A Stronger Defence Industry Structure

The strength of defence and aerospace industry is of great importance in terms of the increase of Gross National Product and creating new technologies for the end users, that is civil sector, and most importantly in terms of providing depth to the industry. The Defence Industry, that can market the products it produces within the market economy, acts as a leading sector. Within this scope; Undersecretariat for Defence Industries (SSM), which is the chief architect of the National Defence Industry, carry on its works to restructure Turkish Defence and Aerospace Industry in a way that it can offer unique domestic solutions and also compete in the international arena.

As you know, US President Donald TRUMP announced in recent days that they would increase their Defence expenditures by 9% and spend additional US$54 Billion. Economists predict that the Defence Expenditures of the USA, which is currently US$550 Billion may arise to US$700 Billion. President TRUMP also promised to expand the economy by 3%. Experts underline that; in order for TRUMP to achieve this, he must create innovations and ensure new contributions to the labour force and this can only be achieved through the strength of Defence Industry. It would be beneficial if the decision makers in Turkey could realize the multiplier effect (since it will lead to more employment, productions, high profitability rates and therefore more investments, this multiplier effect will affect economic growth as well) that the Defence Industry can have on the development of the country’s economy and give priority to this field, which is strategically important not just for the national defence but also national economy.

In order to overcome the main obstacle that Turkish Defence and Aerospace Industry will face with regards to its 2o23 export goal, which is US$25 Billion that comprises of US$5 Billion worth of income from defence industry, US$10 Billion worth of income from civilian aerospace, US$5 Billion worth of income from security and US$5 Billion worth of income from civilian aerospace service and maintenance; investments on human resources (both within the SM and the Industry) must continue to further improve the skilled labour and human resources. The success of the Training Researchers for the Industry Program (SAYP), initiated by SSM in 2012 in order to fulfill the future requirements of Prime Contractors, Subcontractors, Subsidiary Industries and SMEs regarding researchers and skilled labour, is of great importance. As of March 2017, 44 researchers are employed in 44 different projects under SAYP. There are on-going efforts to include new companies and universities to the scope of SAYP in the following period.

According to the SSM 2016 Activity Report published in February 2017; in order to further increase the success rate of the Undersecretariat in project management, which carries out 460 projects as of the end of 2016, must have a personnel structure that possess the sufficient numbers and equipment and in order to maintain its qualified human resources the social and economic possibilities offered to the personnel must be increased. The importance of qualified human resources, which is the basis of a staff that provide solutions instead of excuses, is demonstrated once again in National PowerPack (Diesel Engine + Hydro-mechanical Transmission) Development Project for ALTAY Main Battle Tank (MBT), whose contract was mutually terminated.

According to the 2o16 Activity Report, the number of employees in SSM, which operates through five Deputy Undersecretariats and Legal Consultancy Department affiliated under the Undersecretary and 2o Directorates affiliated under Deputy Undersecretariats; is 515, comprising of 395 permanent and 120 contracted employees. Also 88 personnel with varying titles within the MoND are temporarily employed at the SSM. 

Today, there are very good engineers and technicians within the Turkish Defence & Aerospace Sector companies in the industry and we have reached to a strong potential. However, unfortunately this potential cannot be managed well in our Country. Therefore, while there are on-going efforts to enrich the current potential; necessary measures should be taken to manage this potential more effectively and efficiently. In order to utilize the available possibilities and capabilities more effectively and efficiently and avoid the waste of labour and budgets through repeated projects, the coordination and management of the Sector appears as a very important competence. With an experienced human source and a good coordination, Turkish Defence and Aerospace Sector can do better.

For the coordination of the Sector and the smooth operation of management activities we need to focus on the identification, declaration and also the obtainment of critical technologies. Each company must focus on certain technologies and they shouldn’t waste their labour, financial resources and time on same technologies. So, a balanced sharing must be maintained and the industry must be disciplined better with regards to the technological focus.    While, in one hand, limiting the players at Unmanned Platforms, expanding Maritime Platforms to the whole Sector on the other hand, creates a dilemma and causes increased costs by way of bearing non-recurring costs at each time. In this context, in order to have a more active presence in export markets; consortiums can be established in areas such as Land Vehicles, Naval Platforms, Aircraft, Helicopters, EW and Cyber Security, Communications, Electronics and Information Systems (CEIS), Air Defence and Space, Unmanned and Smart Systems and Weapons Systems and thus ensuring they can compete in foreign markets under a single company that would monitor and manage the tender process of companies with certain capabilities in the relevant industries. While there were only two LPI radar manufacturers around the world when MilGem Project began, today the number of LPI radar manufacturers in Turkey is three. Likewise, there are 4 companies that are actively operating in the area of underwater technologies. While the number of companies manufacturing or upgrading MBTs in Germany is two, as of 23 January five companies have submitted their proposals for the M60 and Leopard 2A4 MBT Modernization Project initiated by SSM (although it was based on invitations); and at least three companies, other than Otokar, are expected to submit proposals for the Serial Production Phase of ALTAY MBT Programme.

Therefore Turkish Defence and Aerospace Sector companies are competing with each other in certain areas and they are almost trying to undermine each other. In order to overcome such issues and avoid repetitions and the waste of financial resources that are already limited, there is a need for the presence of an ‘Older Brother’ like respectable institution that will have an influence over the Sector. This institution must ensure that the companies and the industry understand how technologies are managed and make sure they act accordingly.  This institution must determine which companies will operate in which areas of critical technologies and monitor their practices to warn them and impose sanctions when required. If this is not done, the improvement of the Sector will be limited and spinning will continue in certain areas.

Prioritizing the preparation of the document that would guide the Sector in order to substantiate the goal of ‘Guiding the Defence Industry’, SSM; while taking important steps to enable the corporate structure, it publicly releases the Defence Industry Strategy Document (until today, three Strategic Plans are prepared which are issued for 2007-2011, 2011-2016 and 2017-2021), that forms the main framework regarding the guiding of the Sector in the long term. In order for SSM to be that ‘Older Brother’ like respectable institution, it must be consolidated in terms of personnel/human resources as well as legislations and it must be entitled with the legal power that it needs to realize the Industrial Strategy Document. 

 

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