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March 01, 2016 01:00 AM

Alba plans to grow in Turkey and beyond

Steve Toloken
Assistant Managing Editor
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    Steve Toloken
    Arkin Levent, Alba Plastik general manager.

    Istanbul — Growth in Turkey's auto sector is fueling opportunities for injection molder Alba Plastik San. ve Tic A.S.

    The small company is not far past the startup stage, launching production in 2009 and today having modest sales of 16 million euros ($17.9 million).

    But it expects to double revenues in the next two years, with a new factory in Turkey and more molding capacity. A big driver is, it says, the global car industry localizing more part production in the country.

    “Today we are doing 16 million euros and in 2018, we will be 37 million euros [$41.4 million], based on signed contracts,” said Alba General Manager Akin Levent, in an interview at the company's factory in Kocaeli, near Istanbul.

    Vehicle production in Turkey hit 1.36 million cars in 2015, a 16 percent increase from 2014. A little less than 1 million of those cars were exported, with Turkey home to large assembly plants for Ford, Fiat, Honda, Hyundai, Renault and Toyota.

    While Turkey's economy has struggled the last two years and vehicle demand shrank 10 percent in 2014, some studies project the local market will grow and start to rival exports in the next few years.

    The Italian consultancy Focus2Move, for example, estimated last year that Turkish domestic demand will be 1 million vehicles a year in 2020, in addition to the roughly 1 million cars exported.

    For Alba, it's meant a steady increase in demand since it began as an offshoot of the larger Turkish firm Alba Group.

    The company has 20 injection molding machines, mostly European brands like Engel and KraussMaffei, with clamping forces up to 2,000 metric tons. It expects to add 10 more presses larger than 800 metric tons by 2018, Levent said.

    “As a government strategy the target in Turkey is to produce nearly 2 million cars per year,” he said. “So each year, of course not in the crisis year [2009], we saw that each year the automotive market is growing. And most of our customers are starting to localize their plastic and metal parts.”

    That localization and Alba's growing desire to export are prompting a 2 million euro ($2.17 million) investment on a new factory for painting and metallizing plastic parts, in the next two years.

    The company is also starting a research and development unit this year, Levent said, and wants to begin producing its own branded parts because it sees those products as having a higher profit margin.

    Lack of focus on R&D is a problem for Turkey's manufacturers broadly, he said. Some Turkish firms like appliance maker Arçelik A.S., are strong in R&D and new product development, but too many Turkish manufacturers short change it, he said.

    “We have many companies in Turkey that are producers [for others] but it doesn't bring any additional value to Turkey,” he said. “We have potential. We have young people. We need to produce our own goods.”

    Industry data supports Levent's argument: Turkey's plastics product exports sell for an average of 32 percent below the world's average, reflecting too much low-value added manufacturing, according to the Turkish trade group Pagev.

    Starting as mold maker

    Alba's molding operations began in 2009, as a unit of the larger Turkish firm Alba Group, which has divisions in wrought iron metal working and making injection molds. Today the molding unit has 185 employees out of 450 in the group.

    The molding division began as an offshoot of the mold making division, after some customers requested that it start making plastic parts, Levent said.

    “We started with simple parts in 2009 and then our business grew,” he said. “Now it's changed. Today we are producing very technical parts. For example, dashboard parts.”

    Alba started its mold making shop in 1992, and Levent said doing full-scale mold production remains a core strength: “Most of the companies like Alba … have only a maintenance toolshop. But we are making our own tools.”

    Future growth for the company will require setting up joint ventures with foreign firms or going outside Turkey, Levent believes.

    The company is looking seriously at setting up a factory in Europe, possibly Slovenia, by 2020. He said Turkey's processing industry has changed how it thinks about globalization in the last five years, and no longer sees growth in Turkey as the best way to ensure long-term survival.

    “Before, all the local companies, their strategy was to grow on the local side, in Turkey,” Levent said. “But today that's not possible. We have to go outside, we have to make joint ventures, we have to buy other companies.

    “If you want to be a global player, do it, otherwise you make your production in Turkey and in 30 years, you can close your doors.”

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