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Results of ICI 500-2019 Research Were Discussed in ICI July Assembly

22.07.2020
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July Assembly of Istanbul Chamber of Industry was held as a video conference on the date of July 22nd, 2020. The main agenda of ICI Assembly chaired by Zeynep Bodur Okyay

ICI Assembly President was “Looking at the Present and Future of the Industry in line with the 2019 Results of ICI 500.” In the assembly meeting, a panel was organized under the moderation of Hakan Güldağ with the participation of Dr. Can Fuat Gürlesel, Ferda Besli and Şeref Oğuz, ICI Consultants and the 2019 Results of ICI 500 were discussed.

Erdal Bahçıvan, ICI Board of Directors President who made a speech in ICI Assembly drew attention that the impact of pandemic on the industry sector will be seen in the following year’s ICI 500 data and stated that: “We should construct the future today by making some deductions. The period that we are going through obliges the industry to acquire new competencies. Technology-based productivity increase will be the main topic of the coming years”.

The July Assembly meeting was opened by Zeynep Bodur Okyay, the ICI Assembly President. When opening the meeting, Okyay said that:

“The ICI Top 500 Industrial Organizations research is one of Chamber’s pride works putting forward the picture of our industry for 52 years, showing trends, drawing attention to risks and opportunities.

We see that the turnover increase rate of our companies decreased, the profitability decreased despite of the decrease in the financing cost, the debt increased, the turnover share of low technology products increased to 40 percent and the number of public companies, which had been already low, decreased in 2019, which are all the challenging

parameters for us. The increase in the share of advanced technological products in sales from production from 5.3 percent to 6.9 percent, increase in the employment even if it is only 1 percent and increase in the R&D costs by 152 percent and increase in the sales from production to the 1 percent are all promising developments. But not enough.

Briefly, as Erdal Bahçıvan underlined last year, our companies endeavored to re-enter to the growth path while financial fragility inherited from the past prevented them. We know that only if the industry grows, Turkish economy grows. Therefore, saving industry from only working for its debts is one of the most valuable reforms that are expected to be seen. Otherwise, it does not seem possible for us to achieve extreme growth and reach the scales in line with our goals.

For only comparison purposes; Volkswagen, Germany's largest industrial enterprise, made a turnover of $282 billion last year by only 671,000 recruitments. The turnover of our 500 top industrial organizations is 180 billion dollars and their total employment is 697 thousand on average. Please pay attention to the scale and efficiency difference.”

Okyay, the Deputy President of ICI Assembly gave the floor to Erdal Bahçıvan, ICI Board of Directors President to make his speech.

Stating that all sectors are affected differently by the extraordinary process, Bahçıvan said that how the industry sector has been affected will only be seen in the following year by means of ICI 500; however, they have to make some deductions and accordingly construct the future today. Bahçıvan pointed out that it is of more critical than ever to improve the added value structures of the sectors, enhance adaptation process to changes in global demand dynamics, strengthen the investment attractiveness of the sectors, accelerate the adaptation process to future professions, technologies and business manners, and implement integrated policies.

Emphasizing that the period that they are going through obliges the industry to acquire new competencies, Bahçıvan recorded that technology-based efficiency increase will keep its place on the main agenda for the following years. Bahçıvan told that digital transformation, high quality and qualified labor force are the three priorities of the industry, and stated that foreign capital investments, technology and R&D partnerships come to the forefront.

Underlying that financing will continue to be one of the most primary titles in the following period, Bahçıvan expressed that the need in the long-term qualified financing will increase in order to realize the transformation. Bahçıvan recorded that they should focus on strengthening the link between the industrial sector and capital markets instead of being stuck on the banking sector and credit-focused funding approach for Türkiye. Bahçıvan underlined that those who get stronger from the process will be those who comprehend the changes and benefit from the opportunities through correct and fast steps.

Stating that they are about to conclude the projects “Post-Covid-19 Sectoral Risks, Opportunities and Route Maps” that they initiated by this approach and predictions as ICI, Bahçıvan expressed to believe that the project they plan to introduce to the public during mid-August will create a strong perspective for the industry sector and will guide all sections for the construction of the future.

Mentioning about the events that ICI has organized recently, Bahçıvan said that they joined in the meetings organized by TOBB and with the participation of ministeries, Chamber presidents and sectoral assembly presidents and they shared their opinions and suggestions with the government all the time. Within this scope, Bahçıvan informed that Mustafa Varank, the Minister of Industry and Technology participated in the meeting under the organization of TOBB and shared his opinions.

Bahçıvan continued:

“We continue to organize executive development training programs for our school principals and vice principals that we had organized for the first time in November last year within the scope of the Vocational Training Project. When it comes to the vocational training, I would like to remind that this week is the school selection week for students within the scope of high school transition examination. As Istanbul Chamber of Industry, we made a press release last day so that our students and their parents could make their choices towards vocational high schools, and we are in a great effort with school principals of the schools we guide. I would like to express that your contribution to guide your close circle to make their choices towards vocational high schools is of high importance and value.”

Stating that they held the Profession Committees Negotiation Meeting where the tax and related subjects were discussed upon the participation of Bekir Bayrakdar, the President of Turkish Revenue Administration, deputy presidents, department heads and Assembly and Profession Committee Members, Bahçıvan recorded that the meeting was a friendly atmosphere and very productive even if it was remotely held.

Stating that they decided to organize a workshop with the participation of all stakeholders in the production of cotton which is of great importance for the region and Türkiye, during the Şanlıurfa-Gaziantep visit they realized with Assembly members the last October, Bahçıvan expressed that they introduced the final report of the workshop held in December last year with a wide participation and included with valuable opinions and suggestions, to the public on July 6.

Bahçıvan stated that: “We prepared the instructions and question lists after the guideline and presented to the use of the industry within the scope of “ICI-Standard of Struggle Against Epidemic/Pandemic Specific to Covid-19” that includes to take the necessary health and hygiene precautions in industrial facilities while adapting into the new normal. Besides, we have realized and continue to realize projects to spread the standard by means of training programs and pilot applications that we have organized in general and sectoral scale so far.”

Bahçıvan stated that together with their consultants they started their efforts to transform the existing VAT system into a structure that would not impose financial burden on producers and aim to prepare their suggestions on the new VAT model until September.

Hasan Büyükdede, Deputy Minister of Industry and Technology participated in the meeting and made a brief evaluation regarding the current economical developments. Büyükdede said that: “ That 70 percent of the profits owned by the firms in ICI 500 are spent for the financing cost in each year have always bothered us. As the Ministry, how to reduce the deficit of firms for 30 billion TRY is an issue on our agenda. We will establish a new board with the name of Industrialization Executive Board in the following period. We will establish the structure that we coordinate within the ministry among several ministries. We see a great interest in the Technology Focused Industry Move, especially from the machinery sector, then from the chemistry, electrical-electronics and automotive sectors. We give the Safe Production Certificate over TSI and we have given it for 390 companies so far. There are serious investments in Anatolia. There is a great interest in terms of both domestic and foreign industrial investments in Bursa Manisa, İzmir, Balıkesir, Konya, Denizli, Gaziantep, Adana, Mersin ve Ankara.”

Hakan Güldağ

A panel was organized under the moderation of Hakan Güldağ with the participation of Dr. Can Fuat Gürlesel, Ferda Besli and Şeref Oğuz.

At the beginning of the panel, Hakan Güldağ said that: “Türkiye’s Top 500 Industrial Organizations is one of the brand researches of Türkiye. It is an illuminating and guiding research for the economy newspapers.”

In the panel, speakers briefly said that:

Dr. Can Fuat Gürlesel

“The factors defining the development of ICI 500 used to be realized with the dynamics of the industry. However, the main factor giving shape to the overall table of ICI 500 after 2016 turned out to be the domestic and international developments instead of the dynamics and performance of the industry itself. Our firms are focusing on their core businesses which is different from the previous years as seen in the results of the year which is very interesting. There were discussions about the volume of the out-of operation revenues just 5- 6 years ago. Since the industrialist has seen it, they take themselves under protection and focus on core activities to manage the process. Additionally, as the internal and external demand develops, sales are impacted. For export, we see that during the years when the export has shown a strong increase, the marketing performance grows rapidly. Therefore, export tendency is of crucial importance for ICI 500 firms. Central bank reserves are very close to face with deficit. Markets expecting a value loss in Turkish lira is the biggest risk before the industry.

Ferda Besli

“Since the currency we use in the financing is foreign currency, ICI 500 companies face with difficulties. Credit for 406 billion TRY was used while 83 percent of foreign currency was indebted in 2018, 73 percent of foreign currency was indebted in 2019. So, we are being affected by the value loss against the foreign currencies because of the problems that we have not caused. ICI 500 is a brand and ICI 500 companies can use a little bir more advantageous credits from the banks. However, we need to get rid of dollar and euro credits. Most of the TRY credits are used by individuals or SMEs and large companies like ICI 500 cannot find TRY credits. When indebted for foreign currency, macro issues in currency are affecting our balance sheet in a negative direction. Since the profitability has decreased in the companies, equitie capitals cannot grow. And since the interests in the world are low, the companies prefer to be indebted instead of equity capital. Because of the low profitability, they are indebted more and such rations affect the rating of the companies in a negative direction.

Dr. Şeref Oğuz

“ICI 500 is kind of MR for the industry. This year, the industry is moderate; not bad but not enough as well. Unfortunately, 233 firms included in ICI 500 have not conducted R&D. R&D should be deemed as a part of the technology. When we look at the other countries, they use Coronavirus pandemic as an excuse for themselves and improving themselves. Countries started to change their strategies. China stops the period of production while the West stops the period of consumption. China is no more the cheap production center. They are focusing on sectoral specialization instead of scale economy. Sectoral separation is losing its validity in the world. Countries are getting deep in the sectors where they are good at. Industrial companies should increase their product competency. Besides, we need to figure out which markets are in and out in the world. If we are intended to catch up with the Industry 4.0, we need to work on human resource. The efforts of ICI to gain profession for the Türkiye which has not profession should spread across the country.”