Defense and Aerospace Industry Manufacturers Association (SASAD) shared the Defense and Aviation Industry 2019 Performance Report. First and foremost, the increase in turnover and exports is noticeable, while the decrease in the number of orders received draws attention.
The key data in the general line of the report is as follows:
| (2014-2019 Defense and Aerospace data (SASAD 2019 Performance Report) | ||||||
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |
| Turnover | $ 5.101 | $ 4.908 | $ 5.968 | $ 6.693 | $ 8.761 | $ 10.884 |
| Exports | $ 1.855 | $ 1.929 | $ 1.953 | $ 1.824 | $ 2.188 | $ 3.068 |
| Orders Received | $ 11.000 | $ 7.686 | $ 11.913 | $ 8.055 | $ 12.204 | $ 10.671 |
| Imports | $ 1.351 | $ 1.067 | $ 1.289 | $ 1.544 | $ 2.449 | $ 3.088 |
| R&D | $ 887 | $ 904 | $ 1.254 | $ 1.234 | $ 1.448 | $ 1.672 |
| Note: Figures are in Million USD. | ||||||
The changes of 2019 data compared to 2018 are as follows:
- Turnover: +24%
- Exports: +40,2%
- Orders Received: -13%
- Imports: +26%
- R&D: +15%
The turnover of the sector has continued to increase since 2001, except for 2009 and 2015, has increased its speed as of 2016 and has made a big leap in 2019. The effect of cross-border operations and operations that started in 2016 with the Euphrates Shield Operation and continued afterward plays an important role in this increase.
Increased rates of land vehicle turnover have folded and significant progress has been made in the domestic market as well as in exports. As a matter of fact, President Erdoğan recently stated that 1,800 armored vehicles were taken into inventory in 2 years. In addition, significant sales successes such as the sale of FNSS PARS 8×8 to Oman and Malaysia, the sale of Rabdan, a derivative of ARMA 8×8 to the UAE, have significantly increased export figures and turnover.
There is a significant rise in the overall picture of marine vehicles. Coast guard and outpost boat sales to Oman and Qatar have a significant impact. As a result of the training ship to Qatar and the export of Corvettes to Pakistan, it can be expected that the export of marine vehicles will continue to increase. Logistics ships, Corvette programs and boats, which Turkey supplies for its own needs, have a significant share in a significant portion of the turnover.
One reason for the rise in overall turnover in military aviation is the fact that some projects have been converted to production. It is also known that there are significant off-set sales in military aviation.
In the per capita turnover, a certain range has been maintained for a long time. While it is promising to be back to the rise in 2019 following the big downturn in 2018, it is necessary that the uptrend production of high technology products should increase.
When we examine the export data by year, the table shows significant changes in the data. In particular, significant changes in the share of exports to the United States are striking.
Especially in the field of military aviation, 481 million dollars of exports in 2018 fell to 75 million dollars in 2019, and the opposite is seen in the naval area: an increase from 2 million dollars to 113 million dollars. According to open-source information, although it is known that there are no naval platform sales to the USA, these sales are estimated to be classified as subsystems, service, component.
Exports to the US in the field of civil aviation have increased from $183 million in 2018 to $287 million in 2019.
Civil aviation sales for Europe increased by more than five times from $102 million in 2018 to $552 million.
Regions outside the United States and Europe are described as “other” in the report. Exports to other countries in Civil Aviation rose to $144 million from $110 million, according to the report, while shipping declined from $165 million to $34 million.
Exports to other countries, Turkey’s most successful land vehicles sector recorded a big growth. Exports totaled $897 million, up from $528 million in 2018. The fact that Turkish land vehicle manufacturers are especially oriented towards the Asia-Pacific region contributes significantly to the growth in this part. This region can be expected to become more prominent in Turkey’s exports in the following periods.
Exports to the United States in Civil Aviation increased, while the European region declined. The decline in turnover in Civil Aviation is expected to continue due to the COVID-19 pandemic.
Sales of ammunition, missiles, weapons and similar products increased both in Europe and other regions. Sales to the US fell by almost half. Sales to Europe rose from $7 million to $44 million, while sales to other regions rose from $80 million to $323 million.
Other exports (KBRN-P, C1ISR, IT, Aerospace, Security, Logistics Support) to other countries (Middle East, Asia, Africa, South America) constitute an important export item with $291 million.
Exports of the Turkish defense and aviation industry increased by 34.6% to 1 billion 740 million 988 thousand dollars in the period of January 1 – December 31, 2019, compared to the same period of the previous year. (According to the data released by the Turkey Exporters Assembly, “TİM”). Therefore, SASAD and TIM data do not match each other in terms of export figures.
Overall Assessment
The continuous growth of the sector, in general, can be regarded as a promising development. But some of the data between them also raises serious question marks. Some areas have not been able to achieve stable growth and, for political and sectoral reasons, there are significant declines or rises (fluctuations) in turnover over the years.
When we look at the import and export figures, after the decline in imports in 2015, it is seen that as of 2016 it has risen again.
The report assessed that the increase in imports was “driven by hidden embargoes and an effort to create stockpiles and supply chain work that has been hampered by the epidemic.” However, this assessment alone does not explain the significant rise in imports. In this, the supply of urgent needs arising in the operations in 2016 and beyond and the intermediate products, raw materials and equipment to be used for increased exports can be decisively considered to be effective.
In 2019, the budget allocated to product and technology development increased by 15.44% to around $1.67 billion, of which 15%, i.e. $249 million, is allocated to technology development. In 2018, it had reached around $ 1.48 billion, a 17% increase compared to 2017. But the share of technology development remained at 10%. Therefore, both the product and technology development budget has increased significantly and the share of technology development has increased. As a result, the budget allocated to technology development increased by 67.1% in 2019 compared to 2018, reaching $249 million.
Defense industry researcher Arda Mevlütoğlu made the assessments about the human resources of the sector as follows:
When it comes to employment, it seems that the total number of employees in the sector continues to increase steadily and is approaching 74 thousand, which is a pleasing development. But, as an issue that has been talked about for a long time and has become even more painful in the recent period, the fact that experienced and educated individuals in the sector travel abroad almost in mass, unfortunately, is not reflected in these data. The defense sector has lost and continues to lose, many employees, who have experienced an average of 10-15 years, have taken part in many critical projects, and have backed two or three careers alone compared to their European and American counterparts. In light of many examples that I have witnessed closely, I can say that experienced men and women, who have participated in many projects and we have heard of in the daily press and on social media and become proud of, go abroad and are alienated in some cases. The number and rate of mid-level leaders and managers who will lead, mentor and train young engineers are rapidly decreasing. This is a national security threat that needs to be thoroughly examined.
Distribution of turnover according to the provinces has been interesting. It is seen that Ankara accounts for 70% of the defense-aviation sector turnover, while Istanbul accounts for 18%. 65.65% of the employees live in Ankara and 20.8% live in Istanbul.
Savunma ve Havacılık Sanayii 2019 Performans Raporu ve Bazı Değerlendirmeler | Siyah Gri Beyaz
It should also be noted as an important warning that it is stated in the related report that since BAYKAR is not a member of SASAD, their data are not included in the report. Given that Baykar’s Bayraktar TB2 UAVs play an important role in both domestic and international sales, the fact that there is a significant shortfall in the data is revealed.
