Profil Sanayi was founded by Mr Sezer’s father, Sedat Sezer in 1966, as a small workshop in Bursa. The 1960s were years in which the automotive industry in Turkey began to gather momentum as foreign firms opened assembly and manufacturing facilities in Turkey, realising the potential savings on labour and land costs that could be made. Sezer senior was ready to provide services in response to these demands. In the early days Profil Sanayi manufactured pipes and steel profiles for the newly opened Renault and Tofas (owned by FIAT) vehicle assembly factories in Turkey. Since then, Profil Sanayi’s product range has been shaped in response to the particular demands of the company’s clients, which were generally met with a flexible and willing approach and led to a series of deals over the years. 

In 2003, the company experienced one of its biggest boosts in sales and tripled its turnover. This was the result of securing a contract with Ford after it had introduced the Transit Connect model, a smaller panel van which replaced the older models based on the Escort and Fiesta family cars. The production of the Transit Connect took place in Turkey and the availability of reliable local suppliers was key to its viability. This kind of relationship with major car manufacturers has continued ever since, and Mr Sezer is proud to announce that Profil Sanayi will use 7,000 tonnes of raw materials to manufacture parts for the new Fiat Doblo range. The company continues to concentrate on developing close relationships with all its clients and on responding to the needs of the market as quickly as possible.

Impressive production capability

Profil Sanayi is amongst the top ten car part suppliers in Turkey. It currently has three production lines and 250 employees, which allow it to process 30,000 tonnes of raw materials. The three lines are split between two factories, one of which is located on a 12,000 square metre site, and the other on a 6,500 square metre site. The factories have press and bending capabilities, which are used in-house for cold metal sheet forming and also have assembly facilities. Only 65 percent of the full capacity of the two factories and three lines is currently being used. They produce stabiliser bars, security door bars, interior and exterior sheet parts, sear brackets, security bumper parts and brackets, and even interior partition components for custom designed carrier vehicles. Since 1975, the company has also been producing moulds and apparatus. The moulds which it has developed are used in many models of Tofas and Ford vehicles and Mr Sezer explains that the company is set on a plan to increase its mould production since this is identified as a high value function of its business, especially at this particular moment, when the automotive industry is suffering from reduced consumer interest.

Recession strikes the Turkish automotive industry

Mr Sezer explains why the Turkish automotive industry was so badly affected by the global financial crisis. Turkey is the biggest manufacturer of buses and the third biggest manufacturer of light commercial vehicles in the European Economic Area and it is, therefore, natural that the sudden change in consumer demand has had a heavy toll, affecting production levels and the demand for parts manufactured by all automotive suppliers in the country. The automotive industry was on the rise between 2001 and 2008, says Mr Sezer, and during this period suppliers made large-scale investments in their businesses. Many of these investments were funded by loans whose payments were based on an assumption of full production and, when production targets had to fall in 2008 in response to lower consumer demands, factories were working at only 60 percent of the expected level of production. Many suppliers got caught out by this unexpected change in the market and were unprepared. This problem was exacerbated by the fact that the companies’ sales are in New Turkish Lira, while any loans the businesses take out are generally in US Dollars. This means that when the weaker currency lost value on the global currency markets, companies were left to lose money on both sides.

On top of that, he says, there was a lack of adequate and immediate help from the Turkish state to help the sector. Although the government introduced a reduction in ÖTV (Excise duty) for three months in order to revitalise the automotive market, this did not benefit domestic producers as much as it did foreign companies. The incentive included foreign-made cars as well as ones made in the domestic market and, in fact, only 40 percent of cars sold were made at home. According to Mr Sezer, the government’s handling of the situation made things even worse, since it kept companies living in hope that there would be further incentives and possible price cuts. These rumours caused the potential consumer to keep waiting and postponing their decision to buy. However, despite all these difficulties, companies that were customer-focused, followed the market closely and reacted with flexibility, were able to show durability. He also believes that Turkey maintains some advantages. Firstly, the country’s 2001 financial crisis resulted in widespread changes in the banking system which, to a certain extent, shielded Turkish financial services from the worst of the crisis: “As a businessman I can now see that the then Minister for Economic Affairs, Kemal Dervis’s reforms are paying off.” 

Kemal Dervis was working at the World Bank and living in the USA before he was invited to Turkey to take up the Ministerial position for the economic recovery of the country. He introduced stringent regulations to the banking sector and it is believed that the banking sector is now stronger and better suited to weather domestic or global financial turbulence because of these reforms.

Trading with the EU as a non-member country

Mr Sezer feels it is saddening that Turkish businessmen can still be refused a visa for entry to European countries and, therefore, cannot market their products. He believes Turkish businesses are yet to be subject to equal rights and opportunities, despite Turkey’s Customs Union agreement with the European Union since 1996. Mr Sezer thinks this agreement turned Turkey into a big importer country, but, unfortunately, did not make it an equally big exporter. He describes the nature of the trade between Turkey and the EU countries with these words: “We sell 50 lorry-loads of goods at a value of one million dollars and we import one lorry load of high value goods also worth a million.” He believes to overcome the disadvantage of trading from outside the EU, the best thing is to concentrate on products that have a bigger labour content, because this is where Turkey has an advantage over international competitors, not on automated production. This is why Turkish businessmen should also focus on products with higher added value. He intends to apply the same principle to his company’s business strategy, by concentrating on moulds and machinery design and production.

“Our profit margins also fell because of the recession”

Profil Sanayi recorded 30 percent growth in 2007, but when the recession started, its profit margins fell significantly. In fact, although the company still grew in terms of turnover, its profit has fallen as a result of aggressive competition and the unexpected changes in the cost of raw materials, which are indexed to stronger foreign currencies. Profil Sanayi’s management took steps to adapt to the changes of circumstances in the markets. It recently invested in six new ABB-branded welding robots to increase production efficiency and made other efficiency investments and cost reductions wherever possible. It also continued all the projects it was involved in before the recession started. Mr Sezer states that the company’s strongest asset is the people working for the family business, so, as a matter of principle, management would only cut jobs as a last resort. He is proud that the company has craftsmen that have been with the company for over 45 years. As someone who has been working for Profil Sanayi since he was 18, he says he is very close to his staff, knows everybody by name and his door is always open. This open communication and family spirit have always helped the business in good times and bad.

Light at the end of the tunnel

Mr Sezer says that the most difficult times in the recession were from September last year to this February and things have since started to pick up: “Although some say the worst is yet to come, I expect sales and turnover to increase after September this year, but suspect it will take until the end of 2010 for the industry to get back to where it was.” He takes comfort from the fact that Turkish banks are in good shape, and believes that this will help to take the pressure off the faltering economy.

A new direction built on core strengths

Mr Sezer says that the company is now very keen to increase its involvement with export markets in order to reduce the risk of currency value loss. The majority of Profil Sanayi’s production is currently consumed in Turkey, but it has begun to export to Southampton in the UK, and is currently talking to some potential clients in Germany. He says the company always invested profits back into the business and the intention is to grow the business even more, not just to make more money, but also to create more jobs for the community. Profil Sanayi plans to build the future of the company using the strengths it has developed over the years and by increasing the production of value added products such as mould design and production. “We are very strong in project management,” Mr Sezer says, and points to the awards Profil Sanayi received from the Toyota Group as evidence of the company’s highly responsive management and fast decision-making systems. When a completely new product is to be manufactured, Profil Sanayi is famed for its ability to put all the relevant processes together for the projects from the beginning to the end and to the full satisfaction of its clients. He believes that these competences will be the strengths that will help continue the success and reputation that Profil Sanayi has enjoyed so far.