With its highly skilled, low-cost labour force, Turkey has long been hailed as an ideal manufacturing location for OEMs and Tier 1s. But now the country wants to forge itself a new reputation as a haven for cutting edge research and development. It’s a plan with ambition that reflects its rapid growth in recent years.
Despite civil unrest, instability in the Kurdish region, and ongoing conflict in neighbouring Syria, Turkey’s success story continues. The country’s economy grew 5.7% in Q4 2015, the third highest rate for a G20 country after China and India.
The automotive industry has grown accordingly, and is in a good position to lead Turkey’s transformation into a high-tech hub. Figures from the International Organisation of Motor Vehicle Manufacturers (OICA) show that in 2015, the country achieved a total output of 1.36 million units, a 16.1% increase on 2014’s figure of 1.17 million units. Approximately 73 out of every 100 vehicles manufactured in 2015 were exported, mainly to European markets. Major global brands manufactured in the country include Fiat, Ford, Daimler, Toyota, Hyundai and Renault.
Not quite European, not quite Arabic
Formally established in 1977, Ford Otosan is an equally owned joint venture (JV) between Ford and Turkish industrial conglomerate Koç. Total production for the OEM in 2015 was 334,622 units. In total, Ford Otosan produces 73% of Ford’s European CV sales, and 81% of its Transit model sales. The CV specialisation is important – Turkey is one of only two countries globally to manufacture the Ford Cargo heavy truck, at the Inonu plant, which has annual capacity of 10,000 trucks, 66,000 engines and 45,000 gearboxes. Ford Otosan was also involved in the development of the Ford Connect and, most recently, the Ford Transit Courier vans.
“It’s quite an interesting place,” comes Haydar Yenigun’s understated assessment of his home country. An engineer by training, Yenigun is currently a General Manager at Ford Otosan – an executive role comparable to Chief Operating Officer. “On the one side you have unrest, sometimes war, and on the other side you have Eastern Europe. What we have is a culture that’s not quite European, and not quite Arabic.”
The result, he suggests, is a dream set-up for manufacturers – proximity to Europe and a secular government has benefitted Turkish education over the years, resulting in one of the most highly skilled workforces in the region. Meanwhile, its emerging market status means that labour costs are relatively low, and energy costs are very competitive, particularly compared with Eastern European locations. Geographically, it also benefits from easy access to the raw materials needed.
Turkey’s emerging market status means that labour costs are relatively low, and energy costs are very competitive
Yenigun is confident that the industry will go from strength to strength, and that the incentive is there for more investment in the Turkish automotive industry. “It’s one of the strongest industries in Turkey,” he says, “and not just because of us. Hyundai, Toyota, Fiat, Renault – we’re all located in almost the same region, which has led to the development of a supply base infrastructure. In addition, more than 50% of our products leave Turkey for other European markets, which means most European suppliers are using our supply base for engine components, body components, plastic parts, and more.” Further opportunities will arrive with the recovery of the oil price, he concludes, when Russia will once again become attractive to OEMs.
Of course, labour costs have risen, and China remains a cheaper alternative, but Turkey retains competitiveness, partly on account of its labour laws. In Turkey, a full working week is 45 hours long, compared with a European Union (EU) average of 37.2. “The labour costs will gradually increase,” concedes Yenigun, “but the specialised skillsets we’re accumulating, along with continued investment from the government, mean that continued growth is certain.” Technical specialisation is particularly important, especially if Turkish industries are to realise their high-tech goals.
“We have a big ambition to get ahead of the curve in technology,” says Yenigun. Ford Otosan’s R&D facility in Istanbul currently employs around 1,500 people. Current studies are performing research on autonomous driving for heavy commercial vehicles (HCVs), as well as connected software for CVs. These can monitor engine condition, and conduct preventative maintenance throughout the vehicle.
Engine development is another particular strength. In April 2016, the Ecotorq truck engine went into production at the Inonu plant. Ford Otosan is the only company within Ford’s network that develops heavy truck engines, explains Yenigun. These engines will be exported worldwide, and production will also start in China. The Turkish government approves; speaking at an opening ceremony at the plant, the Minister for Science, Industry and Technology, Fikri Isik, said Turkey had become an “exporter of R&D services.”
Ford Otosan isn’t alone – Tofas, FCA’s JV with Koç, also has R&D capabilities at its plant in Bursa. The facility is FCA group’s largest in Europe, manufacturing vehicles for seven different brands. Most recent to go into production was the Tipo/Egea platform in April 2016 – designed and engineered in Turkey.
Ford Otosan has also invested heavily in the manufacturing side of the equation. Modern technologies are on prominent display at the Ford Yenikoy plant, opened in May 2014 with an investment of US$511m. The plant produces the Ford Transit Courier and Tourneo Courier, with an annual capacity of around 110,000 units.
Compressed-air powered robots have been scrapped in favour of modern, servo-mechanical instruments powered by electricity, which are less energy intensive. Quality improvements are achieved through the use of electronic sensors and lasers to perform measurements on parts.
Other advanced technology at the facility includes a remote laser system that can perform welding operations at a distance of up to one metre. This, explains Yenigun, means the robot no longer has to perform complicated positioning manoeuvres to get close to the sheet metal, saving both time and energy costs. Cycle times can thus be shortened on some parts by up to 60%.
Of particular importance for Ford Otosan’s future manufacturing strategy, says Yenigun, is increasing levels of human-robot co-operation. Collaborative robots are built with sensors and padding that allow them to work without safety fences and security areas. When a worker enters a pre-determined work area, the mechanism slows down. Just before it comes into direct contact with a worker, it stops altogether.
In the case of Yenikoy, the robots assist workers with tyre assembly. Human-robot co-operation has been adopted at some of the world’s most technologically sophisticated plants: Audi, an early adopter of the concept, uses robots at its Ingolstadt facility to correctly identify and hand components directly to workers at the right time. At Bosch’s ‘smart factory’ facility in Feuerbach, which produces common rail pumps for diesel engines, the supplier’s automated production assistant (APAS) operates in extremely close quarters with workers to relieve them of dangerous, repetitive tasks.
Looking forward, Yenigun sees future potential in what many refer to as Industry 4.0, but what he prefers to call connected technologies and digitalisation. This could usher in improvements not just in production efficiency, but in the way the organisation could innovate and work with ideas. “We number over 10,500 people in total,” he says, “both white and blue collar. An effective digital platform could allow us to quickly collect ideas from each one of these 10,500 people.” This way, he concludes, Ford Otosan and the Turkish automotive industry’s effort to become a centre for high-tech design and manufacturing could be a collaborative one.
This article appeared in the Q2 2016 issue of Automotive Megatrends Magazine. Follow this link to download the full issue.