Interview with the Deputy General Manager of TAFF Mr. Sadık PİYADE

Question 1. Could you please share your opinions and views about the IDEF 2017 Fair?

We were successfully completed the 13th IDEF Fair, which has been organized in single years since 1993 and become a world brand, on 9-12 May 2017. 133 delegations and 820 companies attended the IDEF 2017 Fair from all corners of the world. I would like to thank them once again.

Our fair was organized under the auspices of the Presidency of the Republic of Turkey, hosted by the Ministry of National Defence and under the management and responsibility of Turkish Armed Forces Foundation (TAFF) for the first time this year. This situation has also honoured us and has given us strength.

During IDEF 2017 Fair; as the Foundation, we consider that we make contributions to our Foundation’s publicity and also the possible cooperation with the Foundation companies by meeting with the defense industry companies such as FIDAE, TAIS Navy Shipbuilding, Ingun Prufmittelbau Gmbh, CSIR, Quinetiq, Lockheed Martin, Optix Co, Teksan Jeneratör İç ve Dış Tic.A.Ş., Unidef Birleşik Sav.San.Tic.A.Ş., etc.

We continue to work with all our efforts to be even more successful in the next fairs after IDEF 2017 Fair, in which we broke records in almost every field.

Question 2. Could you please give information about the position of the Turkish Armed Forces Foundation of the Great Turkish Nation in the Turkish defense industry and also its important indicators?

After the Cyprus Peace Operation, realized in 1974, the importance of meeting the needs of the Turkish Defense Industry through the local opportunities was better understood. Our foundation was established on 26 September 1987 by being merged the Turkish Army, Naval and Air Forces Foundation through the Law no.3388.

Our foundation has made in the field of national defense industry since its establishment and has continued to make new investments. The foundation has effectively managed its aforesaid investments and each of them has become both domestic and national companies which have voice in the world and national arena. As of this date, the actions towards the national defense industry started to be taken more strongly and accordingly the foundation companies were set up.

During the 80s and 90s, the assembly-based products were developed more under license in the Turkish Defense Industry. From the beginning of the 2000s; through the initiatives of the Ministry of National Defense, the Undersecretariat for Defense Industries and the User Authorities, the TAFF Subsidiaries focused on the research and development (R&D) activities based on national and critical technologies as across the defense industry and accordingly it began to focus on the development of unique products. At this point, the number of unique products with high local contribution rate in the defense industry has been raised to a very important level.

As of today;

ASELSAN, has become an electronic giant with its unique products,
TAI, has reached to a leading position in the field of aviation, satellite and space,
ROKETSAN, is the sole design and producer of the rocket-missile systems,
HAVELSAN, has become the software, informatics and system integration leader,
İŞBİR, has reached a position, supplying generators and alternators for the important defense and public projects,
ASPİLSAN, has gained the ability to develop unique battery and battery block products for the important defense industry systems in the Turkish Defense Industry.

When considered the tangible data concerning the position of our subsidiaries in the country defense industry; our subsidiaries’ share in 5,9 Billion TL-Net Sales, realized across the Turkish defense industry was recorded as 43% according to 2016 figures and also our subsidiaries’ share in the exportation recorded as approximately 2 Billion TL was recorded as 41%. When analyzed the R&D expenses, our subsidiaries’ share in the R&D expenses amounted at 1,2 Billion TL was 60%.

Furthermore, 40% of 35.000 personnel employed in the country defense industry by the end of 2016 were employed by our Subsidiaries. 5.068 engineers worked in the R&D activities of our companies in 2016.

The TAFF, being the Foundation of Great Turkish Nation, provides the effective supervision and strategic orientation of its direct and indirect 14 companies, including the six subsidiaries in which the foundation is the main shareholder.

According to the Top 500 Companies List published in 2017 on the basis of the 2016 data of the Istanbul Chamber of Industry (ICI) which sorts the biggest companies of Turkey according to the production and sales; ASELSAN rose to 20th from 23rd in the previous year, TAI rose to 29th from 36th in the previous year and ROKETSAN rose to 89th from 127th in the previous year. HAVELSAN was ranked the 293rd in the list.

ASELSAN is the 58th largest defense industry company and TAI is the 72nd largest defense industry company of the world according to the Defense News 100 List which sorts the largest 100 defense industry companies of the world according to the defense industry sales.

TAI ranked 23rd, ASELSAN ranked 101st and ROKETSAN ranked 109th in the list published in 2016 on the basis of 2015 data prepared by the Turkish Exporters Assembly according to the export revenues.

Question 3. R&D Activities of the Subsidiaries

We consider that we make great contributions to both Turkish Defense Industry and Turkish industry by means of the intense R&D activities conducted by the Subsidiaries, increasing use of subcontracting by our companies with the aim of spreading technology in the country and also the exportation of the unique products and systems developed by our companies.

Our companies have focused on important R&D works in order to determine the future needs, to meet the critical systems through the national opportunities and also to ensure the competitiveness in the international arena. In this regard, the development of technologies and systems, which the TAFF will need in future, and also all of the sub-system and components, of which the supply is risky, in the subsidiaries’ responsibility areas with an innovative approach by determining the strategic operation needs constitutes the basis of the TAFF’s technology development strategy. The activities are carried out through this strategy related that the companies can reach a position that they can cooperate in a balanced manner in the global market and also increase their competitiveness by developing technologies that can create value and difference.

In addition to the R&D activities carried out within the scope of the projects, there are 161 R&D projects, performed through the subsidiaries’ own resources as of 2015 by the Subsidiaries. Our companies’ primary technology fields are Sensor/Electronic Systems, Aviation and Space, Weapon Systems, Informatics and Advanced Material-Energy Technologies.

ASELSAN, TUSAŞ, ROKETSAN, HAVELSAN and ASPİLSAN have 6 technocities and 12 R&D Centers in total by the end of 2016 and 6.177 R&D engineers are employed these campuses.

Company Number of Technocity Number of R&D Center
ASELSAN 2  (METU/ İTÜ) 6
TAI 1  (METU) 1
ROKETSAN 2 (Bilkent / İstanbul) 2
HAVELSAN 1  (METU) 2
ASPİLSAN 1
TOTAL 6 12

ASELSAN was in the first place in the list of companies, made maximum R&D expenses, “R&D 250 Research”, published every year by the Turkish Time journal, in 2014 and also kept its place in 2015. Compared to previous year, TAI ranked 3rd by rising one step and ROKETSAN ranked 5th by rising one step. HAVELSAN entered from the 2nd rank in this list in 2015 for the first time.

ASELSAN took the first place in the Defense Industry in the R&D Centers’ Performance Evaluation Ranking of the Ministry of Science, Industry and Technology in 2015. Depending on the support of R&D activities from the national budget, the incentives provided have an important place in the total R&D expenses, made by our companies.

Concerning the main aim of our subsidiaries to increase the warpower of our security forces, their activities for developing national and advanced technology applications and increasing the local contribution margin continue resolutely and effectively.

Our companies play an active role in gaining technological depth in the activity fields where they are responsible in defense, security, aviation and space industries, in developing strategic human resources applications and also in developing country’s defense industry with the objectives of creating brand value in the world’s defense industry with the unique systems, products and solutions.

It is aimed to increase the technologic maturity levels of the Subsidiaries in order to reduce foreign dependency in the national defense industry by developing unique products in future within the scope of 5-year Strategic Plans of the TAFF.

Question 4. The Subsidiaries’ exportation activities

While our companies were only software and hardware manufacturer at the beginning, today they are the system designers, integrators and exporters by diversifying their unique product portfolio.

The tenders won in abroad under competition lead the international competitors to cooperate with our companies. It is estimated that this acceleration is an important force multiplier in the assurance of the future of our country.

The number of countries exported by our companies has reached to 45, the exported product range has exceeded 25 and the export amount reached 805 Million Dollars. The main projects, performed within the exportation scope, are as follows;

ASELSAN;
– The production, development and maintenance and repair of military and civilian products and systems of Kazakhstan by establishing a joint venture company in the Kazakhstan with the Kazakhstani engineering company,
– Production of night vision devices in Jordan together with the King Abdullah Design and Development Bureau, which is the procurement authority of Jordan,
– Production, maintenance and sales of the Stabilized Machine Gun (STAMP) and Stabilized Top (STOP) systems together with Tawazun company of the United Arab Emirates (UAE),
– Meeting the needs of the Saudi Arabia and the region through the design, development, production and sales of the Radar, Electronic warfare and electro-optical technologies together with the association company established between ASELSAN and TAQNIA Defense and Securities Technologies which is the publicly-owned company of the Saudi Arabia,
– General production works within the scope of the Software-based V/UHF Radio Contract in Pakistan.

TAI;

The important exportation activities are as follows;
– Under the A400M Transport Aircraft Program, partnering to the aircraft’s design and production as the “National Industry Organization” together with the participating countries’ aviation industries,
– Production of F-35A Center Fuselage of F-35, being the most advanced combat aircraft produced up to today, at the premises of TAI as a second source under the multinational joint strike fighter (JSF) program,
– Being one of the few suppliers, performing the important structural components’ production of the Black Hawk helicopters as a result of the agreement signed with SIKORSKY Aircraft Corporation within the scope of the General Purpose Helicopters.

ROKETSAN;

The followings are the important exportation activities;
– TAWAZUN Project, including the production of CİRİT Fuse for the United Arab Emirates, AT-802 Airtractor Integration, Towed Land Platform Integration and Towed Land Platform, Training Simulator, Training and Logistics Equipment,
– Design and production of Jobaria (Monster) Weapon System which can launch 122 mm or 16 300 mm rockets, for the United Arab Emirates,
– Co-production of TR-107 and TR-122 artillery rockets, needed by the Armed Forces of the United Arab Emirates together with Burkan Munition Systems Company, located in the United Arab Emirates,
– Development and marketing of SOM-J Weapon System in line with the contract signed with Lockheed Martin Missiles and Fire Control Company within the scope of F-35 Project,
– Production of the Control Actuator systems of Patriot Pac-2 fuses, sold to the third countries by Raytheon,
– Production of T-122/300 Weapon System within the scope of the needs of Azerbaijan State Border Services.

HAVELSAN;

The followings are among the exportation projects performed by HAVELSAN;
– Design and production of CN-235 Simulator for the South Korea,
– Design and production of the Electronic Warfare Test and Training Range (EWTTR) for Pakistan and South Korea,
– Establishment of AW-139 Simulator Training Center for the Armed Forces of Qatar,
– Half-life Modernizaton Project for AGOSTA-90B type submarines for Pakistan

Question 5. Subsidiaries’ Subcontractor Use

In addition to the intense R&D activities carried out by the Subsidiaries, we underlined above, they make great contributions to the national economy either through the direct employment or the indirect employment provided by cooperating with the other companies in the industry and also by entrusting the domestic industry.
Under the Subcontractor Selection/Procurement Process conducted by the subsidiaries;
– The criteria for becoming an approval supplier on the corporate websites are shared and the applications are received,
– The companies, provided the necessary requirements among the applications, are evaluated,
– The companies, considered as positive, are periodically evaluated according to the criteria determined as the subcontractors,
– If subcontractors fail to comply with the criteria set out in the instructions, they are removed from the supply chain,
– The activities such as training are continuously conducted in order to develop and strengthen the domestic subcontractor and subsidiary industry base,
– The Subsidiaries organize the common sense meetings with both domestic and foreign existing / candidate sub-contractors,
– The subcontractor selection, evaluation and examination processes are transparently conducted according to the relevant instructions.

The works for providing new capabilities to the subcontractors, developing different business models and supporting the business development activities have contributed to the development of the sector and domestic industry. While the number of domestic subcontractors was 2.365 in 2015, this number has reached 3.332 by increasing 41% in 2016 and while the subcontractors working abroad was 2.022 in 2015, it has reached 2.302 by increasing 14% in 2016.

Consequently;

Pursuant to the law of establishment and articles of foundation, our Foundation makes direct and indirect contributions to the development of the Turkish Defense Industry and also the national economy either through the companies in which it invests or the transfer of obtained funds to the projects for supporting the Turkish Armed Forces’ modernization.

The Turkish Armed Forces Foundation, that has been 30 years since its establishment, strengthens its corporate structure without deviating from its target to strengthen the Turkish Armed Forces and also provides the effective supervision and strategic orientation of the companies in which it is the main shareholder and/or has shares and thus it continues resolutely and effectively to make contributions to the rapid and effective development of the Turkish Defense Industry.

The commitment based project amount of our abovementioned subsidiaries extending to years has reached 22 Billion dollars by increasing about 38% compared to the previous year as of 31 December 2016. As the contracts in progress are signed, this number will increase.

Our companies are focused on stable and sustainable growth by placing emphasis on subcontractor use and creating business ecosystems, and therefore on the efficiency and competitiveness.

Our Foundation, established by a special law in order to strengthen its army of the Great Turkish Nation with limited resources, has reached a position, making the contributions to the national economy by making great contributions to the Turkish Defense Industry through its specific structure and its Companies.

TAFF owes all of its development to its employees from its manager to its employees, working altruistically, ruggedly and wholeheartedly.

Increasing the contribution of our Foundation to the National Defense Industry and value created by our Foundation since its establishment together with the appreciation of the Great Turkish Nation and also appraising every penny donated by this Precious Nation by considering our national understanding dating back to our history and also our general custom is our greatest effort.