Electromechanical Industry Aiming for Over $10 Billion in Exports by 2025

The electromechanical industry sector is expected to close 2024 with an export value of approximately $9.5 billion and has set higher targets for 2025. Mustafa Güngör, Chairman of the Electromechanical Industrialists Association (EMSAD), stated that the sector aims to enter 2025 with the goal of breaking a new record by achieving exports exceeding $10 billion. He mentioned that ambitious targets for electric energy have been set in the 2024-2028 Strategic Plan published by the Ministry of Energy and Natural Resources, stating, "To achieve the goals listed in the plan, contractors involved in the construction of electromechanical systems and electric transmission and distribution networks will become key players. It is crucial to give importance to these sectors to ensure that the equipment used in new electric facilities can be produced domestically and that the facilities are completed on time and correctly."

Güngör emphasized that the increasing global need for electricity is highlighted by the rising population and developing industries, and the NET ZERO 2050 targets provide significant opportunities for the Turkish electromechanical industry. He noted that according to scenarios prepared with the policies defined by the International Energy Agency (IEA), an average annual investment of $550 billion is needed for electric transmission and distribution networks globally by 2030, rising to an average of $580 billion per year from 2030 to 2050. "It is expected that equipment production worldwide will nearly double and the length of networks will increase by 1.7 times. We anticipate a similar momentum in the domestic market as well. Based on all these developments, it would not be incorrect to say that manufacturers and contractors operating within the electricity sector in our country will face a very vibrant market not only in 2025 but also up to 2050," he stated.

To achieve the 2025 goals and capture a larger share of the revitalized global market under the NET ZERO 2050 targets, the electromechanical industry sector needs public support, according to Güngör. He said, "To maintain our sector’s competitive edge in exports, we need to establish a balance between inflation and exchange rates. We are facing serious challenges, particularly in competition against Chinese-origin products. Furthermore, doubling Eximbank loans relative to guarantees provided by non-cash bank letters would significantly ease financial pressure on exporting companies. It is crucial that necessary measures are taken as soon as possible for the future of our sector. In 2024, high credit interest rates have made it difficult for our sector to access financing. This situation hinders the realization of new projects while limiting sectoral growth. We recommend introducing special interest rates for the electromechanical industry, which is a strategically important sector. Additionally, to prevent manufacturing and contractor firms from being adversely affected by cost increases beyond their control due to high inflation, the government should implement an inflation adjustment clause for Turkish Lira-based purchases and facility tenders."

Güngör also pointed out that high inflation negatively impacts wage balances in workplaces, creating serious difficulties in accessing qualified labor and leading to a loss of skilled personnel, which could pose a significant danger to the sector if it continues to escalate. He noted that a minimum wage increase of at least 25% is expected in 2025, stating, "Special incentive mechanisms should be implemented as soon as possible to ensure access to and retention of qualified labor in our sector."

He further mentioned that the development of the electromechanical industry sector cannot be considered independently of public involvement. "Private sector investments, excluding international firms, are directed according to the demands of regulatory bodies. Rapid decisions from the public institutions and organizations, which are in a regulatory position in our sector, to adapt to changes in energy will enhance our sector's competitiveness in international markets. For the targets in the 2024-2028 Strategic Plan to be met, it is vital to initiate tender processes for necessary public investments as soon as possible, to review the eligibility criteria in tenders conducted by Türkiye Electricity Transmission Corporation (TEİAŞ), and to consider principles of merit."

He expressed expectations from electricity distribution companies to rectify conditions in contracts that put producer firms in a difficult position. "Additionally, to effectively manage the capacity planning processes of producer firms, electricity distribution companies should distribute equipment demands in their five-year investment plans over multiple years. This will enable distribution companies to obtain equipment more cheaply and on time. The orders and demands that are congested in the last quarter, causing overloads in the production capacities of firms, must be prevented, which currently create issues in planning, supply chain, and delivery."

Güngör emphasized the importance of having locally and nationally produced products in achieving the 2028 targets for Renewable Energy. "Therefore, supporting electromechanical industries that manufacture locally and the contractor groups executing the construction of planned facilities with special support and incentive mechanisms will be beneficial for the national interest. These incentives are crucial for companies to maintain their competitive advantage in exports, access affordable credit for new investments, develop R&D projects, obtain qualified labor, retain existing personnel, and avoid financial crises while conducting business amid high inflation."