“Our Target Is To Join The Global League”

Bayram Aslan launched İçdaş in 1969 when iron began to be traded on the black market. Today the company, which in those days was producing 10,000 tons a year, is a giant with output of 10,000 tons a day. İçdaş Çelik has become the second largest iron and steel company in Turkey with a turnover of YTL 2.4 billion. İçdaş Board Chairman Bayram Aslan says that the investments it has recently made have created a revolution. “We are targeting becoming one of the global giants with total investments of US$4.8 billion by 2010,” he says. Bayram Aslan, who is one of the doyens of Turkish industry, told Capital the story of the company and of industry in Turkey.

* İçdaş was founded in 1969. Today it has become one of the largest iron and steel companies in Turkey. What were the critical turning points which enabled you to achieve this?
In those years there weren’t any businesses in Turkey with two factories working three shifts. It was extremely difficult to produce anything. The customers were lined up at the gate. There was a lot of demand but no materials. Whenever our output increased, we had difficulties finding with raw materials. Now we have been saved from a dependence on outside, have our own national iron and steel output and meet our requirements for iron and steel from our own rolling mills. In 1969, we saw the scrap metal capacity of the domestic market and initiated studies on establishing an arc furnace. In this way, in 1970 we established one of the oldest integrated iron-steel production plants in Turkey.

* In the last five years you have expanded İçdaş Çelik by 248 percent and achieved a turnover of YTL 2.4 billion. How did you achieve such rapid growth?
I don’t think we grew quickly. Over the last five years, we have been able to reap the benefits of past investments. We have grown step by step. But in the last five years we established our second plant in Çanakkale and we realized a boom in production on a countrywide basis there. We doubled output. Our casting capacity at the mill will reach five million tons in the next year.

* What are the longest term targets you have set yourselves?
We are planning to increase our investments in Biga to a total of US$4.8 billion in 2010. What we shall achieve in terms of turnover depends on the global situation in iron-steel. Two months ago, the global price of iron and steel was US$1,500-1,600. In the last month, it has fallen by at least US$300. It would not be right to give a figure at the moment. When output rises, then so will turnover. If we base our calculations on today’s prices, we can achieve a turnover of US$5 billion in 2012 at İçdaş Çelik alone. After we have completed our investments in 2010, we are planning to be one of the largest industrial companies in Turkey by 2015, and then to become one of the largest in the world.

* There have been important consolidations in the global iron and steel sector. What kind of developments do you expect in the sector in the future?
The consolidation began with the privatization of state-owned steel firms. This process which started with horizontal integration, became more widespread as companies began to set targets such as controlling regional markets and increasing product diversity. Recently, steel companies have shifted towards vertical integration through acquisitions. The next stage in the consolidation process will be acquisitions in China and other similar developing countries. To sum up, there will be a competition process, which will include consolidation, between steel companies in developing countries and major steel giants which have reached a certain size internationally.

* How will this global change affect Turkey?
Most of the companies in the sector in Turkey are family-owned. For this reason, Turkey will not be very much affected by the consolidation process. But there have already been developments, such as acquisitions of steel service centers. For this reason, consolidation or new companies are inevitable in subsectors which are targeting the Turkish market. If international companies think that it is necessary for the Turkish market, they will transfer companies.

* Do you have any plans for inorganic growth? Have you received any such offers?
Not at the moment. But there may be changes in our policies according to prevailing conditions. We did receive offers from Greece and Singapore but we did not accept them.

* The Turkish iron and steel sector has an important place in Europe. What kind of opportunities are there for the sector as regards Europe?
As a result of the new increases in capacity, Turkey ranks third in Europe behind Germany and Italy in terms of output of iron and steel. Given the rate of increase in production in the Turkish iron and steel sector, Turkey is expected soon to catch up with Italy. Turkey is a major exporter of long products, and an important importer of flat products. The increase in imports of flat steel is an indication of the transformation occurring in the industry. I am talking here not just about the steel industry but also about industries which use this product. Turkey will establish a place for itself through the policies it will pursue in energy, logistics and raw materials.

* There are giants like Arcelor Mittal in the global arena. Can Turkey produce a global iron and steel company?
Turkey has a certain market share and competitive strength. The size of it cannot be determined just by total steel production. It is necessary to ask questions such as, in which steel plant and how much is Arcelor Mittal producing, and how influential is it in the markets in the countries in which it is producing. From this perspective, Turkish producers have strong and weak sides. In order to compete in the global arena, it may be that the determining factors are issues such as Arcelor Mittal’s acquisition strategy to grow the market and whether or not it can realize its targets in the vertical integration process.

What Are İçdaş’s Targets For 2010

Growth In Every Area
 In the 2007 list announced by the Istanbul Chamber of Industry (ISO), we ranked tenth in the list of the 500 largest industrial companies in Turkey. We are aiming to expand in every area in which we are active.

Us$4.8 Billion In Investment
Particularly as a result of the total US$1.7 billion we have invested in our integrated plant Çanakkale, we shall have invested a total of US$4.8 billion by 2010. In addition to our investments, the total number of people in our workforce has currently reached 5,570.

Employment For 11,000 People
By 2010, we shall be a group which has created employment for 11,000 people. Our turnover in 2007 was $2.1 billion and we have set ourselves a target of US$3.5 billion for turnover in 2008. In 2007, our exports stood at US$777.543 million. We are aiming to increase that to US$1.3 billion this year.

Özlem Aydın Ayvacı
oaydin@capital.com.tr