The Orient

The Turkish city of Düzce, between Ankara and Istanbul, is the location of SAF-HOLLAND’s latest plant built in 2016. The construction of this plant represents another step on the way to achieving the “Strategy 2020” goal of taking advantage of the transportation sector’s growth in emerging markets. Despite the currently challenging situation and more pronounced market fluctuations in some regional markets of the Middle East, there are some interesting opportunities waiting in this highly populated region that are worth preparing for.

DÜZCE-ISTANBUL
Turkey
Production location
Turkey’s Managing Director Bilal Azizoglu
We don’t have any problem finding qualified employees

Hazelnut plantations, as far as the eye can see. Three out of four of the world’s hazelnuts are harvested in Turkey. Ten kilometers from the Black Sea, the region around the city of Düzce is one of the preferred areas for agriculture with its very hot summers and icy cold winters. Yet, it’s not the climate that brought Bilal Azizoglu here but the strategic location halfway between Ankara and Istanbul. Under his direction, SAF-HOLLAND’s first plant in Turkey, directly at the traffic artery, was established in 2016 and will start production in the first quarter of 2017. A total of 35,000 axle systems are expected to leave this plant every year by 2018.

“Turkey is Europe’s bridge to the Middle East.” Bilal Azizoglu, Managing Director of SAF-HOLLAND in Turkey

SAF-HOLLAND’s investment in this new plant is also an investment in a growing market. Since the arrival of the new millennium, Turkey has become one of the most vital production centers for Europe’s commercial vehicle industry. First came the bus and coach manufacturers, whose final assembly was very labor intensive due to the different configurations. In the meantime, a growing number of heavy-duty commercial vehicles and their trailers are being manufactured in Turkey. In 2015, which was a record year, a total of 275,000 commercial vehicles and roughly 25,000 trailers left production plants. “The Turkish government has invested massively in infrastructure in the past ten years,” offered Azizoglu explaining his customers’ investment decisions. “From communication networks to highways, the entire country went through a wave of modernization.” Still, the favorable conditions, which include the direct support of the ministry of economy, were just one aspect. “Turkey is Europe’s bridge to the Middle East,” says Azizoglu. This statement is especially true for vehicle original equipment manufacturers who deliver from Turkey to the Arab peninsula – a region that experienced a construction boom until 2015 that boosted the demand for commercial vehicles. The Iranian market may have a greater role to play in the future. “Of course growth in Iran also depends on future political developments,” says Azizoglu. “The potential for recovery in this country, with more than 75 million inhabitants, is enormous.” This outlook is also reflected in the World Bank’s forecast for economic growth in Iran of 4.6% in 2017. The Iranian government’s five-year plan even shows a targeted annual growth rate of 8%. Turkey is also an international hub for the transportation industry. “The food produced in Turkey, for example, is distributed throughout the entire region,” explained Azizoglu. “And, of course, it needs to be transported – preferably by land.” Currently, however, trade is suffering because the war in Syria is blocking one of the most important routes. “It’s only a matter of time before this problem is solved,” says Azizoglu optimistically.

Production to start at the new plant after just one year.

SAF-HOLLAND, on the other hand, wasted no time constructing its new plant, which only took about a year to complete. “We Turks are quick and pragmatic,” says Azizoglu, who himself was born in Schleswig-Holstein, Germany, and later studied in Ankara. It wasn’t only a question of mentality, but also the smooth cooperation between the headquarters in Bessenbach and the colleagues locally that made it possible to work quickly. “We were able to simply ‘plug-and-produce’ the whole production concept used in Bessenbach,” explained Arne Jörn, Chief Operating Officer responsible for SAF-HOLLAND’s global production system. The machines and equipment for Düzce were newly purchased and configured for production use in Germany. Experienced workers from Bessenbach, some who were even originally from Turkey, came to Düzce to help set up the new plant and training for the new staff. Some of this new staff will also spend time at the Spessart location. Jörn and Azizoglu shared the project management and every week discussed all of the pending issues in detail, for example, the renovation of the rented, three-year-old plant hall, which at one point had failed to meet all of SAF-HOLLAND’s requirements. One of the biggest challenges was a process step integrated into the axle production process in Germany: the cathodic dip-paint coating, which is the basis for anti-corrosion protection. Because the necessary equipment ties up a relatively high amount of capital, it was not feasible to set up a duplicate process in Düzce. After conducting a search together, Jörn and Azizoglu finally found a suitable provider in the region.

“We were able to simply ‘plug-and-produce’ the whole production concept used in Bessenbach.” Arne Jörn, Chief Operating Officer of SAF-HOLLAND

Finding employees, on the other hand, was actually not that difficult. “In Turkey, the commercial vehicle industry is seen as a growing, future-oriented industry,” explained Azizoglu. SAF-HOLLAND, as a multi-national company, is particularly attractive for workers.” Just one week after publishing the first online job advertisements, there were already 150 applicants. Although not all were qualified, after a rigorous interview process an initial team was quickly assembled. Experienced people from the automotive industry were hired for key positions in areas such as production and quality management.

Customer discussion
Turkey has grown into a center for the commercial vehicle industry

Word had spread among the Turkish customer base that SAF-HOLLAND was now producing locally. “The initial reaction was ‘When can you start delivering?’”, described Azizoglu. Shorter transportation distances greatly increase delivery flexibility, which can be an important advantage, especially in the trailer business. Whereas, previously, two to three weeks would pass between the receipt of an order in Bessenbach and delivery in Turkey, now the time is projected to fall to just two to three days. “We also were able to increase our overall capacity for the European market and thereby reduce the delivery times to our European customers,” added Jörn. The service business with Turkish customers is also benefiting from the new location, which has a developed area totaling roughly 1.3 hectares and has significantly more room than the previous location in Istanbul. The Aftermarket warehouse has already moved to the new location. “This is now another area where we can respond more flexibly to our customer requests,“ promises Azizoglu.

The new plant:

35000axles

per year is the future target for the plant in Düzce.

2-3days

delivery times help increase the flexibility for our regional customers.

Like the days of incredible treasures that made the Ottoman empire into a world trade center, this is how Turkey intends to be the bridge for the exchange of goods between Europe and the Middle East today. Be it gold, machine parts or simply hazelnuts. What these goods have in common is that they must be transported – on axles, of course. Good prerequisites for SAF-HOLLAND’s new plant.

Faster delivery
Portions of the aftermarket business will also be located in Düzce

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