ECONOMY

Turkish shipyards revived

TUZLA – When the Maltese Falcon, a ship hailed as the world’s largest sailing yacht, slipped into international waters this summer from shores near Istanbul, it created a fresh benchmark for Turkish shipbuilding. Gliding through the Bosporus, the 88-meter (289-foot) Maltese Falcon, the largest sailing yacht in terms of deck length, displayed 15 square sails on three freestanding computerized carbon masts that rotate to catch the wind. «The technological achievements together with the overall quality of the manufacturing is setting a new benchmark for the yacht-building community,» said Giancarlo Ragnetti, chief executive of Perini Navi, the Italian firm that built the yacht in Turkey for venture capitalist Tom Perkins. «The Maltese Falcon is a clear example that the Turkish yachting industry is today among the first in the world,» Ragnetti said. In Tuzla, where the Maltese Falcon was built, cranes crowd out the sky, and ships jostle in the water for limited space. The construction of luxury yachts, chemical freighters and petrol carriers doubled Turkey’s shipbuilding export revenues last year to $1.25 billion from $685 million in 2004. The lion’s share of the revenue came from yachts and transport vessels. And the industry is expecting another record year in 2006: Turkish shipyards are building 100 ships in the first seven months, compared to the 79 produced in all of last year. Unable to compete with the sheer volume of Asian shipbuilding giants – South Korean’s cheap assembly-line ships account for 35 percent of all ships made worldwide – Turkish shipwrights have latched onto two advantages to secure their place. Turkey offers cheaper labor than other European countries and it has carved a niche for itself in boutique shipbuilding, providing high-value made-to-order ships for rich European and American customers. «Turkey is providing the flexibility of a Western shipyard but at a cost closer to that of China,» said Vidar Smines of Ulstein Group, a Norwegian shipbuilding consultancy firm. Costs are 25 percent below those in Italy for quality boats, said Johan Attvik, who is looking to build his J Craft classic boats in Tuzla. Reviving a legacy «A shipbuilding nation has been growing from nearly nothing…10 years ago to today, when Turkish shipbuilding in terms of value and value creation is not far behind established countries,» said Smines. Exports are on the rise – of the 79 ships made in 2005, 44 were exported and 41 have already been exported this year. But the industry, which has its roots in the Ottoman Empire, has had to overcome some initial reservations and financing hurdles. Kahraman Sadikoglu, who owns the largest shipyard in Tuzla, said a lack of trust toward Turkish shipbuilding has hampered European investment. «In the beginning, they didn’t believe we could build a ship and we couldn’t provide a guarantee,» he said. That has now changed since private credit for businesses has taken off in Turkey. Previously, it was difficult for many medium-sized shipbuilders to secure capital for a 10 percent guarantee of the estimated value of the ship – a condition required by most investors. «It’s gotten much, much easier,» said Sadikoglu, who restored and leases from the state one of the world’s largest yachts – the 136-meter (446-foot) Savarona, once owned by the founder of modern Turkey, Mustafa Kemal Ataturk. The tradition of building boats along the Bosporus has its roots in the naval might of the Ottoman Empire, which stretched across seven seas at the height of its power. Mustafa Kacar, a historian at Istanbul University, says that shipyards in Istanbul alone produced 1,000 ships a year during the height of the industry around the late 17th century. The empire’s fleet of wooden, wind-powered ships outpaced the naval forces of other powers before losing out to more advanced technologies. «If it weren’t for the steamship, the Ottoman Empire would still be a huge power,» Kacar said. When the Turkish Republic was established in 1923, shipbuilding was nationalized along with other major industries. Soon the sector was reduced to producing ships for Turkey’s navy, which was scaled down to a coastal defense force after the Treaty of Sevres which enshrined peace between the Ottoman Empire and the Allied Forces after World War I. Today’s industry still shows the legacy of that falling from grace: Most Turkish shipyards are too small to make major profits, said Sadikoglu, forcing some companies to expand beyond the crowded Tuzla yards. Gemak Shipbuilding, with yards near Sadikoglu’s Tuzla workshop, is building a third plant in Yalova, on the other side of the Marmara Sea to meet booming demand for chemical and petroleum carriers. The industry is also hampered by a volatile political climate that has held back the creation of consistent, nationwide guidelines for shipbuilders. «(Since the founding of the republic) there have been 60 governments in Turkey, and that means 60 transportation ministers, and everyone wants to put their own people in office,» Sadikoglu said.