Serdar GÖRGÜÇ, “In 2020, We Recorded 2.9 Billion TL in Revenues and 20% Growth with Exports of US$307 Million.”
Defence Turkey: As Turkey’s first private Defense Industry company and the leading tactical wheeled vehicle manufacturer of the Turkish Defense Industry, Otokar celebrates its 58th anniversary in 2021. Can we start our interview with your comments on Otokar’s current footprint in the Turkish Defense Industry today?
Serdar GÖRGÜÇ: Through our 58-year history, we brought to life numerous successful projects with our responsibility to our users and our country. Otokar is Turkey's pioneer and most experienced land systems manufacturer. Our combat proven know-how in land systems and related R&D, engineering, and testing capabilities as well as our wide product range puts us at the forefront of the global defense industry. Otokar is continuously expanding its user portfolio and serving a wider range of users across the world every year, due to its well appreciated user-oriented approach. Otokar is a preferred vendor to both NATO and the United Nations. Currently, around 33,000 Otokar military vehicles are actively used by armed forced and security forces in more than 35 countries, including Turkey. We are really proud of the point Otokar has reached.
Defence Turkey: Otokar operates in commercial/civil and military fields, which is a strategy adopted by many Defense Industry companies across the world. Otokar also adopted this strategy to achieve sustainable growth. Can you elaborate on the current balance of Otokar’s activities between the civil/commercial side and the defense industry and breakdown the domestic/international side as well?
Serdar GÖRGÜÇ: As you mentioned, operating in two different areas is a specially chosen strategy for Otokar to achieve sustainable growth. Defense industry projects and orders sometimes take many years and have demonstrated a lot of differences in demand over years. The commercial vehicle field is more organized, but it is a field that is affected more quickly by economic fluctuations, it is labor-intensive, and its sales volume is lower compared to the general automotive field. These two different sectors balance each other and ensure the healthy and sustainable growth of Otokar. Although the rates may vary on a yearly basis depending on the projects, we balance the share of commercial vehicles and defense industry products in our turnover by half.
Export markets are particularly important for Otokar. Especially in land systems, we aim to reach a wider geography in exports, seize expansion and growth opportunities through technology transfers and joint production with local partners. In 2020, Otokar exports amounted to US$307 Million, accounting for 75% of our annual revenues. Throughout the year, we focused on delivering existing orders and we also signed new deals. In the first quarter of 2021, Otokar’s revenue increased by 91% compared to same period of last year and our total export sales accounted for 57% of the total turnover.
Defence Turkey: Could you elaborate on Otokar’s broad portfolio of business? What are the capability areas that Otokar boasts today? What can you tell us about the main technical advantages that make Otokar’s military vehicles different from other similar products on the market?
Serdar GÖRGÜÇ: Otokar designs and manufactures a wide range of defense industry products including 4x4, 6x6, 8x8 tactical wheeled armored vehicles and tracked armored vehicles as well as turret systems. Having a broad product range in land systems, Otokar also stands apart with its expertise in the design, development, and system integration of all kinds of vehicles and platforms. Being a preferred vendor to both NATO and the United Nations, Otokar is continuously expanding its customer portfolio and serving wider range of users over the world every year. This is mainly due to our well appreciated user-oriented approach. We analyze the different needs and expectations of our users for land systems, simulate these requirements in house and develop solutions that meet these requirements in the fastest manner thanks to our excellence in R&D, engineering, and testing.
Defence Turkey: As a global military land systems manufacturer Otokar is well known for its ability to provide innovative, effective, and tailor-made/customized solutions. Can you elaborate on Otokar’s current technology, manufacturing capabilities and facilities?
Serdar GÖRGÜÇ: Our investments, our engineering capabilities, and the flexibility to produce according to user requirements have made us a preferred global land systems manufacturer over the years.
With numerous firsts to its name since its inception, Otokar carries out R&D activities at world standards. In the last decade we allocated 8% of our revenue for our R&D and testing activities. We continue to introduce innovative solutions in land systems by considering the current and future requirements of modern armies and security forces. Otokar R&D capabilities include CAD software for product design, simulation, and analysis, prototyping workshops, and a unique Test Center which houses Turkey’s highest capacity hydraulic road simulator and a Climatic Test Chamber equipped with a 1,500hp Dynamometer, which is the one and only of its kind in Turkey and amongst a handful in Europe. The Test Center is also home to Turkey’s largest and the world’s best state-of-the art Electromagnetic Compatibility Test Center (EMC/EMI), which serves as an accredited independent EMI/EMC test center for all R&D activities of domestic and foreign automotive and defense industries.
Otokar Test Center activities support design activities by simulating real life conditions and generating invaluable feedback based on data. That is how we can meet various user expectations under various ambient conditions and are able to have a worldwide competitive edge over our competitors.
Defence Turkey: What can you tell us about your solution partners (local and international) in the field of military vehicles and in which areas do you cooperate with them?
Serdar GÖRGÜÇ: Otokar is a global company with 4 different subsidiaries in different locations. The company is in cooperation with many business partners all over the world. In 2020, Otokar worked with 981 suppliers, including 1,252 local companies, for direct and indirect procurements. We usually select our solution partners based on performance and on a cost basis, however, sometimes user requirements dictate this selection.
Defence Turkey: What kind of new products do you see a demand for in the coming years in the military vehicles sector? What is on the horizon for Otokar, what can the industry expect to see as far as new products/technologies and services?
Serdar GÖRGÜÇ: With the changing battlefield conditions and user expectations, armies now want to benefit from the operational advantages and logistics efficiency of technology at the highest level. Therefore, the expectations of new generation vehicles and solutions are increasing in modern armies. There is a desire for the use of technological solutions that will increase survivability, efficiency, and performance. In line with the expectations one of the areas that Otokar focused on is alternative fuel technologies. Otokar added a new electric military vehicle AKREP IIe to its product range in 2019.
Defence Turkey: How much time, effort and money does Otokar set aside on R&D annually?
Serdar GÖRGÜÇ: Otokar aims to develop new equipment and applications to meet the requirements of the future and has allocated 8% of its revenues for research and development (R&D) activities over the last 10 years, bringing R&D spending to 1.3 billion TL during that timeframe.
We analyze the different needs and expectations of our users for land systems and develop solutions that meet these requirements in the fastest manner due to our excellent engineering and superior R&D capabilities. We endeavor to continuously improve, and we will continue our investments in this context.
Defence Turkey: Can we get an overview of 2020 from Otokar’s point of view, and could you elaborate on your targets for 2021?
Serdar GÖRGÜÇ: 2020 was a difficult year that challenged the entire world. We deeply felt the impact of the pandemic on our fields of operation. From the early days of the pandemic, as a priority we took all necessary measures to protect the health of our employees, to ensure business continuity, and mitigate the impact and prevent infection. With safe production practices and several measures in place, our operations continued in the healthiest manner possible.
In 2020, we recorded 2.9 billion TL in revenues with 20% growth and exports amounted to US$307 Million, accounting for 75% of our annual revenues. Despite the cancellation of planned exhibitions and the imposed travel restrictions, we maintained our communication and relations with our target markets. We continued to consider the requirements of our clients to develop tailored solutions. This approach brought new achievements in defense industry exports last year and we received two new export orders. Production and deliveries of existing contracts continued throughout the year.
In 2021, we will continue to work without compromising our goals. While we are delivering our existing orders, we aim to take advantage of opportunities in technology transfer and joint production with local partners abroad, as well as following new export potential in various geographies.
Defence Turkey: According to the data provided by the Turkish Exporters Assembly (TIM), exports of the Turkish Defense and Aerospace Industry have secured a 47.7% increase during January 1 – April 30, 2021 and a 85.16% increase in April 2021 compared to the previous year. Could you provide a capsule summary of Otokar’s major activities carried out during the first quarter of 2021 in terms of turnover and export figures?
Serdar GÖRGÜÇ: In the first quarter of 2021 Otokar’s revenue rose to 877 million TL with a year-on-year increase of 91%. We increased our export revenues by 44% year-on-year to $69 million TL in the same period.
In the first quarter we continued to produce and deliver on existing contracts as planned. In February we participated in the IDEX 2021 defense exhibition in Abu Dhabi and introduced our electric armored vehicle, AKREP IIe for the first time to the international markets. We also displayed the new generation COBRA II MRAP for the first time.
Defence Turkey: What could you tell us about Otokar’s international presence and market position in the field of military vehicles/land systems, and the international programs/tenders that you are currently undertaking? How many countries have your products been exported to? What key geographical markets are your next targets in?
Serdar GÖRGÜÇ: As a preferred vendor to both NATO and the United Nations (UN), Otokar consistently continues to strengthen its international presence. As a company that exports products with fully owned intellectual property rights, currently, around 33,000 Otokar made military vehicles are actively used by armed forced and security forces in Turkey as well as more than 35 friendly and ally countries. The performance of our vehicles that are serving worldwide are the most important reference for our potential customers.
We continue to carry out our promotional activities across different geographies evaluating new cooperation opportunities. Almost all countries, especially for big defense industry projects, now require the use of local opportunities and the development capabilities in the country. Only the manufacturers that adapt to such requirements are successful against international competition. Technology transfer for large procurement projects of this scale has become the most important competitive condition. Otokar now stands out in the defense industry, not only with its products but also with global knowhow, engineering, R&D and technology transfer capabilities. Otokar continues to strengthen its position in the regions where it operates by establishing affiliates and subsidiaries.
Defence Turkey: Could you inform us on the ongoing export activities and those expected to be contracted soon? In April 2020 Otokar announced that they secured an export contract from an undisclosed African country for the delivery of ARMA 8x8 Wheeled Armored Vehicles. Can you elaborate on the configuration/armament of these vehicles and their delivery schedule?
Serdar GÖRGÜÇ: Otokar armored vehicles continue to be favored by friendly and allied countries. In 2020, we received two different orders from two different African countries for various armored vehicles, spare parts, and training services. We plan to start deliveries in 2021 and to complete deliveries by the end of 2022. We are particularly proud that one of these orders includes the ARMA 8x8. Our ARMA 8x8 vehicle will begin to serve in missions on the continent of Africa for the first time.
Defence Turkey: Can you provide an update on the current status of the AKREP IIe and URAL Special Operation Vehicle Projects that were launched in 2019?
Serdar GÖRGÜÇ: The AKREP II Family will be an outstanding solution for modern Armies with its superior maneuverability and agility as well as the outstanding design allowing the integration of various types of armament, weapon stations and alternative power packs.
The electric powered armored vehicle AKREP IIe was introduced in 2019 as the first version of the AKREP II product range. AKREP IIe is well suited to meet the challenging requirements of armies across the world and to respond to tactical performance expectations, offering many benefits, especially in fuel efficiency, mobility, survivability, and integrated logistics support.
We are continuously working on the development process of the vehicle and the new versions of the AKREP II Family.
The new variant of the versatile modular URAL platform, the URAL Special Operations Vehicle (SOV), made its debut at IDEF ‘19. Designed for the needs of military units and other security forces engaged in special operations, the URAL Special Operations Vehicle delivers superior mobility as well as high ballistic, mine and side ballistic protection for its crew, thanks to the armored semi-body, base, and fire wall.
Defence Turkey: Is the COBRA 4x4 Wheeled Armored Vehicle still in production? How many COBRA vehicles have been produced and delivered so far? How many Armed and Security Forces around the globe COBRA?
Serdar GÖRGÜÇ: COBRA is one of a kind in the world in terms of its mobility, amphibious capability, protection, and modularity. Developed to respond to internal security forces’ need for easy access in and out of the vehicle, COBRA stands out with its superior mobility and survivability.
The COBRA 4x4 armored vehicle is still in production. We have built over 4,000 COBRAs over years. Actively used in 15 countries across the world, COBRA features a modular platform that can be configured for different missions and it serves as one of the most preferred vehicles by UN forces for its exceptional features.
Defence Turkey: Unveiled in May 2013, the COBRA II 4x4 Wheeled Armored Vehicle has quickly gained user appreciation with its successful performance in Turkey, as well as in export markets. How many COBRA II vehicles have been produced so far and how many countries have inducted COBRA II into their services/inventories?
Serdar GÖRGÜÇ: COBRA II 4x4 Tactical Wheeled Armored Vehicles are in the inventory of 6 services in Turkey and 3 export countries. Otokar has delivered more than 600 COBRA II vehicles in different configurations including Armored Personnel Carrier, Armored Ambulance, Armored Patrol, Command and Control and Reconnaissance and Surveillance variants.
Defence Turkey: Otokar recently unveiled its new generation MRAP vehicle COBRA II MRAP. What kind of requirements/demands and technologies have led Otokar to introduce COBRA II-MRAP into the market? Can you elaborate on its technical features and superiorities that make COBRA II-MRAP different from other 4x4 MRAP vehicles on the market?
Serdar GÖRGÜÇ: COBRA II MRAP is a next generation Mine Resistant Ambush Protected Vehicle, which combines a high level of survivability and mobility in a modular package. The vehicle provides superior protection for the crew against ballistic, mine and IED threats while maintaining high cross-country mobility with its independent suspension system. It is specifically designed to provide high reliability, ease of maintenance and quick removal/installation of power pack.
With its modular design, COBRA II MRAP provides high payload and spacious internal space for integration of weapons systems and mission equipment. The vehicle can be configured with alternative seating layouts for up to 11 personnel with 3 or 5 door configurations as per specific user requirements.
Defence Turkey: Can you provide an update the current status of the TULPAR Light Tank, which was tested by two different users. Do you expect any interest for the TULPAR Tracked Armored Vehicle from Turkish Armed and Security Forces? Do you have any plans to integrate an indigenous powerpack (when it becomes available) to TULPAR for testing purpose?
Serdar GÖRGÜÇ: Tests of TULPAR under the toughest climatic and terrain conditions were completed and the vehicle was qualified. Developed to meet the needs of different countries in global markets, TULPAR's performance in tests and feedback from potential users are quite satisfactory.
The need for such vehicles has been increasing in recent years. TULPAR is capable of responding to the needs of different countries both in terms of technical capability and cost. TULPAR is ready for mass production; we follow current needs around the world, including Turkey’ needs.
Our engineering and production capabilities, and the flexibility to produce according to user requirements have always made us a preferred global land systems manufacturer. Since we have the intellectual property rights of our vehicles, we are ready to meet any requirements including the integration of indigenous powerpack.
Defence Turkey: Could you elaborate on the short and long-term targets of Otokar in the commercial and military vehicle sectors; and where do you envision Otokar will be 10 years from now?
Serdar GÖRGÜÇ: As a company that stands out with its products, engineering and production capabilities and experience, Otokar is always ready to serve Turkey, first and foremost. In terms of international markets, Otokar’s targets include higher exports to a vast geography and seizing opportunities for technology transfer and production with international partners at their locations.
Defence Turkey: What can you tell us about Otokar’s participation in the IDEF ‘21 Exhibition? What are you expecting from the exhibition?
Serdar GÖRGÜÇ: We have been participating in IDEF, one of the biggest defense exhibitions in our region, from the very beginning. As Turkey's leading land systems manufacturer, we have announced many firsts and innovations at IDEF. In this context, IDEF is a very important event for Otokar.
During IDEF this year, we plan to improve our cooperation with our current users while promoting our capabilities in land systems to potential users. As Turkey's leading land systems manufacturer, our goal is to continue our contribution to the country's exports with our products, R&D, and technology transfer capabilities in global markets.
Defence Turkey: Mr. GÖRGÜÇ, thank you for sparing time for our readers today.
