Yavuz Işık / Turkish Ready Mixed Concrete Association Chairman of the Board
How was the year 2022 in general for the industry? Which issues will come into the spotlight in the sector for 2023 and beyond?
The year 2022 was a year of unusual and significant movements in global markets. Commodity prices, especially oil and gold, saw large fluctuations while the euro/dollar exchange rate reached its lowest level in 20 years. The United States, Germany, and all emerging countries are currently engaged in a full-fledged fight against inflation. The Federal Reserve (FED) in the United States raised its interest rate from 3.25% to 4.00% in November. With this interest rate decision, the policy rate reached its highest level since December 2007. For the first time since its founding in 1998, the European Central Bank raised its interest rate by 75 basis points in September.
In light of recent developments, the expectation of recession in the United States still remains high. The expectation of recession peaked at 63% in October, and as of January, the expectation of recession remains at 61%. While the US Federal Reserve (FED) states that even though a strict economic contraction is not necessary but a smooth decline is necessary to slowdown the economic growth in order to reduce inflation, many economists believe that this contraction will not be so smooth. In this way, the US economy appears to be showing its worst growth performance in the past 50 years, excluding recession periods.
In the energy front, an energy crisis continues to impact the world more severely than the energy crisis of the 1970s. Natural gas and coal accompany the rise in oil prices which we have witnessed in the 1970s. Along with the energy exploration problem, high inflation will be one of the key factors limiting growth in Europe. The war in Ukraine is expected to continue to have an impact on volatility of energy and commodity prices in the following 6 months.
The developments around the world have reflected in Turkey as rising exchange rates and inflation. The decrease in policy interest rates has increased the perception of risk associated with our country in global markets. The CDS score is considered to be the beginning of risk with a value of 300, while Turkey’s CDS is 538 as of the middle of January. Although it seems low compared to the CDS value of 908 in 2022, it is considered important that the risk premium, which has been high since August 2021, to fall below 300 points.
All of these developments have fundamentally affected the construction sector as well. The Turkish economy has shown positive growth for 9 consecutive quarters. However, the construction sector has shrunk in 6 of these 9 quarters. It is seen that the construction sector, which is the most contracted sector in the Turkish economy, also entered the last quarter of the year with a contraction. The 14% contraction rate in the third quarter of 2022 in the construction sector is a sign of the highest decline in recent times.
The fluctuating activity level in the construction sector and especially the inability to increase the confidence in the sector is the most important problem. The construction industry still cannot demonstrate its true potential. The 57% decrease in mortgage home sales as of November shows how important it is to access financing options is in the housing industry. It is believed that this problem will cease to be a major issue and the construction sector will grow with the implementation of different financing models by our Ministries.
We estimate that the ready-mix concrete sector will close 2022 with a production close to 105 million m³, which was the level in 2021.
We believe that success in fighting the inflation and rising costs, particularly in terms of economic stability, will be decisive in achieving a 10% real growth in 2023.
As an association, what kind of activities you have undertaken in 2022? What will be your general activities in 2023 and beyond?
We will continue to meet the qualified personnel needs of our sector by organizing pump and mixer operator, power plant operator and laboratory technician trainings that we have been conducting since 1994. In addition to these trainings, we will continue to enhance our trainings such as Economic and Safe Driving Training, Technical Safety Rules Training for Concrete Site Operation Personnel and Concrete Pump Operators, Efficient Use of Concrete Pumps and Concrete Plants, Safe Driving with Concrete Mixers and Mobile Concrete Pumps, Safe Installation of Concrete Pumps, Practical Blind Spot Training in Heavy Vehicle Use, and Heavy Vehicle Accident Analysis Training. We will guide the sector by adding new short training films to the ones we have already prepared.
With the Turkish Ready Mixed Concrete Association VCC (Vocational Competence Center), which we established in 2015 for the purpose of conducting exams and certification according to the Vocational Qualification Authority Law, we will continue our “Concrete Pump Operator” and “Concrete Plant Operator” professional competence exams and certifications.
In our accredited Building Materials Laboratory, established in 2007 with the support of many academics and experienced staff at Yıldız Technical University Techno Park, we will conduct experiments on concrete, aggregate, cement, chemical additives, concrete mixture water, volatile ash and high-furnace slag, and also continue to provide calibration services for concrete producers’ own equipment. Our Turkish Ready Mixed Concrete Association Concrete R&D Technology Advisory Center, established with the support of Istanbul Development Agency (ISTKA) under the coordination of the Ministry of Industry and Technology, will continue to serve contractors, producers of ready-mix concrete, precast concrete, cement, aggregate, chemical admixtures, and mineral admixtures, citizens and municipalities who need advanced tests for determining the quality of concrete in their buildings and a building performance report.
With in the scope of the Switzerland-based Concrete Sustainability Council (CSC) certification system, of which we are a member and Regional System Operator, we will inform concrete, aggregate and cement producers and certify them by KGS, the CSC Certification Body. We will continue to develop projects for the construction and ready-mix concrete sectors in our Technical, Environmental, and OHS Committees and other committees. We will closely monitor developments affecting our sector and take necessary initiatives with relevant authorities, including public institutions and organizations.
We will continue to work with all national and international associations, professional organizations, and universities that are members of our union. As a member of the European Ready-Mixed Concrete Association (ERMCO) and the Concrete Sustainability Council (CSC) Board of Directors, we will continue to represent our sector effectively on international platforms, bring innovations to our country, and share the experiences of the Turkish ready-mix concrete sector with international stakeholders.
We will continue to prepare our monthly Construction Sector Assessment Reports, in which we include our monthly index reports prepared since 2016 and current economic data related to the construction sector.
In particular, a new page was opened for the construction and many other sectors with our country signing and ratifying the Paris Agreement at the end of 2021. In the short and medium terms, we think that green and digital transformation, low-carbon and circular economy, integrated design, building information modeling (BIM), and energy efficiency will be more prominent in both the construction and construction materials industries.
At Turkish Ready Mixed Concrete Association, we closely follow national and international developments and continuously develop new projects for the construction and ready-mix concrete industries.
According to official data for 2021, our sector, with a turnover exceeding $4 billion, an employment volume of over 35,000, and an annual production of 105 million cubic meters, is of great importance for the Turkish economy and construction sector. Thanks to the work of our association, our sector has reached a point where it is now being used as a model in Europe and around the world. According to data from the European Ready-Mixed Concrete Association (ERMCO) for 2021, the total production of all EU member countries was 272.5 million cubic meters, while Turkey alone produced 105 million cubic meters of concrete. With this production, Turkey is the leading country among EU countries.
The most effective solution against earthquakes is the transformation of risky structures
In our country, earthquake is a type of disaster that ranks first in terms of casualty and property damage. About 60 percent of casualties caused by disasters occur due to earthquakes. According to the data of the Turkish Ministry of Interior, Disaster and Emergency Management Presidency (AFAD), 1,796 earthquakes with a magnitude of at least 5.0 have been recorded since 1900. The earthquakes of magnitude 7.7, whose epicenter was in Pazarcık district of Kahramanmaraş at 04.17 on February 6, 2023, and of magnitude 7.6, whose epicenter was in Elbistan district of Kahramanmaraş at 13.24, once again reveal the importance of urban transformation. Since there is no way that we can know the exact location, time and severity of earthquakes, we can prevent new suffering by urgently renovating risky structures. On this occasion, may Allah have mercy on our citizens who lost their lives in the earthquakes that occurred in the Pazarcık and Elbistan districts of Kahramanmaraş and were felt intensely in the surrounding provinces, especially in Hatay, Osmaniye, Gaziantep, Şanlıurfa, Diyarbakır, Malatya and Adana; My condolences and patience to their families, I wish a speedy recovery to the injured.
The effects of major earthquakes on the national economy, especially in metropolitan cities where there is trade, industry and important infrastructure, should also be evaluated. Therefore, it is important to solve the problems that reduce the speed of urban transformation. By solving these problems, it will be possible to ensure that citizens get safe and comfortable living spaces. For this reason, all stakeholders who will take part in the process should take an active role in order to transform at least 300 thousand houses every year by the Turkish Ministry of Environment, Urbanization and Climate Change.
Aiming to guarantee the quality in the field of ready-mixed concrete, our Association ensures the production of concrete in high-quality and high[1]strength classes by controlling the production conditions, technical and laboratory infrastructure, personnel adequacy of ready-mixed concrete facilities with the Quality Assurance System (KGS). Ready-mixed concrete with KGS quality certificate, which will be used in the construction of new buildings and urban transformation works, will save many lives in a possible earthquake.
We invite all concrete manufacturers to the KGS System to produce in accordance with the standards
This ratio should be much higher for earthquake-resistant construction. Concrete plants participating in the KGS System perform a more stable and sustainable production as a result of intensive controls. Thus, both high[1]quality and economical production is obtained. Confidence is established between the concrete producer and the consumer by ensuring production in accordance with the standards. Concrete manufacturers granted with KGS Certificate are especially preferred because they apply an impartial and accurate audit to all manufacturers in the sector. Nowadays, it is gratifying for our country and for us that concrete manufacturer companies are required to be KGS certified Turkish Ready Mixed Concrete Association member in the technical specifications of some prestigious projects as a prerequisite. In this direction, we invite all concrete manufacturers to the KGS System to produce in accordance with the standards.
