Turkey has been overlooked as both an export and as an investment market (for inward investment) for many reasons.
Why has such an expanding and active market not attracted the attention of investors or export managers despite the figures which suggest that it is growing faster than many international markets for insulation materials?
There seem to be several reasons. Turkey is the eighth largest market for the use of refrigeration insulation around the world and will grow by 31.6% in the next five years. It will rise to fifth in the world as a user of polyurethane material in refrigeration applications at that time.
In the insulated panel market, the growth is greater and its position as a world manufacturer of insulated panels will rank in the top eight producing markets by 2018.
Why is Turkey overlooked?
It is evident that Turkey is not an easy market in which to work due to language and the legal system, however, demand for insulated products is expanding rapidly.
The EU has overlooked or delayed Turkey’s application to join the EU which has meant that Turkey has fallen out of favour with investors and bankers and as such has not attracted the interest that it might due to its market size.
Finally, Turkey is ‘locked in’ with the Middle East which is not beneficial from a marketing perspective. Even our own Isowall Consulting market studies grouped Turkey within the Middle East and hence its association with an unstable and often dysfunctional market makes it unattractive to commercial investment and export activities.
Despite this market perception, the banking system and financial position of Turkey is strong and offers investors and exporters the opportunity to insure their export payments and to have reasonable certainty over investment opportunities. Many large and substantial public companies in Europe have invested in Turkey in the last five years, especially in the insulation market, and some of these companies are leading ‘brands’ within the insulation industry who are looking for long term investments where an expanding market continues to grow without the interruptions that have so affected the European market in the last five years.
With an increase in disposable income, with a demand for insulated structures for industrial buildings and with an increase in living standards (which lead to an increase in the use and consumption of refrigerated and pre-prepared foods) the coldstorage and agricultural market has developed at an extraordinarily fast rate.
Government-sponsored investment and the development of the infrastructure of Turkey is also encouraging insulated panel makers to expand their production capacity and buying new equipment. This provides an opportunity for European machinery suppliers to enter the market and to sell to new and growing enterprises.
Investment incentives, tax incentives and the capacity to finance the development of industrial buildings have also led to an increase in insulation demand.
Although the Turkish market contains many large and significant insulation producers (and especially a number of insulated panel makers manufacturing panels of near or equal to European standards) the insulation producers of Europe need not concern themselves as to whether the growing production capacity of Turkey will affect European markets. The growth within the Turkish market is such that within the next five years, demand for insulation will consume the capacity of the Turkish panel producers.
Turkey is an open market. It is a market where innovation is welcomed and where new products are assessed fairly and with interest. It is a market where new technologies are taken up and this opens up the opportunity for producers to expand their sales if not invest in the Turkish market.
Michael Young is a director of Isowall Consulting UK, a specialist and focused consultant to the insulation, panel, refrigeration and rollforming industries.