Holland goes Turkey

Turkey has been a maritime nation for centuries, shipbuilding activity commenced in 1390, the first shipyard in Istanbul was established in 1455 and in the 16th century, the biggest shipyards in the world were Turkish. With a coast line of 8,435 kilometres, the maritime industry is of utmost importance and shipping is the most used mode of transport in Turkey. Moreover, the country is strategically positioned between Europe, Central Asia and the Middle East. Therefore it comes as no surprise that the Dutch maritime cluster has discovered Turkey as an interesting country to do business with.

”The Netherlands is slowly waking up when it comes to Turkey”, says Terry van Velzen, director business development at Imtech Marine and chairman of the Maritime Hotspot Istanbul, an initiative of network organisation Maritime by Holland. ”Turkey is located in our European backyard and has a lot of growth potential. The country’s economic growth is about six to eight percent and Turkey is seen as the gateway between Europe and the Middle East. Istanbul is a growing metropolis and can be compared to Hamburg or Rotterdam with a lot of port activity, production and trade. It is the most important port city of Turkey with a lot of throughput traffic from Romania, Bulgaria, Russia and Ukraine through the Bosporus.”

2g@ther S Maritime Hotspot

Sandra van Putten, senior consultant at research institute Panteia, has been involved in projects in Turkey since 2007, Panteia started their activities in Turkey already in 2004: ”First we focussed on road transport, later we also became active in the maritime sector. In 2009 the cooperation programme 2g@ther Focus on Turkey started, after a visit of former Dutch Minister of Transport Eurlings to Turkey. This programme aims at contributing to the development of Turkish ports, coastal shipping and the shipbuilding industry and its ambition is to create increased synergies between the maritime and logistics industries of Turkey and the Netherlands. The counterpart is the Turkish Ministry of Transport, which is important as the Turkish maritime sector is still not completely privatised. Projects are executed both privately and publicly, and also market research and trade missions are part of the programme. The main conclusion of our market research is that the flow of goods to and from Turkey will increase dramatically the coming years and the logistics of Turkish ports and its hinterland connections need to be improved and changed, and the Netherlands happens to be an expert in port logistics.”

Alongside 2g@ther Focus on Turkey, which will run out in 2014, the Maritime Hotspot Istanbul has the ambition to strengthen the business relations between the Turkish and Dutch maritime cluster. In November 2012, Istanbul was identified as a maritime hotspot, next to St. Petersburg and Rio de Janeiro about which Maritime by Holland Magazine already reported in edition 2 and edition 5 of 2013. The Maritime Hotspot Istanbul mainly focusses on ports, dredging, shipbuilding, offshore and shipping. During Europort 2013 a hotspot meeting took place during which it was decided that the working group should pick specific focus points, one of them being ports.

During a working group Maritime Hotspot Istanbul meeting in June 2013, the first results of a market research were presented. This research was officially published in January 2014 under the name of ‘Maritime Turkey market research’, realised by a collaboration of Panteia, Bloem Doze Nienhuis and Dokuz Eylul University, and co-financed by Agentschap NL and Maritime Hotspot Istanbul. The market research gives an extensive overview of the Turkish maritime industry and identifies opportunities for the Dutch. Van Putten: ”There are several interesting projects we want to start under the 2g@there programme during the coming months, for example the hinterland logistics regarding ports. I think that the Netherlands can play an important role regarding technical assistance, infrastructure and superstructure development. The connections to the hinterland are poor, only the – former – state ports have a rail connection, but all other ports use road transport. Inland shipping is hardly being used, Turkey is cautiously looking into this, but this will be a long-term plan. There is a lot of industry situated around the Izmir-area, mainly cars, and there is a potential to transport these goods by inland vessels, but in order to do that, the right infrastructure needs to be in place, a big challenge. Another more concrete plan is to build a second Bosporus, an idea of the current president Erdogan. The reason for this is that the first Bosporus becomes too busy and the risk for accidents grows. Integrated in this plan are also a new airport and new residential areas and the government has already reserved money for this prestigious project, that will be interesting to Dutch dredging companies, engineers and suppliers. Other opportunities are related to training and education of the maritime sector.”

Van Velzen adds: ”The ports are po orly developed and the Netherlands can help in their further development. Moreover Turkey struggles with water problems: how do you build a city with a well regulated water supply and drainage? This happens to be one of the expertise that the Netherlands has to offer. Turkey is more and more aware of sustainability and has a green agenda, also something the Netherlands stands out with. The Netherlands is a maritime nation, as is Turkey, but the Dutch also have expertise and knowledge, something Turkey is looking for, as they do have enough manpower, but not in all cases enough knowhow. There is a lot of room for innovation and that is what the Dutch maritime cluster should take advantage of.”

Eco-ship

One of the big projects the Dutch look into is the newbuilding programme of the Turkish coaster fleet. These vessels have reached their economic and technical end of life and as the SECA zones are soon introduced, Turkey needs to prepare for that. Van Velzen: “They can prepare in two different ways: either refit traditional diesel oil engines with scrubbers or change to the fuel of the future: LNG. Together with several partners like Cryonorm, HRP ZF Marine, Veth Propulsion, Wartsila, IHC Metalix, Peters Shipyards, Mitsubishi and HME, Imtech Marine is developing an LNG-powered, electrically propelled ship. The current version is still a prototype of the so-called Eco-Ship, which should not only differ from other vessels technology-wise, but also the outside look should be different, so it immediately can be identified as an Eco-Ship. The vessel will be a cargo vessel or bunker vessel with two LNG tanks. As we equipped the vessel with 360 degree rotatable thrusters and bow thrusters, tugs are no longer required. The operational costs will therefore be quite low, as it will sail on LNG, it does not need the help of tug boats anymore and because it is a green and clean vessel, surcharges in ports will not have to be paid. The overall investment is a little higher than for a conventional vessel, but these extra costs will be earned back within six to seven years.”

He continues: “Currently a feasibility study is carried out, with a small subsidy of the Dutch government as the Dutch maritime industry is designing a new coaster with hybrid electrical propulsion for Turkish short sea shipping. Our counter part is the Ministry of Transport in Turkey. We also cooperate with Turkish design company NavTek, who is responsible for ship design and the general arrangement plan based on Dutch knowhow, among others. The design will be presented to the Turkish government beginning of 2014. We plan to create a standard design which can be built by several shipyards with the equipment of Dutch suppliers, who however should have their own local branch in Turkey. This is a very practical example of how the Dutch and Turkish industries can cooperate.”

Imtech Marine is active in Turkey since 1999 and acquired its first contract in 2004. Van Velzen: “This was for a naval frigate. After that we delved into the civil shipbuilding and my vision was that Turkey, that mainly focused on cargo vessels, would become interesting hotspot for the special shipbuilding industry and therefore we decided to buy a local company in Turkey named Elkon in 2010. From 2011 we saw the Turkish shipbuilding slowly shifting from commercial shipping to naval vessels, workboats, tugs, megayachts and fishing vessels. I am proud of the fact that with Elkon in the family, Imtech is a big player in the Turkish maritime industry with a market share of approximately 70%. We are the main supplier of the Turkish navy, can count all big yacht builders to our clients and are the first company in Turkey to locally build electrical propulsion systems. Turkey used to build vessels for mainly Turkish owners, but nowadays, many Norwegian owners build in Turkey as well, as are more and more Germans and also Dutch companies. Turkey is a Mediterranean country, which means doing business is different than in Northern Europe. You need to invest a lot of time in your business partners. I actually enjoy doing business with Turkish business people. They have a good ‘just do it’ mentality based on a ‘design to build’ principle and like the Dutch, Turks are very good business people.” On 22 March 2012, Imtech Marine received the Netuba Netherlands Turkey Trade Award 2012. This award is granted every two years to a company or a person who significantly contributed to the trade or investment relations between the Netherlands and Turkey.

A lot to offer

Another Dutch company with experience in Turkey is Damen Shipyards Group. The company opened a facility in the Antalya Free Zone of Turkey for the production of professional composite vessels from eleven to 40 metres for professional use such as patrol boats, pilot boats and crew boats in 2013. Area director Middle East Martin de Bruijn comments: ”Turkey is a shipbuilding nation with experience and tradition and is interesting for Damen because of the high technical education level, the low hourly wages and low costs. Next to that the right infrastructure of relevant subcontractors and facilities is present and for some of our clients, Turkey is a favourable location. The country is in need of good partners for new technologies, as the appreciation of quality and the demand for good quality regarding designs, materials and references is increasing. The Dutch maritime cluster has a lot to offer to the Turkish maritime industry: we can help improving the quality, planning and the professionalisation, we are experienced with project management and serial building and are able to deliver modern technologies based on local requirements. As soon as the market improves, there will be plenty of opportunities, especially for the maritime suppliers in cooperation with local partners.”

Going local or at least team up with local partners is of utmost importance. The ‘Maritime Turkey market research’ states: ”If one wants to join the Turkish market, business needs to be done mostly from Turkey itself. This can be done by a strong partner, merger or acquisition in Turkey.” Van Velzen agrees: ”Localise as soon as possible, do not try to export, but open a local branch, engineer and produce locally, just like Imtech Marine and Heinen & Hopman.” Van Putten adds: ”To have a good, respected Turkish partner that can be trusted is crucial. The Dutch Embassy and consulates in Turkey can help companies with finding one. Examples of Dutch companies doing well in Turkey are Arcadis, who just opened an office in Ankara, and Ecorys, but also maritime suppliers Heinen & Hopman and Imtech Marine. For suppliers a local partner might be enough to start with, as to do business in Turkey, you depend on tenders and during a tendering process, a Dutch party alone will not win the bid. The second step is opening your own office in Turkey.”

She also advises companies who consider to do business in Turkey: ”The Turkish society is very masculine and hierarchic; therefore the way of doing business is different from the Dutch way. The consequence is that we can talk to people on our level, but they cannot take the decisions, as this is done on higher levels, which means negotiations take longer than we are used to, that can be frustrating. Be aware of the cultural differences and ask for advice regarding regulations and legislation, which differs a big deal from the Dutch ones. The Turkish trade culture is difficult: on the one hand, they want a relationship based on mutual trust and friendship, on the other hand they look for fast gain. Investing in relationships is very important.” De Bruijn agrees: ”Relationships and knowledge of local circumstances are important, do not go for fast success or simple sub-contracting, attention will pay itself back at some point. Acknowledge and respect the cultural differences, preparation and the right expectations are key, be prepared and ready to invest a lot of energy and time.”

Persistence

Martin Bloem, CEO and managing partner at consultancy company Bloem Doze Nienhuis and one of the conductors of the market study about Turkey, sees that because of the crisis, Dutch companies think of retracting from Turkey and persuades them to persist: ”A few years ago, Turkey was seen as the next big thing and therefore many Dutch suppliers and shipyards looked into expanding their business there. Now the economy is struggling, many of these suppliers and yards want to retract from Turkey, but I want to urge the Dutch maritime cluster to stay, as Turkey offers so many opportunities for the Dutch, just think of the superyacht industry, port projects and the coaster newbuild programme.”

Turkey offers the Dutch maritime cluster a wealth of opportunities to contribute to many initiatives, for example the port developments and the coaster newbuild programme. The Turkish maritime cluster is very dynamic and shaping up for future of leadership, according to the ‘Maritime Turkey market research’, the Turkish and Dutch cluster are partly competitors, partly complementary and new commercial relations can be explored without harming existing national interest. The essence is to find out how to enlarge the business together instead of dividing it. Nothing should stand in the way of the Dutch being successful in Turkey, as Bloem summarises: ”The Turkish people have a rich maritime history, as have the Dutch, that brings the two cultures together. The Turks are sincerely interested in the Dutch knowledge and the Dutch should take advantage of that.”

Gail van den Hanenberg