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Turkey’s defense companies: Big in words, small in numbers
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I must confess, when I heard there was going to be a celebration at Turkey’s aerospace powerhouse, TAI, in the presence of Air Force Commander Aydogan Babaoglu, I thought the company would either be launching a golf course on its premises, or a manufacturing line for golf equipment. Well, knowing a few things about the Turkish defense industry, its companies and the general’s love affair with golf, I even thought TAI would now boast a complete golf course made of composite grass. I was wrong.
The event was to celebrate the launch of a production line for composite fuselage for the multinational, next-generation, fighter jet, the F-35, otherwise known by its project tag, the Joint Strike Fighter, or JSF. TAI’s merry celebration and the merry press coverage of it sparked a series of other celebrations by different Turkish companies, for similar reasons. The headlines following each celebration would tell readers about the marvels of our defense industry’s production capabilities, each a success story of its own.
A few days after the big TAI show-off, Kale Havacilik, another Turkish subcontractor in the JSF program, showed the press its own goodies for the F-35. The company claims it produces "critical" parts for the future fighter and it has an ambition to manufacture a "Made in Turkey" aircraft; although it has not said whether it will be a military aircraft, a civilian aircraft or a model aircraft. Hurriyet’s headline for the story read, "Turkish flag on F-35, excitement for locally-made aircraft."
But the facts are slightly different. Yes, there is a Turkish flag on the JSF group’s masthead and stationary and probably on the prototype aircraft too, as Turkey is one of the shareholder states. You pay for the fighter’s development, you commit to buying a certain quantity of the final product and you can have your flag anywhere you want, next to the flags of other participant nations.
But calling any ’Made in Turkey’ part for the F-35 "critical" must be another joke. "Critical" parts in weapons systems are the parts that only a few manufacturers in the world could supply and/or would be vitally important for a system’s operation. An aircraft cannot fly safely without a reliable door latch, but that does not make a door latch a "critical" part of the aircraft.
But the best way to judge is often hidden in figures. Kale says its 2009 sales will amount to $25 million, including contracts other than the JSF contract, while the JSF program is worth $400 billion. Assuming Kale will earn $20 million from the JSF, we can always calculate how "critical" that work will be. Your calculator will probably not give you a percentage if you divided 20 by 400,000.
Most recently it was a privately-owned aviation company, Alp Havacilik, in the news. Alp delivered the first batch of $40,000-a-piece parts, fan rotor rear hub, for the F135, the engine that will power the F-35. Needless to say, that is another "critical" part of the fighter. We also learned from the Hürriyet story that Alp aimed to generate $2 billion "from this business in which it had invested $4 million."
I know only one business in which you invest $4 million and make $2 billion, and that is narcotics. If any Turkish aviation company achieves that unusual return on their investment from a legal business, hats off to its executives! But again, the story goes back to how these proud contracts were won. Through international competition? Not really.
Turkish companies were awarded the JSF subcontracts not because they are the sole suppliers of the parts they will supply to the consortium, or because they produce the best quality parts at the lowest cost, but simply because Turkey committed itself to buy over $11 billion worth of F-35 aircraft and naturally wanted its share of the production business. When Turkey and the JSF consortium agreed on a work-share, the rest was relatively easy; fuselage to TAI, "critical" parts to Kale, rear hub to Alp, some software to Havelsan, some to Aselsan and moreÉ
Turkish defense companies are a thriving lot. Some of them have been highly successful, including Kale and Alp. There are others which create small engineering miracles to help reduce Turkey’s dependency on really critical systems. It is just that they are not what they claim they are. Again, facts and figures will best explain. Aselsan is the biggest defense company in this country of 70 million. Its 2007 defense revenue was $458 million. In comparison, ST Engineering, the defense powerhouse of Singapore, a country of 4.5 million people, reported $1.153 billion defense revenue in the same year.
A few days after the big TAI show-off, Kale Havacilik, another Turkish subcontractor in the JSF program, showed the press its own goodies for the F-35. The company claims it produces "critical" parts for the future fighter and it has an ambition to manufacture a "Made in Turkey" aircraft; although it has not said whether it will be a military aircraft, a civilian aircraft or a model aircraft. Hurriyet’s headline for the story read, "Turkish flag on F-35, excitement for locally-made aircraft."
But the facts are slightly different. Yes, there is a Turkish flag on the JSF group’s masthead and stationary and probably on the prototype aircraft too, as Turkey is one of the shareholder states. You pay for the fighter’s development, you commit to buying a certain quantity of the final product and you can have your flag anywhere you want, next to the flags of other participant nations.
But calling any ’Made in Turkey’ part for the F-35 "critical" must be another joke. "Critical" parts in weapons systems are the parts that only a few manufacturers in the world could supply and/or would be vitally important for a system’s operation. An aircraft cannot fly safely without a reliable door latch, but that does not make a door latch a "critical" part of the aircraft.
But the best way to judge is often hidden in figures. Kale says its 2009 sales will amount to $25 million, including contracts other than the JSF contract, while the JSF program is worth $400 billion. Assuming Kale will earn $20 million from the JSF, we can always calculate how "critical" that work will be. Your calculator will probably not give you a percentage if you divided 20 by 400,000.
Most recently it was a privately-owned aviation company, Alp Havacilik, in the news. Alp delivered the first batch of $40,000-a-piece parts, fan rotor rear hub, for the F135, the engine that will power the F-35. Needless to say, that is another "critical" part of the fighter. We also learned from the Hürriyet story that Alp aimed to generate $2 billion "from this business in which it had invested $4 million."
I know only one business in which you invest $4 million and make $2 billion, and that is narcotics. If any Turkish aviation company achieves that unusual return on their investment from a legal business, hats off to its executives! But again, the story goes back to how these proud contracts were won. Through international competition? Not really.
Turkish companies were awarded the JSF subcontracts not because they are the sole suppliers of the parts they will supply to the consortium, or because they produce the best quality parts at the lowest cost, but simply because Turkey committed itself to buy over $11 billion worth of F-35 aircraft and naturally wanted its share of the production business. When Turkey and the JSF consortium agreed on a work-share, the rest was relatively easy; fuselage to TAI, "critical" parts to Kale, rear hub to Alp, some software to Havelsan, some to Aselsan and moreÉ
Turkish defense companies are a thriving lot. Some of them have been highly successful, including Kale and Alp. There are others which create small engineering miracles to help reduce Turkey’s dependency on really critical systems. It is just that they are not what they claim they are. Again, facts and figures will best explain. Aselsan is the biggest defense company in this country of 70 million. Its 2007 defense revenue was $458 million. In comparison, ST Engineering, the defense powerhouse of Singapore, a country of 4.5 million people, reported $1.153 billion defense revenue in the same year.
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