A Presentation by ASSOCIATION of TURKISH MACHINE MANUFACTURERS Arslan SANIR, Secretary General http://www.mib.org.tr mib@mib.org.tr

MIB INCLUDES ALL KINDS OF MACHINERY MANUFACTURERS. ASSOCIATION OF TURKISH MACHINE MANUFACTURERS WAS ESTABLISHED IN 1990 AS A NON GOVERNMENTAL ORGANIZATION, AND IS THE MAJOR NATIONAL ORGANIZATION IN THE FIELD OF MACHINERY IN TURKEY. MIB INCLUDES ALL KINDS OF MACHINERY MANUFACTURERS. THE MACHINERY MANUFACTURING INDUSTRY HAS PARTICULAR IMPORTANCE FOR TURKEY DUE TO ITS PROMISING EXPORT POTENTIAL.

MIB IS A MEMBER OF CECIMO (EUROPEAN COMMITTEE FOR COOPERATION OF MACHINE TOOL INDUSTRIES) SINCE 1999. AND ALSO A MEMBER OF PNEUROP (EUROPEAN COMMITTEE OF MANUFACTURERS OF COMPRESSORS, VACUUM PUMPS, PNEUMATIC TOOLS AND ALLIED EQUIPMENT) SINCE MAY 2005.

GROSS NATIONAL PRODUCT FOR 2005 IS 361 BILLION US $ (With Current Prices) EXPECTED GNP for 2006 İS 388 BILLION US $ SIZE OF MACHINERY MARKET: 24.9 BILLION US $ PRODUCTION: 17.7 BILLION US $ EXPORTS . . . . . . . . . . . . . . . . . : 4.9 BILLION US $ IMPORTS . . . .: 12.1 BILLION US $ THE MACHINERY MARKET REACHING 25 BILLION $ IN 2005 (7% of The GNP) HIGHLIGHTS THE IMPORTANCE OF THIS SECTOR IN TURKEY. ALTHOUGH THE MACHINERY MANUFACTURING SECTOR HAS SHOWN A SUCCESSFUL PERFORMANCE, THE VALUE OF IMPORTS IS STILL VERY HIGH. FINANCE IS A BIG CONCERN FOR MACHINERY MANUFACTURERS. BANKS ARE NOT SO EAGER TO GIVE LONG TERM CREDITS TO THE COMPANIES WHEN THEY SELL MACHINES TO THEIR CUSTOMERS. ON THE OTHER SIDE, FOREIGN COMPANIES CAN GET THIS KIND OF CREDITS FROM THEIR EXIMBANKS. IT ADVERSELY EFFECTS COMPETITION OF TURKISH MACHINE MANUFACTURERS IN LOCAL MARKET AND ALSO IN EXPORT MARKETS AND CAUSE AN INCREASE IMPORTS.

MACHINERY MANUFACTURING SECTOR IN TURKEY IS RATHER YOUNG IN COMPARISON TO THOSE IN EUROPEAN COUNTRIES. THE FIRST INVESTMENTS IN MECHANICAL INDUSTRY HAVE BEEN INITIATED IN 1950s AS STATE ENTERPRISES. AT THE END OF 1950s THE FIRST PRIVATE COMPANIES HAVE STARTED INVESTING IN THIS INDUSTRY. THE COMPANIES THAT ARE MANUFACTURING MACHINERIES ARE 90 % SME’S AND ALMOST ALL OF THEM ARE OWNED BY FAMILIES. IN 2005, THE AVERAGE NUMBER OF EMPLOYEE OF THE COMPANIES THAT ARE THE MEMBERS OF MIB IS 83.

THE AVERAGE NUMBER OF EMPLOYEE BECOMES 64 IF THE SME’S ARE TAKEN INTO ACCOUNT ONLY. MACHINERY MANUFACTURING MAINLY TAKES PLACE IN THE MARMARA REGION COVERING ISTANBUL, KOCAELİ and BURSA. THE OTHER MAJORMANUFACTURING LOCATIONSINCLUDE CITIES OF IZMIR, ANKARA, KONYA, AFYON, ESKISEHIR and GAZIANTEP. AS TO THE MACHINE TOOLS, THE PRODUCTION IS RATHER REALIZED IN ISTANBUL, BURSA, KONYA AND IZMIR. THE PRODUCTION OF AGRICULTURAL MACHINERY IS PERFORMED IN MANY CITIES, HOWEVER MOST OF THE COMPANIES ARE VERY SMALL IN SIZE. THERE ARE APPROXIMATELY 3’000 COMPANIES REGISTERED AS MACHINE MANUFCTURERS BUT COMPANIES WHICH EMPLOY MORE THAN 20 WORKERS ARE ONLY AROUND 1’000. THE REMAINING ARE MOSTLY REPAIR or RENEWING SHOPS or THEY PRODUCE SOME SIMPLE EQUIPMENT FOR THE LOCAL MARKET.

MACHINERY MANUFACTURING CONCENTRATED AREAS IN TURKIYE

THE COMPANIES THAT ARE PRODUCING FOR DOMESTIC MARKET TILL 1990, STARTED TO PAY MORE ATTENTION TO APPLICATION OF NEW TECHNOLOGIES, R & D AND QUALITY, ON THE FOLLOWING YEARS. IN THE MEAN TIME, THEY BECAME MORE INTERESTED IN PARTICIPATING IN FOREIGN EXHIBITIONS. FOR INSTANCE, IN 2005 , 40 FIRMS PARTICIPATED IN EMO, WHERE THIS NUMBER WAS ONLY 7 IN 1995. THIS DEVELOPMENT RESULTED IN A STEADY INCREASE OF EXPORTS SINCE 1995 ONWARDS, AS SHOWN IN THE TABLE.

IMPORT-EXPORT OF MACHINERY (With Current Prices) MACHINERY FOREIGN TRADE Billion US $ 14 YEARS EXPORTS (X 1000) CHANGE % IMPORTS (X 1000) EXP. / IMP. % 1998 1.115.100 7.663.400 - 14,55 1999 1.215.600 9,01 5.068.000 -33,87 23,99 2000 1.362.700 12,10 5.875.000 15,92 23,19 2001 1.564.400 14,80 4.936.900 -15,97 31,69 2002 2.077.511 32,80 6.474.200 31,14 31,35 2003 3.118.511 50,11 8.141.300 25,75 32,09 2004 3.913.354 25,49 10.362.800 27,29 37,76 2005 4.852.868 24,00 12.173.200 17,47 39,87 12 10 8 6 4 2 1998 1999 2000 2001 2002 2003 2004 2005 EXPORT IMPORT

THE RATE OF SALES OF LOCALLY PRODUCED MACHINERY IN THE DOMESTIC MARKET IS ALSO INCREASING AS WELL AS THE EXPORTS. THE OVERALL MACHINERY PRODUCTION HAS INCREASED 2 TIMES, AND THE EXPORTS HAVE INCREASED 3 TIMES BETWEEN 2001 AND 2005. MACHINERY EXPORT IS IN THE 4. RANK IN TOTAL EXPORT OF TURKIYE AND 60% OF TURKISH MACHINERY EXPORT IS TO EU COUNTRIES, USA AND CANADA. OBVIOUSLY, IN SUCH DEVELOPED COUNTRIES, QUALITY, RELIABILITY AND TECHNOLOGY OF MACHINERY IS MORE IMPORTANT THAN PRICE. WE THINK THAT ALL THESE FACTS PROVE THAT MANY TURKISH MACHINE MANUFACTURERS HAVE A COMPETITIVE POSITION IN WORLD MARKET.

TURKISH MACHINERY TRADE (EXPORTS – IMPORTS) (US $ Million)   2001 2002 2003 2004 2005 TOTAL SALES 13.035 16.175 19.322 23.949 24.995 Change % 24,09 19,46 23,94 4,37 PRODUCTION 9.663 11.779 14.300 17.500 17.675 Production Change % 21,90 21,40 22,38 1,00 EXPORT 1.564 2.077 3.118 3.913 4.852 Export Change % 32,80 50,11 25,49 24,01 IMPORT 4.936 6.474 8.141 10.362 12.173 Import Change % 31,14 25,75 27,29 17,47 Total Export of Turkiye 31.334 36.059 47.252 62.773 73.122 Total Import of Turkiye 41.399 51.553 69.339 97.161 116.048 Machinery Export / Total Export (%) 4,99 5,76 6,60 6,23 6,64 Machinery Import / Total Import (%) 11,93 12,56 11,74 10,67 10,49

TURKIYE IS IN A VERY ADVANCED LEVEL IN PRODUCTION OF SOME SPECIFIC TYPES OF MACHINERY. ACCORDING TO CECIMO PUBLICATIONS, TURKIYE IS THE 9th BIGGEST COUNTRY AS A MACHINE TOOL MANUFACTURER and 12th AS AN EXPORTER AMONG THE 15 CECIMO MEMBER COUNTRIES. ACCORDING TO GARDNER PUBLICATIONS, PUBLISHED IN U.S.A., TURKIYE IS 14th BIGGEST COUNTRY AS A MACHINE TOOL MANUFACTURER and 20th AS AN EXPORTER COUNTRY IN THE WORLD. 19% OF TURKIYE’S MACHINE TOOLS EXPORT WAS TO GERMANY FOLLOWED BY ITALY, SPAIN, U.S.A. and RUSSIA.

60% OF MACHINE TOOLS EXPORT WAS TO EU COUNTRIES, U.S.A. and CANADA. IN MACHINE TOOLS PRODUCTION, SHEET METAL PROCESSING MACHINES ARE IN LEADING POSITION. IN 2005, 70% OF THE MACHINE TOOLS PRODUCTION CONSISTED OF SHEET METAL PROCESSING MACHINES. IN 2005, APPROXIMATELY 30% OF THE MACHINE TOOLS PRODUCTION CONSISTED OF METALWORKING MACHINE TOOLS. 60% OF MACHINE TOOLS EXPORT WAS TO EU COUNTRIES, U.S.A. and CANADA. BESIDES MACHINE TOOLS, CONSTRUCTION MACHINERY, PUMPS and COMPRESSORS, FOOD INDUSTRY MACHINERY, AIR-CONDITIONING AND HOISTING and HANDLING MACHINERY MANUFACTURING INDUSTRIES ARE ALSO IN AN ADVANCED LEVEL.

EARTH MOVING EQUIPMENTS & CONSTRUCTION MACHINERY ONE of THE INTERESTING SECTORS IN TÜRKİYE. BECAUSE of FAST GROWING DEMAND, NEW INVESTMENTS IS EXPECTED IN THIS SECTOR. TOTAL IMPORT Year Total 2003 257.740.000 USD 2004 493.559.000 USD 2005 911.775.750 USD

EARTH MOVING MACHINERY (Excavators, Wheel Loaders, Dozers, Graders, Scrapers,. . . ) Total Market 974.330.000 USD Import 817.429.000 USD Production in Türkiye 215.000.000 USD Export 58.096.000 USD

EARTH MOVING MACHINERY LOCAL MARKET DOMINATED, 84%, by IMPORTS. FIRST 6 COUNTRIES EXPORTING to TÜRKİYE JAPAN 196.085.666 USD SOUTH KOREA 165.266.694 USD ENGLAND 128.840.928 USD BELGIUM 76.047.452 USD SWEDEN 54.339.740 USD ITALY 37.306.229 USD

CONSTRUCTION MACHINERY (Crushers, Screening & Washing, Classifying Equipment, Concrete Batching & Asphalt Plants) Total Market 424.466.750 USD Import 94.346.750 USD Production in Türkiye 412.650.000 USD Export 82.530.000 USD

CONSTRUCTION MACHINERY FIRST 6 COUNTRIES EXPORTING to TÜRKİYE ITALY 33.903.043 USD GERMANY 29.077.869 USD FRANCE 7.233.277 USD USA 6.543.467 USD DENMARK 4.994.710 USD ENGLAND 2.942.239 USD

ON BEHALF of ASSOCIATION of TURKISH MACHINE MANUFACTURERS THANK YOU.