, we provided conveniences to our customers by easing down the payment plans. How has the trade volume of ISBI changed within the last two years, in comparison to the other 20 free zones? What levels did yo our activities reach during the crisis? Ataturk Airport Free Zone produces the highest turnover per square meter, trade volume and profit of all the free zones in Turkey. Although there have been fluctuations during the crisis, our trade volume reached nearly $3 billion, one of the best turnovers among all the free zones. Our activity ratio as of the end of 2009 was 90%. As the effects of the crises lessen, we are expecting this ratio to reach 95% again. Especially during the crisis, what kind of investment opp portunities did you provide to the firms, both in Turkey and abroad, in order to capture their atttention? During the crisis, to make export and import easier for companies, we provide value-added logistics and storage services solutions. In addition obtaining business permits for the firms founded in the zone, we always provide financial counseling, customs procedures, support for transportation in Turkey and abroad, and market research. The economy is in recovery. What kind of projects does the ISBI have for this period? We are planning on increasing the quality of our logistical services and advancing our variety in order to create new storage opportunities. In addition to giving our customers an advantage in cost through the usage of high tech robots and storage systems in these new buildings, we will also present them with quality data and reports. We are also planning to increase the speed of merchandise handling and delivery to the eventual consumers. Can you tell us about the activities at the port you opened in Cyprus? For the upcoming period, do you have any plans for new investments and services abroad? We have established and started running our Port ISBI firm at the Cyprus Famagusta Free Harbor region; the firm provides its services in an area of 103.000 square meters. We provide our customers all kinds of storage services, including those with added value; renting of open areas; and carrier services. The building of our first storage facility has been completed and it has started functioning. We are planining to begin the building of two more storage facilities in 2010. Northern Cyprus is a very important port as it is located in the eastern Mediterrenean and is close to Turkish, Balkan, Middle Eastern, and Northern African ports. In order to better take advantage of this very strategic spot, we are continuing the renovation of an old copper mine area to build the Gemikonagi in Lefke. Once the renovation is completed, we will begin the construction of a pick-up/distribution port for container ships. With the strategic site of Cyprus, which is located right in the middle of shipping routes, a great dynamism will be brought to the region. In addition to these investments of ours, we are also providing ‘knowhow services’ about establishing and running a free zone.!

Selcuk Tur, General Manager of Istanbul Ataturk Airport Free Trade Zone.

DYNAMIC ZONE The Free Zone at Istanbul Atatürk Airport is situated in the center of Istanbul and has a strategic position in the worlds of industry with connections to Europe, Russia, the Turkic republics, the Middle East, the Far East, and North Africa; it is located on the European side where the industrial and financial sectors are concentrated. Its geographical location, which is at a point where international trade routes intersect, increases the importance of the region with regard to the foreign trade in Turkey and the world. Turkey’s main gateways are located in Istanbul, such as as Ataturk Airport for air transportation, Halkali Customs for highway transportation, Halkali Station for railway transportation; the latter are both 15 km from ISBI. Ambarli Port, for sea transportation, is 25 km from ISBI and Haydarpasha Port is only 30 km from the Free Zone. In addition, the Free Zone has access to the E-5 and Trans European Motorway, which connect Istanbul to Europe. Within the region of the Free Zone all the technical infrastructure support can be found. The AHL Free Zone exceeded a total trade volume of 30 billion dollars within the last decade; in 2009, the trade volume reached as 2.95 billion dollars. This figure constitutes 14% of the total trade volume reached in 20 free zones in Turkey. The rate of occupation today in the region is 90%. ISBI presents services to many foreign trade companies belong to around 20 different sectors with office, warehouse and office + warehouse alternatives of different sizes situated in a closed area of 57,870 square meters with a $50 million investment. Free zones carry out intensive trade as "one stop shops" in the arena of international trade. ISBI will be the first free zone to fulfill this concept. The products subject to international trade should be supported with value-added services which ISBI provides, such as: The warehouse palletizing systems which are controlled by using the latest technology and robots, Garments on Hangers Stocking, Labeling, Separation, Collation, Customer based product collection, Box conTurkofAmerica • 63


FREE ZONE AT ISTANBUL ATATURK AIRPORT

K›br›s- Famagusta Free Zone

tent control, Boxing, Palletizing, Stock control, Order taking, Voice picking, Address based warehousing, and RFID (Radio Frequency Identification) Palleting. INVESTING IN NORTHERN CYPRUS In addition to the Ataturk Airport Free Zone, ISBI is investing in two different locations in Northern Cyprus. The first free zone invesment in Northern Cyprus is located in Famagusta and covers an area of 103,000 square meters. Northern Cyprus offers broader tax incentives and less bureaucracy to users with very advantageous prices. The region is a major attraction in this regard.

64 • TurkofAmerica

The second important location is Karavostasi Port in northern Cyprus. This area was previously being used as a copper mine. 2.2 million square meters of land currently in the copper mine are now being cleaned up and environmental rehabilitation work is being carried out. Following this work, the largest ports by capacity in the Eastern Mediterrarean basin are planned to be built here. As Gemikona¤› Port comes to life, ISBI is working on a project to establish a direct link between Cyrups and Istanbul by which customers receive orders to provide products from the port.



TURKON LINE

Turkon started the first-ever marine shipping service between Turkey and the US in 1997 and initially had seven containers. Turkon operates with containers of 32,000 tons in exports and 32,000 tons in imports.

66 • TurkofAmerica

Turkon Sh›pp›ng 40% of the Goods Traded Between Turkey and the US urkon handles 40% of the marine shipping betTurkon started the first-ever marine shipping service between Turkey and the US in 1997 and initially had seven containers; it now takes on a great role in shipping of traded goods between the two countries through its six ships. Turkon operates with containers of 32,000 tons in exports and 32,000 tons in imports.

Tween Turkey and the US.

Turkon’s 18% market share is followed by the 16% shares of Maersk and Med. According to the date obtained from the customs house, Turkon shipped 5300 containers of goods from Turkey to the US in March and 8200 containers from the US to Turkey. In 2006, the number of imported containers was 6215, while there were 8200 containers of exported goods. The firm not only provides services from

port to port but also handles transportation from and to factories and warehouses. Although the kinds of transported goods vary, the estimated total cost of shipping a container to the US is $2500. For example, one container of cable picked up from Mersin Port in Kayseri and delivered to Chicago costs about $2377. Among the various goods carried by the ships of Turkon are pizzas to F-16 planes, luxurious yachts to explosive materials. The ships sail on the US route by stopping at New York, NY, Norfolk, VA, and Savannah, GA ports. In addition to the ports in Turkey, Turkon also provides shipping services to the ports of the countries in the region, such as in Alexandria, Haifa and Beirut. There are thirty-six people working in the firm’s headquarters in Secau-


cus, New Jersey. Turkon also has offices in Savannah, Norfolk, and Greensboro. The increase and decrease recorded in the trade levels between the two countries impact Turkon’s business closely. Turkon Director General Mustafa Merç emphasizes that they used to carry more goods from Turkey during 1990’s; however, since the entrance to the Customs Union and the lifting of quotas in the US decreased the number of competing products, trade shipping has been affected negatively. As Turkon started to operate in the market, it was observed that the number of Turkish forwarding firms using the service also increased. While there are nearly twenty Turkish forwarding agencies functioning in the US market, Turkon has a total of fifty forwarding units that it works with in the US and Turkey. TURKON’S CUSTOMERS Among Turkon’s customers are International Paper and Weyerhaeuse, the world’s leading paper manufacturers and the largest exporters; Staple Cotton Cooperative Association, headquartered in Mississippi, the largest and oldest cotton cooperative manufacturer in the US; Cotton Producers of the Carolinas; AK Steel; and Raynolds. Turkon plans to increase the number of its ships as its portfolio of customers increase. Two more large ships, which have been built by Turkon’s partner firm Sedef Dock, will start on running as well. The Director General of Turkon, Merc, who has been in the position since the opening of the firm in 1997, is a graduate of Istanbul Uni-

versity Economics Department. He started his career as an inspector in a public firm called Deniz Forwarding and he was promoted to the position of deputy general director. During the years that he was an inspector, he received an education in marine studies in the US and when he returned to Turkey he started working in the trade department of Deniz Forwarding. He also held the position of director general of a firm that was established in 1994 under Deniz Forwarding, which had seventy one ships running. Transferring to the private sector later on, Merc started the operation of Turkon Holding’s American branch. Turkon Holding The founder of the Kasif Kalkavan Group was Kasif Kalkavan; he passed away last January. The Group, which established Turkon Holding in 2003 and invested in different sectors, had also bought Sedef Dock from STFA, one of Turkey’s well known construction firms, and increased its ship building capacity. This group also owns the brand name for the water Sandras and it has shares in Turkon Railroad and the Kartal Hotel. It has been operating the Gocek Port since 2005. The presidency of Turkon Holding is held by Nevzat Kalkavan, the son of Kasif Kalkavan; Mehmet and Metin Kalkavan are on the executive board; and while three sons of Nevzat Kalkavan work under Turkon, one other son who carries the same name as his grandfather, Kasif Kalkavan, is advancing his experiences in the New Jersey office. Kasif Kalkavan states; “It is forbidden for us to do something different than navigation.”!

Mustafa Merc, General Manager of Turkon Line.

TurkofAmerica • 67


THE EXPERIENCES OF A NATURAL STONE COMPANY DURING THE CRISIS

The F›nanc›al Turmo›l Helps Sefa Stone to Make More Prof›t

“Since we were established in 2006, we have been growing 35% annually. In 2011, we want to open a warehouse in California and then open a store in a strategic state every year. So we hope to double our growth rate.” Selcuk Cevik, General Manager of Sefa Stone.

efa Stone, based in Florida, is one of many Tur-

Skish natural stone companies which run busines-

ses in the United States market. Sister company of the Cevik Group in Kayseri, Sefa Stone has grown 35 percent each year since its establishment in 2006. The financial turmoil has helped the company to make more profit, since many of its competitors have gone out of business. For the first time since the company has operated in the U.S., it now faces a crisis. Selcuk Cevik, young general manager of the company, talked to TURKOFAMERICA about his experiences under the current economy. 68 • TurkofAmerica

What are your expectations for the end of 2010? 2009 was a difficult year. This comment is very common and it is not made in vain. This crisis first began in the banking industry then covered all businesses. In such a critical time, everybody does their own analysis. Since first quarter of 2010, we see that the impact of the crisis is reduced. We hope that the economy recovers from the full impact of the global crisis which has surrounded the world by the end of 2010. Can you say that the crisis is over? Can you make a comparison with the pre-crisis period?


This question has divided economists in the world. Some of the economists say that the crisis is over or say that it is about to end. They praise government actions which help the recovery. Some say that the crisis will re-start. According to them, this one is only foreshocks. Of course, this doesn’t apply to the effect on a specific industry such us natural stone. Ending the crisis in the banking sector may not have finished it in the real sector. But I can say the economy is getting better. What was your strategy in times of crisis? What experience do you have from this crisis? In crisis periods, while some companies appear to settle in, some other companies continued growth. As an example, our marble company’s sales were very slow in Turkey while sales in the U.S. increased 50%. This example shows us that the marble companies in the U.S. prefer to acquire materials from the U.S. market instead of importing marble from Turkey to stock. We always strive to give the best to our customers with materials and services. This was very useful to us in times of crisis. In times of crisis, many marble companies have gone out of business, which caused customers to change suppliers. With quality service and materials, unlike other companies, we did not lose our customers. We got their customers as well. You have a sister company in Turkey. What were the similar effects of the crisis in both countries? Do you see any advantageous aspects of the crisis? Our marble company in Turkey, as I mentioned earlier, has been affected by the crisis, but our U.S. company has not been affected. But rather than companies, when we examine the economies, the U.S. was affected by the crisis more than Turkey was. In the U.S. everything is about loans, such as home mortgages, cars, school fees, consumer loans, home goods, etc. In Turkey, our people are not used to relying on bank credit. People’s savings are usually under pillows. If they have money, they like to spend it, so Turkish people do not use loans as Americans do. In a crisis period, there are not many payment problems for consumers. The bank would not knock on people’s doors to get their cars, homes, etc. This is a very important issue in the U.S., everything bought on credit and bank loans.. When people have lost their jobs, they have lost everything. The advantage of the crisis for us is the closure of other firms. It was a great opportunity for us because we are one of the most powerful Turkish natural stone companies in the U.S. and our new store in Florida is currently the largest Turkish marble and travertine stone property. Did the crisis cause any changes in your range of products, customer relationships, and marketing strategy? Of course, our product range in the U.S. has developed, changed and grown. In addition to material from Turkey, we have begun to import materials from Spain and China. This crisis gave us opportunities to sell not only our own material to make a profit, but also sell all kinds of natural stone. You have different investments in different industries in Turkey, such as mining and tourism. Do you gain any advantages by having businesses in different in ndustries?

Other than natural stone, we are in mining, tourism, and the oil industry. We are entering the energy industry as well. Of course, we have had benefits due to operating in different industries. The crisis has directly affected the natural stone industry, but I can’t say the same thing for the other industries. As we think of Cevik Group Companies as a whole, we were not affected by the crisis at all. I think this was the first serious crisis in the U.S. that you have experienced. If you have sim milar experiences in future, what will you not do? It was our first crisis in the U.S. Not to be affected by the crisis in the next phase, the company needs to apply a culture of living. The companies which have adopted this culture, big or small doesn’t matter, as always are less affected. Turkish companies have kept buying materials which they can’t sell to the U.S. from Turkey. They do not consider what they will do if they don’t sell. At the same time, Turkish producers are sending material here without asking for money. When the products are not sold in the market, the problem starts. We do market research for each material before bringing it to market. Whenever the economy is bad, we will avoid being caught with inventory. In the next five year period, what do you expecct the annual growth rate of the company’s sales and its revenue to be? Since we were established in 2006, we have been growing 35% annually. We want to grow more. In 2011, we want to open a warehouse in California and then open a store in a strategic state every year. So we hope to double our growth rate.! TurkofAmerica • 69


HALACH GOLD

A New Approach from Halach Gold to the Jewelry Market trading gold online? There are so many web-sites that sell gold bullion and/or ask you to mail your scrap and broken jewelry. Just like in any transaction. people have to be more careful who they are conducting business with. When purchasing gold bullion you have to make sure that you are paying the least premium on top of the gold price and if you decide to recycle/sell your broken jewelry you have to make sure that you are getting paid fairly. Through our blogs, websites and online live chat services we answer our customers’ questions. Just a little hint; Check for those website that show their price per gold karat by gram or pennyweight.

he jewelry sector is one of the sectors with the great-

Test ambition to make its mark as a global brand.

Representatives of the industry have declared their goal of becoming the global leader by reaching exports of $10 billion in 10 years. Turkish companies are known for their traditional way of doing business (store based) in the U.S., but one of them decided to set up a web based company. (http://www.mygoldgram.com) Çi¤dem Bostan, Vice President & COO of Halach Gold Inc., a New York based gold buying and selling company, talked to TURKOFAMERICA.

Turkish companies are known for their traditional way of doing business (store based) in the U.S., but one of them decided to set up a web based company.

Turkish companies are known by their traditional way of doing business (store based). Why did you u decide to set up a web based company? We wanted to set up a business model which is appropriate for this market. When the company started its operations in early 2009, gold was trading at an all time high. And to reach out to the maximum audience, opening a web based company was most appropriate. Can you give us some information regarding your progress since the launch of the website? Our business has been growing in leaps and bounds. When we started, we were trading gold from individuals. But we realized that there was a huge potential in selling gold to institutions and buying scrap from gold dealers. Hence we capitalized on that opportunity which gave us an immense surge in our volume. Can you give us some information that is related to the American Market- specifically

70 • TurkofAmerica

How can people trust such websites? What are the preca autions that are taken in order to provide secure/trustworthy online service? One way to check if the website is trustworthy or not is to check whether the business is registered with industry welfare organizations like JBT, BBB, ICTA and D&B, etc. Checking out the company with the Better Business Bureau and the city or state department of consumer affairs will only get you so far. A good indicator of a legitimate company is the quality of their customer service. Did they contact you right away? Did they give you price information over the phone? Test the company, send one item or purchase a small quantity, and if you are satisfied with the price and service, then why not do more business transactions? Also customer testimonials are so important. How is American culture based on spending? Since the earliest indications of stock market trouble, the value of gold has risen dramatically. This has changed the approach of the general public toward gold. Gold has hit the mainstream and more and more people are considering including gold in their portfolios. This current economic crisis has given a reverse spin on the American culture of consumerism. We believe, as they do, that the price of gold will continue to climb. It has the potential to protect your finances against inflation, deflation, stock market slumps, and currency devaluation. The price of gold fluctuates with the world markets, but gold will always retain its inherent value.!



GUIDE

Nat›onal Trade Assoc›at›ons here are over 7,600 national trade associations in the

TUnited States, with a large number (approximately

2,000) headquartered in the Washington, DC area. There are also many trade associations at the state and local levels. One of the oldest trade associations in the United States is the American Seed Trade Association, founded in 1883. Major trade associations in chemical, steel, mining, jewelry, metals and electric-electronics industries are the following. AMERICAN CHEMICAL SOCIETY 1155 Sixteenth Street, NW Washington, DC 20036 Phone: (202) 872-4600 www.acs.org

There are over 7,600 national trade associations in the United States, with a large number headquartered in the Washington, DC area.

THE NATIONAL MINING ASSOCIATION 101 Constitution Ave. NW Suite 500 East Washington, D.C. 20001 Phone: (202) 463-2600 Fax: (202) 463-2666 Email: webmaster@nma.org www.nma.org AMERICAN COAL COUNCIL 1101 Pennsylvania Ave. N.W., Ste. 600, Washington, DC 20004 Phone: (202) 756-4540 Fax: (202) 756-7323 Email: info@americancoalcouncil.org www.americancoalcouncil.org AMERICAN INSTITUTE OF STEEL CONSTRUCTIION One East Wacker Drive Suite 700 Chicago, IL 60601-1802 Phone: (312) 670-2400 Fax: (312) 670-5403 www.aisc.org

JEWELERS VIGILANCE COMMITTEE (JVC) 25 West 45th Street Suite 1406 New York, NY 10036 Tel: (212) 997-2002 www.jvclegal.com MANUFACTURING JEWELERS & SUPPLIERS OF AMERICA, INC. (MJSA) 57 John L. Dietsch Square Attleboro Falls, MA 02763 Phone: (401) 274-3840 www.mjsa.org FEDERAL TRADE COMMISSION Guides for the Jewelry, Precious Metals, and Pewter Industries www.ftc.gov/bcp/guides/jewel-gd.shtm AMERICAN SOCIETY FOR METALS 9639 Kinsman Road Materials Park, OH 44073 Phone: (440) 338-5151 Web: www.asminternational.org

AMERICAN IRON AND STEEL INSTITUTE (AISI) 1140 Connecticut Ave., NW Suite 705 Washington, D.C. 20036 Phone: (202) 452-7100 www.steel.org

THE MINERALS, METALS & MATERIALS SOCIETY 184 Thorn Hill Road, Warrendale, PA 15086 Phone: (724)776-9000 Web: www.tms.org

JEWELERS OF AMERICA 52 Vanderbilt Ave, 19th Floor New York, NY 10017 Phone: (646) 658-0246 Email: info@jewelers.org www.jewelers.org

INSTITUTE OF ELECTRICAL AND ELEC CTRONICS ENGINEERS 3 Park Avenue, 17th Floor New York, NY 10016 Phone: (212) 419-7900 Fax: +1 212 752-4929



ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010

Sek›b Avdag›c, head of the Istanbul he title of ‘European Capital of Culture’ is an honor assigned to a chosen city or cities every year by the European Union. From 1985 until 2010, a total of 38 different cities, including Paris, Florence, Berlin, Madrid, Stockholm, Liverpool, Brussels, Prague, Athens, Dublin, Lisbon, Amsterdam, and Helsinki have been awarded this title.

T

Istanbul with its great importance in world history and unmatchable cultural heritage is already one of the world’s metropols. I would like to repeat what we say to the European society to our American friends as well: “Make Istanbul your next stop!”

74 • TurkofAmerica

As the decision to award the title of European Capital of Culture also to cities that were not in EU member states was made in 1999, Istanbul’s journey toward becoming a European Capital of Culture has started. The Enterprise Group, which was formed by representatives of certain NGOs in 2000 in order to work on Istanbul’s candidacy as a European Capital of Culture, launched its efforts by working with other NGOs, universities, culture and art organizations, and the creative individuals of the city after obtaining the support of local and central government officials; their work also included the establishment of the Agency for Istanbul European Capital of Culture 2010. The Agency for Istanbul European Capital of Culture 2010 was officially formed in November of 2007 in order to organize the projects and activities for Istanbul’s candidacy. Meanwhile, the European Commission selection committee declared on April 11, 2006 that Istanbul, along with Hungary’s Pecs and Germany’s Essen, were chosen as the 2010 European Capitals of Culture. On November, 2006, with the approval of the European Parliament and European Union Commission of Culture Ministers, the awarding of the title of 2010 European Capital of Culture to Istanbul was announced. The President of the Agency for Istanbul European Capital of Culture 2010, Sekib Avdagic, answered TURKOFAMERICA’s questions: Since the year 1985, nearly forty countries have been a European Capital of Culture. What are the characteristics of Istanbul that make it different from these other cities? This title is assigned to those cities which reflect European culture and contribute valuably to this culture. As a city with a 8500-year-old history, Istanbul has been the capital

of three empires, as well as a peaceful home to various cultures and civilizations, and is the tolerance capital of the world; so because of these factors and also because of the contributions it has provided to European culture, it is already among the important culture capitals of the Europe continent. This title, assigned by the European Commission, is only a symbolic title for Istanbul and it stands as an opportunity to introduce the already present historical and cultural legend, as well as its modern side, to the world. On the other hand, with its population of nearly 15 million, there is no doubt that Istanbul has a very different place than Essen and Pecs. Istanbul is the last non-EU city that is receiving the title of ‘European Capital of Culture.’ Aside from our historical differences among other culture capitals, just this fact alone shows that Istanbul has the value of being a unique city. When we look at it from this perspective, I think it should be remembered that Istanbul is among the greatest metropolises of Europe and its activities carried out as a ‘Culture Capital of Europe’ should not be compared, either in quality or in quality, with the other culture capitals. ISTANBULL IS BECOMING AN APPEALING CULTURE AND ART CITY If you were an ordinary citizen of any European counttry who values art and culture, instead of of an official leading the organization, how would you have convinced people around you to participate in the activities in Istanbul? If I were an individual living in any European country and having an interest in art, I would have called Istanbul the ‘most inspiring city of the world.’ I don’t think either I or those around me could resist the appealing power of Istanbul. Our Agency had come up with a slogan for our 2009 advertising campain abroad for Istanbul: ‘Istanbul...The most inspiring city of the world!’ The concept of ‘inspiring’ here is of course not a random adjective. Also, this inspiration is not assigned only to those who live here or visit here; it is also endowed, in a imaginary way, in those who hear its name and desire and long to see it but are not able to.


European Cap›tal of Culture Project:

“Make Your Next Dest›nat›on Istanbul!” Of course, Istanbul does not only give people inspiration. It gives Europe and the world clues about diversities coexisting. Istanbul provides Europe with a touchstone by which Europe can see and recognize its own identity; and it actually gives the inspiration for tolerance, which is essential for its very identity. Istanbul portrays the possibility of being Eastern and Western at the same time, and gives people the chance to experience different and unique cultural movements and artistic options. Especially lately, Istanbul has been, more frequently than ever, the meeting point for the international community for gathering, debating and producing. Istanbul, in short, is saying to Europe and the world, ‘Come and see this eternal inspiration and use this eternal richness.’ However, we should not be content with what we have done in terms of presentation so far and we should produce new charms. So, in fact, our task is just starting. Istanbul has a big and influential name. Our difficutl and challenging job is still present. We have to continue explaining Istanbul’s mesmerizing beauty and displaying it with cultural, artistic and aesthetic details. This should be our, the lovers of Istanbul, precious duty. SELECTED 610 PROJECTS You have had thousands of project proposals. And you have made efforts to sift through these projects and introduce them to the people of Istanbul. On h project or projects have been the ones you enjoyed a personal level, which sharing and participating in the most? Our Agency, since it started accepting project proposals in 2008, received nearly three thousand proposals. Above all, our arts and culture socities, universities, local governments, public offices, companies and individuals showing effort and proposing projects is something deserving appreciation. With such great interest in place, our Board went through a busy evaluation phase and as a result selected 610 projects as part of our agency’s program. Of course, it would not be possible to separate and categorize these over 600 projects as the more important and less important ones. If you were to describe the Istanbul European Capital of Culture project to an American who does not have much knowledge about Turkey and Istanbul in one sentence, what would you say? Through the works that are to be carried out under the Istanbul European Capital of Culture 2010 project we are aiming to make Istanbul a meeting point in the world for arts and culture. In this process, while we display our arts and

The President of the Agency for Istanbul European Capital of Culture 2010 Sekib Avdagic.

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ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010

The openning ceremony of Istanbul European Capital of Culture 2010 project President Abdullah Gul and Prime Minister Recep Tayyip Erdogan together. One of Agency's outdoor advertising campaign in Europe.

culture projects through art’s universal language, we are also trying to contribute to the development and renovation of the city and pave the way for the aftermath of 2010 so such activities will continue to take place. In that way, Istanbul, as an accredited city, will be a great venue for those who want to enjoy arts and culture, see beautiful samples of great architecture and city culture, and experience the liveliness and cultural richness of a world’s metropolis. And above all, Istanbul with its great importance in world history and unmatchable cultural heritage is already one of the world’s metropolises. I would like to repeat what we say to the European society to our American friends as well: “Make Istanbul your next stop!” We will continue to try adding new inspirational resources and perspectives to Istanbul and make Istanbul an attraction for those living here and abroad. And we invite you to be part of this inspiration as well: ‘Istanbul, your next stop!’ When you think about telling about this great project, which is significant not ut also for Turkey as a whole, to your grandchildren or the only for Istanbul bbut third generation, which aspect of it are arre you most proud? Until now, Istanbul has not been in the place it deserves in the international arena so with this project at hand I believe it will receive the power it deserves, and this city of ours which is ‘inspirational in all of its aspects’ will be felt by a much larger crowd. We believe this! When we finish this process and look back, I will always carry with me the pride of making such a step and paving the way for better things to come. At the end, culture is not a port to be reached, it’s a journey. It’s an ongoing becoming and process. We are aware of this and we are taking action with such consciousness. We are preparing Istanbul, which is a city that housed various civilizations and cultures throughout centuries, for a brand new futu-

The Agency supported artists by displaying their pieces and performances to the public.

76 • TurkofAmerica


re. Actually Istanbul has all the necessary infrastructure for that because Istanbul does not only rhetorically bridge Asia to Europe but at the same time truly connects the east with the west; the old with the new; the traditional with the modern; mysticism with science; magnificence with modesty; dogma with pragmatism; and the universal with the local. Since the Istanbul European Capital of Culture 2010 project is limited to last oes this mean that the promoting of Istanbul by your Agency until this year, do will stop at the end of 2010? Is it posssible for your Agency to continue functioning in some way? The Agency for the Istanbul European Capital of Culture 2010 project was established in order to prepare Istanbul as the European Capital of Culture and to plan and manage the activities that are set to take place throughout 2010. The Agency is not a private entity and it has been legally formed by the Grand National Assembly as a result of the collective work of experts from public and civic organizations, local governments, and the private sector. This managing method of the Agency for the Istanbul European Capital of Culture 2010 is a method that has not been used so far in other European Capitals of Culture. This method is receiving appreciation in Europe not only because it’s a first but also due to its structure and it is being monitored with great interest. The goal of the Agency for the Istanbul European Capital of Culture is to create permanent values in Istanbul through sustainable projects and to maintain the mission of being a cultural capital. Aside from the question of whether the Agency might continue to function after 2010, what we pay attention to the most when selecting our projects is whether they’re sustainable or not. Our new arts and culture projects; restoration and preservation projects; and our communication and promotion projects abroad which aim to categorize Istanbul as a cultural venue in the international arena are still continuing to be implemented.!

The ‘Tall and Noble Sails Festival’ was organized with the helpof the Turkish Chamber of Shipping on May 27-30.

This year between July 5-7, The Agency held the second bi-annual Istanbul International Ballet Competition.

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ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010

PROMINENT PROJECTS OF THE AGENCY The main comprehensive restoration projects in the Hagia Sophia Museum and in the Topkapi Palace. The restoration of the Yeni Kapi Theodosius Port ruins, which reflects the 8500-year-old history of Istanbul, in a manner that is complementary to the environment. Accelerating the restoration process of some of other cultural heritage sites, such as the Galata Temple and the Gazanferaga Madrasa. Through the exhibitions that were displayed in the Topkapi Palace, the Agency was able to present selected pieces from the Persian Civilization and the Moscow Kremlin Palace. The opening of another exhibition, called ‘Treasures of the Ottoman Sultans from the Topkapi Palace,’ in Kremlin Palace on May 25th made it possible to present the historical pieces that are preserved in two important palaces, where the decisions that shaped world history were made. The exhibition, called ‘Legendary Istanbul from Byzantine to Istanbul: The 8000 Year Long Journey of a Capital City’, was organized in June in cooperation with the Sabanci University’s Sakip Sabanci Museum. As part of the Agency’s projects under the Stage Performance Arts Directorate, the ‘Dance Platform Istanbul’ program was carried out. As part of this program, the English choreographer Akram Khan and living legend of ballet Sylvie Guillem performed between April 21st and 23rd. The European University’s Theater Festival, which took place on May 2-16, and the 13th International Istanbul Puppet Festival, which was staged on May 5-16. The place that captured attention during the ‘Spring at Haydarpasa,’ which took place on June 3-6, was the Haydarpasa station. The dance which Pina Bausch, one of the leaders of the German Dance Theater movement and the infamous modern dancer, had initially prepared by being inspired by Istanbul and named ‘Breath,’ was performed at the Muhsin Ertugrul Theater on the anniversary of Bausch’s passing on the dates June 21, 22, and 23. The great contemporary Estonian composer Arvo Part’s most recent play, called ‘Adam’s Outcry’ was performed at the world’s widely renowned Aya Irini Museum with the organizational help of the Agency and the city offices of Tallinn, which will have the title of European Capital of culture next year.

One of the world’s most successful pianists, David Helfgott, introduced Rahmaminov to the music lovers of Istanbul through the concerts that took place on April 6 and 8. And the ‘Istanbul Chopin Piano Weeks 2010,’ which was arranged from April 11 to May 9, was another significant musical activity. The ‘Tall and Noble Sails Festival’ was organized with the help of the Turkish Chamber of Shipping on May 27-30. Another sports activity that we supported was the World Rally Championship Turkey round, which was held between April 15 and 18 and was internationally accredited. The ‘Living and Working in Istanbul’ project, which was organized in order to gather seven modern artists together in order for them to produce a piece dedicated to Istanbul and meet with the young artists living in Istanbul, took place in February under the leadership of Austrian artist Peter Kogler. The Spanish artist Antoni Muntadas, who completed his work task in 2009, exhibited his work, which was previously displayed in three cities including Istanbul, at the Tophane-i Amire Culture Center. The Agency’s Visual Arts Board established the Kadirga Art Production Center and enabling young artists to work with the international modern artistic community at this center, also brought to life the ‘Art Port’, a venue that contributed greatly to the culture of Istanbul. The 3600 square meter area of the Art Port, which the Agency operate in order to advance the increasing public exhibition site capacity of Istanbul, will host various exhibitions and activities until the end of 2010 for the residents of Istanbul. This year between July 5-7, we held the second bi-annual Istanbul International Ballet Competition, which it is first started in cooperation with the State Opera and Ballet General Directorate in 2008. With the help of the State Opera and Ballet General Directorate, the Agency organized the first ever Opera Festival in Istanbul, on July 5-7. University-wide Theater Festival, which has been taking place since 2008, continued annually in Istanbul universities, as well as in others in Turkey and Europe. The Agency published many publications and documents related to the fields of arts and culture. They supported artists by displaying their pieces and performances to the public.

ABOUT THE AGENCY FOR ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010 The Agency for Istanbul European Captial of Culture 2010 Project was formed over the past three years with the collective efforts of civil society organizations, central and local governments, and the private sector in order to preserve and promote the cultural legacy that Istanbul already has and to advance its potential in the fields of arts and culture. The Agency is creating, shaping, and implementing projects, step by step, through its 13 different Boards. The 3000 project proposals which we have received since the launching of the Agency has been evaluated in accordance with several different criteria, with sustain78 • TurkofAmerica

ability being the primary one and 605 of these projects have been selected for the year 2010. The Agency aims for all of the projects to be sustainable after 2010. About 214 of the projects that were carried out under the Urban Practices, Preservation of Cultural Heritage, and Arts, Culture, and Tourism programs have been started; 224 additional ones are in process; and 172 more projects will take place during the following phases. The allocated budget for the year 2010 was 60% for the Urban Practices and Preservation of Cultural Heritage and 40% for the Arts and Culture Projects.


''Music Stops'' street festival took place in June 21, at the World Music Days.

With the help of the State Opera and Ballet General Directorate, the Agency organized the first ever Opera Festival in Istanbul, on July 5-7.

The Ali Ufki Year Concerts in Dolmabahçe Palace Medhal Hall. Ali Ufki (1610–1675) was a Polish musician and dragoman in the Ottoman Empire.

Renown arp artist fiirin Pancaro¤lu will be performing at Cemal Reflit Rey Concert Hall in December, 10.

The main comprehensive restoration projects were completed in the Hagia Sophia Museum and in the Topkapi Palace.

'2010 World Chopin Year' celebrations started with world famous Turkish pianist Gulsin Onay in April 11.


ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010

The Agency is creating, shaping, and implementing projects, step by step, through its 13 different Boards.

Hundreds of people visited the “The Morning Line Contemporary Music Sonic Festival” on 22 to 25 May.

Opera Festival in Istanbul

The place that captured attention during the ‘Spring at Haydarpasa,’ which took place on June 3-6, was the Haydarpasa station.

80 • TurkofAmerica




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