An association which have been active for 31 years. How do you evaluate current situation of your industry? What is the position of Turkey compared to other countries?
Turkish Ready-Mix Concrete Association is a professional organization which has been making efforts in concrete production that conforms to the standards, rolling out concrete applications that conform to the methods, ensuring that high-quality, resistant concrete in high strength classes is used all around Turkey in order to assist in construction of safe and resistant buildings for more than 30 years.
Ready-Ready-mix concrete industry of country is young compared to the other countries. The annual concrete production amounted to 1.5 million cubic meter in 1988, the foundation year of our Association, whilst production has been steadily increased in the last 30 years reaching up to 100 million cubic meter in 2018. Currently, 65% of the ready-mix concrete in Turkey is produced by our members. A rate which is considerably high but we do not see it enough. We aim at controlling entire concrete production in order to ensure a safe construction.
Having established and developed ready-mix concrete industry, our Association has today made our industry that is referred as exemplary in Europe and the world. According to data of European Ready-Mix Concrete Organization (ERMCO), total production of European Union member countries amounts to 204.9 million cubic meter, compared to 100 million cubic meter of Turkey, alone. This production figure places Turkey at the first rank among EU countries, followed by Germany with 52.8 million cubic meter, and France with 39.7 million cubic meter. With such growth performance, Turkey has continued to remain first position in Europe since 2009 and the world’s third largest producer after China and the USA.
Besides production figures, Turkey is also a leader in terms of resistance classes of the concrete. Accordingly, Turkey outclasses EU average in resistance classes of C25/30-C30/37 and C35/45 and above.
What was the performance of your industry in 2018? What are your predictions for 2019?
Following is estimated production figures of ready-mix concrete industry in cubic meter by years. Ready-mix concrete industry closed 2018 with a production of 100 million cubic meter, a decline of 13% compared to previous year.
According to the June issue of Ready-Mix Concrete Index Report published monthly by us, all index values show that current and expected activity level in the construction industry remains short. All three indexes showed a decline compared to the same period of the last year. There is no indications of recovery in the industry.
The recent published data of Turkish Statistical Institute show that construction industry has subjected to a regression. Could you evaluate the recent economic developments?
The recent July was a month where decisions have been taken that will determine the course of both Turkish and world economy. Primarily due to the commerce wars and concerns related with Brexit, the growth of global economy is expected to slow down in the remaining months of this year and in 2020. Recession signs that have emerged in the most part of advanced economies, mainly American economy, not only drag down the growth expectations with respect to world economy in 2020, but also negatively impact the global financial movements.
Indicators in the advanced countries point out that global growth has been weakened seriously. Exports of South Korea is seen to have been slowing down. June has seen the lowest export growth rate in the recent periods. Japan’s production industry performance has come to the lowest level since 2016. Monthly economic performance indicators of England is seen to be poor compared to other countries. In Euro-Zone countries, other than France, production entered in a downturn course. German marked down its growth expectation by 1 point.
Also, the recently published Global Economic Outlook Report of IMF states that global economic growth is reduced from 3.3 percent to 3.2 for this year, and 3.6 percent to 3.5 percent for 2020. For developing countries, economic growth estimate is reduced from 4.4 percent to 4.1 percent for 2019, 4.8 percent to 4.7 percent for 2020.
The countries have been implementing low interest and loose monetary policy in order to deal with economic slowdown. In the last month, the US Central Bank declared that they plan to introduce reductions in interest rate in order to support the economy which has been signaling slowdown due to the commerce war between USA and China. Last week, European Central Bank said it will pursue loose monetary policy.
Following the meeting on July, 31st, the US Central Bank declared its hotly anticipated interest decision and reduced interest rates for the first time after 10 years. Not only USA but also developing countries have been bringing similar policies into life. Yet, given the current conditions, it is an expected practice for all countries to apply reductions in interest rates and monetary measures in order to grow their own economies. In parallel with the course of inflation, in July 25th, Republic of Turkey Central Bank also reduced interest rate by 425 base point. This extremely timed decision has been received well by the market. Why is timing right?
In G-20 meeting, Trump stated that he would not pursue sanctions against Turkey, and the recent inflation data showed there has been a slowing trend with regard to price increases. Given this conjecture, markets found reasonable the interest rate reduction of Turkey which has been applying the highest real interest rates.
However interest rate reduction, unfortunately, does not mitigate our problems all together. There are vital problems that must be solved by Economy Regulators. Yes, there is a decline in June on the part of inflation. Reaching up to 25% in the last November, consumer inflation receded down to 15.72% in June. Despite of said decline, the inflation rate is still high and it is inclined to rise if we analyze on the product basis.
Economic activities have slowed down so much that current account balance has produced a surplus in May. 12-month current balance deficit has receded to 2 billion 340 million US$. Although this outlook seems to be very good in terms of figures, it is, in fact, the clearest indicator showing the extent of recession of Turkish economy. Industrial Production Index has been showing decline for 9 months, compared to same month of preceding year.
In an environment where economy slows down on such a scale, the budget balance is also affected negatively. The budget deficit in the first 6 months of the year exceeded 78 billion TRY. Which means an increase of 70% compared to the first half of last year. In the first half, tax revenues, alone, increased by 4.3%. Having shown considerable increase until May, budget expenditures entered in a slowdown trend as of June. In June, budget expenditures decreased by 12.5% compared to same month of the last year. Having produced a deficit of 25 billion TRY in June 2018, budget produced a lower deficit of 12 billion TRY in June 2019. However, it is understood that we could not demonstrate the same performance on the revenue side. In June, our budget revenues increased only by 7.6%.
With the decreased budget expenditures, it seems that the contribution of the public to the growth will be extinguished during the second half of the year. Having reduced its expenditures, public needs to earn tax revenues to maintain budget balance. It is not possible to collect taxes without economic revival. Therefore, first of all, economy must be revived.
A slowed down growth means increased unemployment. According to last-published April figures, unemployment is 1 million 116 thousand people higher compared to last period of the last year. Unemployment rate increased by 3.4 points reaching up to 13%. Young unemployment rate is around 23%.
For employment, construction industry needs its own chapter. The employment in construction industry recorded as 1 million 611 thousand in April 2019, a decreased compared to 2 Million 155 thousand in April 2018. Construction had a lost employment of over 25%. In the same period, the manufacturing industry, which employs 5 Million people, recorded a lost employment of only 50 thousand, meaning a loss of only 1%. Compared to other industries, it is clearly seen that there is no employment loss as much as construction industry.
I have importantly asserted so far that interest rate must be decreased in order to revive the construction industry. Following the interest rate reduction in last July, we do not expect an outright dynamism in residence sales and construction industry. However, in parallel with the permanent success with regard to inflation, and continued interest rate reduction may lead a dynamism not only in construction but also the economy in general. Economy must first be revived in order to sustain increased employment, and improve other economic indicators such as tax collection.
As Turkish ready-mix industry investors, what do you expect government to do?
In the absence of an extensive, long-term, multi-faceted road map, construction industry will itself try to find its way, which will eventually lead the construction and associated industries to suffer more bleeding. At this point, we have demands for preparation of an extensive and high-level inclusive strategy document for the construction industry just like previously prepared for many industries such as machinery, overseas contracting, iron-steelworks, textile&ready-made, tourism. Construction industry must act in a planned manner taking into current economic conditions in order to achieve the capacity of new employment creation as required by the Economic Regulators. It is of outmost importance that a construction industry strategy document should be created under the leadership of Mr. Minister of Environment and Urbanization with the participation of all stakeholders from private and public industry. Turkish Ready-Mix Concrete Association will provide any necessary contribution and support in creation and implementation process of such strategy document.
Again, given the economic recession, what solutions do you, as an association, offer your member companies to help them overcome the current problems of construction industry?
With the contribution of our members, since 2016, we have been publishing indices which include important data both for construction and our industry. Our index reports form a reference document for our concrete producers in their investment projections and industrial evaluation.
We carry out works to reduce the costs of our members. For this purpose, we launched “Study of Sustainable Logistics Transformation in Ready-Mix Concrete Industry Towards Industry 4.0”. We aim at enabling our Members to organize their freight operations safer, more efficient and more sustainable using these studies. Thanks to the on-site trainings provided to over 50 ready-mix concrete plants, we particularly managed to reduce fuel consumption of our mixers and pumps by 20-25% per 100km. All our cost-reducing saving measurements are reviewed by TUBITAK Marmara Research Center (MAM) and presented in the Ready-Mix Production Industry Resource Efficiency Guide published by Republic of Turkey Ministry of Industry and Technology.
You are preparing a training program every year. In what areas do you offer trainings?
Training quality must be improved in order to meet the high-quality concrete production. For this purpose, qualified employee requirement of our industry has been met by certification trainings and seminaries organized by our Association for industry, employees and concrete users for many years. Since 1994, pump and transmixer operators, plant operators and laboratory technicians have been undergoing certification trainings of our Association. These trainings have been so far attended by more than 16 thousand trainee. These trainings not only meet qualified employee requirement but also contribute in production that complies with occupational health and safety rules.
Safe driving training is provided in the courses “Concrete Transmixer Operation in Hazardous and Very Hazardous Works” and “Concrete Pump Operation in Hazardous and Very Hazardous Works” organized for the transmixer and pump operators. One-day long trainings consist of theory and practice and tests are administered at the end of each course. The practical training held in the training track aims at qualification of the concrete pump and concrete transmixer operators and minimization of accidents causing material and moral damages.
As part of “Concrete Plant Works in Hazardous and Very Hazardous Works” organized for the plant operators, virtual plant and simulation trainings are provided by the plant producers. In addition, occupational safety courses are provided by experienced occupational safety experts as part of our “Hazardous and Very Hazardous Works” trainings.
Applied trainings as part of “Concrete and Reinforced Concrete Tests in Earthquake Resistant Buildings” organized especially for the laboratory personnel are provided in laboratories of additive and admixture producers. During 2 days-long trainings, theoretical and applied training are administered by experienced personnel of relevant companies.
In 2015, our Association founded the Turkish Ready-Mix Concrete Association Occupational and Qualification Center (THBB MYM) in order to carry out exams and certification as part of “Hazardous and Very Hazardous Works” under the Occupational Qualification Authority Law. For this purpose, certifications have been provided for Concrete Workers and Reinforced Concrete Workers since 2016. Having accredited and received the Authorization certificate under “Concrete Pump Operator National Qualification” in 2019, THBB MYM has launched the certification activities. Created by THBB MYM in cooperation with INTES, “Concrete Plant Operator” National Qualification is expected to be published in Official Gazette after having evaluated by Construction Committee of Occupational Qualification Authority.
Since its foundation, our Association has been organizing seminars all around the country in order to promote production and application of high-quality concrete to the standards in Turkey. In 2017, we launched a seminary series titled “Concrete Technologies and Right Concrete Applications” to cover entire Turkey. Lecturing on topics such as Components of Concrete, Fresh Concrete, Concrete Pouring and Care, Concrete Resistance and Durability, Special Concrete, Quality Inspection of Concrete, periodically organized in various regions of Turkey, these seminars explain right concrete applications to the concrete users, namely, contractors, architects, engineers and public and regulatory officers related with concrete, representative of building inspection bodies and concrete producers. We held 20 seminaries in the last two years and are continuing to organize them.
What is the activity scope of your building materials laboratory?
Founded by our Association in 2007, our laboratories are currently developing R&D works and projects with many academicians and experienced staff in TeknoPark of Yıldız Technical University to contribute in the industry. This projects seek the ways for a high-quality production with lesser costs and develop the method for an environment-friendly sustainable concrete production. Our THBB Building Materials Laboratory conduct tests involving materials such as concrete, aggregate, cement, chemical, mineral admixtures, concrete mixing water and provides calibration service to construction industry. Research on the recycling of the construction and destruction debris and waste was carried out by our Association for the first time in Turkey. Having the resistance tests of prestigious projects of Turkey conducted in our Laboratories is an important success of our Association, which will be an exemplary reference to other many industries.
Lastly, our project “Turkish Ready-Mix Concrete Association Concrete Research Development and Technology Information Center” developed in cooperation between our Building Materials Laboratory and Yıldız Technical University, has been appreciated by Istanbul Development Agency and launched in 2018. As part of the project, we continue our works to establish this center in the body of Turkish Ready-Mix Concrete Association, which is open to the industry and all stakeholders, capable of advanced concrete research, and offer R&D and technological advisory services.
Could you inform us about your works on sustainability of concrete?
As you may know, besides high-quality production, we have been working on training, sustainability, environment, occupational health and safety matters for development of the ready-mix concrete industry and always place great importance on these matters. As THBB, we are pioneering one more important development in occupational health and safety. We launched works for environmental and occupational health and safety certifications specific to ready-mix concrete industry. Having applied to KGS and successfully passed the inspections, ready-mix concrete companies have started to receive “KGS Environment Certificate” and “KGS Occupational Health and Safety Certificate”. Applying for to receive certificate, ready-mix concrete plants undergo an independent and effective inspection, registering their excellences and qualities in environment and occupational safety areas. As the inspections involve legislative compliance as well as good practices specific to ready-mix concrete industry, plants get familiar about improvement areas after inspections. In 2018 we carried out inspections at the companies which applied for KGS, and concluded first certifications.
Concrete is the most commonly used building materials all around the world. Therefore, it is of outmost importance that concrete must be sustainable. In synchronization with the world, we, too, focused on the sustainability in Turkey. In 2017, our Association is qualified to be “Regional System Operator” of Concrete Sustainability Council (CSC) founded at the end of 2016. At the same time, “THBB Quality Assurance System (KGS) has become “Certification Body”. Council brings in a worldwide-recognized product “Certification System” for concrete components such as cement and aggregate. Concrete Certification Council (CSC) offers concrete, aggregate and cement producers with the opportunity of having their sustainability focused works awarded through a reliable, independent and fact-based certification system. As THBB we finalized the adaptation process of Responsible Utilization of Resources Certification Process in 2018. After finalization of the works, THBB started to hold information meetings for companies which applied for certification of “Responsible Utilization of Resources” and carry out inspections independently of KGS. As part of this System, we completed our first certification of ready-mix concrete plant and cement plant at the end of 2018, which achievement of Turkish Ready-Mix Concrete Industry is a first in the world in the field of sustainability. Our country currently has CSC-certified 2 cement plant and 3 ready-mix concrete plant.
You are elected as President of European Ready-Mix Concrete Organization for the second time. Could you talk about your targets?
Founded in 1967, ERMCO (European Ready-Mix Concrete Organization) is the largest international organization in the ready-mix concrete industry, acting as an umbrella organization for ready-mix concrete producers from twenty countries of Europe, attended by USA, India, Japan, New Zeeland and South America as associate members, and Kyrgyzstan and Russia as correspondent members. ERMCO administers many projects involving new concepts in the ready-mix concrete area such as quality, environment, training, sustainability, standards, and digitalization. Thus, it develops environment-friendly ideas as well as solutions to contribute in the economy in general.
As THBB we are devotedly working with our members for many years in order to roll out the production and application of high-quality, right, environment-friendly and sustainable concrete necessary for the construction of reliable and resistant buildings in Turkey. Having held up our steady and professional point of view, we achieved many successes across national and international platforms. As a result of international implications of our works, we have been serving as President of ERMCO for 2016. Thus, we are able to speak up demands of our producers in Europe while steering the developments that affect our industry on the global scale.
Held on June 14th, 2019, Ordinary General Assembly 2019 of ERMCO re-elected me as the President of ERMCO, being the world’s largest international body in ready-mix concrete area, with the affirmative vote of 50 delegates, and the decision of Presidency Council consisting of representatives of Germany, Italy and Turkey. As we have done in the past, we will set new goals for the period to come with respect to the development of concrete industry both in Turkey and Europe and carry out works to carry our industry a step forward.
As one of the largest members of ERMCO, we highlighted in the technical and strategic meetings that we will continue using technical capability and backbone of THBB and realizing works with organizations being active and carrying out research in European ready-mix industry. Thanks to our scientific and technical know-how, experience and backbone, Turkey will continue to be an irreplaceable part of the projects carried out in the Europe. Our goal is to carry our representative and Presidency roles, which has been successfully delivered so far, one step forward as we undertake further responsibilities.
What are the most important problem in the Industry? As Association, what are your solution suggestions?
The current problems that are of outmost importance for the industry, have been discussed in Meetings of Management Board, consultation meetings, as well as seminaries held in various cities with the participation of the concrete producers. The main problems revealed as a result of discussions include profitability of the industry, regulations resulting in increased costs, limited application of concrete roads and concrete barriers, financing costs, purchasing executives not looking for KGS certificate as a requirement, problems related with application of Electronic Concrete Tracking System (EBIS), unfair competition, insufficient raw material resources, some producers using fair competition disrupting practices, need for qualified employee, illegal employees, laboratories of Local Directorates of Environment and Urbanization remaining un-modernized, regional variances among data required for delivery notes, omissions in Market Surveillance and Inspections (PGD), lack of qualified personnel in authorized laboratories. These problems will be mitigated by Government Subsidies and ready-mix producers once fulfilled their duties.
Apart from those specified above, the most important current topic of our industry consists of traffic hours of concrete trucks and training of operators. Municipalities cannot allocate inner-city sites to read-mix concrete plants. The traffic prohibition imposed on ready-mix concrete trucks in the metropolises poses an obstacle for construction of earthquake resistant buildings due to the technical reasons. To construct a building that has a long live and is earthquake-resistant, it is necessary to process concrete timely and in accordance with its method in the construction sites. Specifically: traffic hours must be regulated just as that of European countries because concrete applications of bearing structural elements such as column, beams etc. must be completed at once. Ready-mix concrete is a material that is necessary to be used in the residence industry and must be placed in a short time (in 2 hours). Therefore, ready-mix concrete must be licensed especially in city, not outside the city like other industries. Further, occupational safety is of outmost importance for our Association. Concrete mixer operators strictly undergo operation trainings organized by our Association. As part of this training, concrete mixer operators are first of all receive advanced and safe driving methods. Besides general information about concrete applications, training includes various courses such as vehicle care and driving, tire care, anger management, traffic and first aid, etc. Safe driving trainings include applied courses on weight shifting in the corners, rollover simulation with special mixer, methods to avoid rolling over, and importance of soft steering movements rather than firm movements. After training, successful operators are qualified to receive the certificate. In addition, speedometers equipped in the vehicles are designed so that they signal operator about speed limit. Lastly, we produced and shared “Safe Driving with Transmixer” training video and “Safe Driving with Mobile Concrete Pump” training video in order to minimize traffic accidents caused by transmixers and mobile concrete pumps on the inner city roads. Our Association is ready to lead in communication of problems of industry and public to the regulators.
Our Industry currently has some problems with Electronic Concrete Tracking System (EBIS), shortly “Chip Concrete” which was introduced in December 2018. We prepared reports to compile our findings and problems faced by our members and solution suggestions and submitted it to Directorate General of Building Works of Ministry of Environment and Urbanization. Our most suggestions were found acceptable by officers of Ministry and the required works have been launched. We are closely following up all developments regarding the matter and continuing our works.