Farplas is one of the steadily rising stars of amongst the supply industry groups in Turkey. It works for the automotive and white goods sectors. It started in 1968 with spare parts. In 1970 it began production. It now has five factories, 800 employees and a turnover of US$60 million. Ömer Burhanoğlu, the group’s CEO, says that their turnover will reach $80 million in 2005.
The marketing guru Seth Godin suggests that companies that want to survive in the modern business world should: “Be different, develop your business.” In fact, this idea, which Seth Godin has been recommending in recent years, was first applied by the Farplas Companies Group in the 1990s. Instead of following the other companies in producing spare parts, Farplas, which supplies manufacturers of commercial vehicles, began to offer semi-finished goods on the principle of finished products and described itself as a partner of the system. The company introduced the same model into the white goods sector. This process led to it working with giant manufacturers such as Renault and Arçelik. The company avoided pressure from its rivals by differentiating itself from them and scooped the awards for the most successful supply industry company.
Farplas Companies Group CEO Ömer Burhanoğlu shared with Capital his views on the sectors in which the group is active:
How do you see the future of the automotive supply industry?
The supply industry is in a difficult position as the result of the high value of the Turkish Lira, an excessive increase in the prices of plastics and iron and steel and competition and price pressure from primary producers. Labor wages have almost reached the same level as those in Europe. In order to overcome these challenges companies need to find areas in which they can create added value.
The activities of foreign companies in the global supply industry are dividing up the world. A European company conducts its R & D activities in India because of its cheap engineering, it produces moulds in China because of the cheap labor, and because of logistics, workmanship and quality it manufactures in Turkey or Poland. I mean, wherever there is a cheap resource, then it most definitely has to use it. This means that if you say that you will remain a player in Turkey then you will have problems. You should definitely have a strategy. It is essential that your infrastructure, human resources, design capabilities, I mean your creative capabilities, are of the highest level. The companies which can do this will not experience problems in the future. Things will continue like this for as long as the world continues to turn. Today we are a good producer but not a good market. If our per capita national income can increase to over $4,500 then sales will boom and we shall become an important market.
We heard that a boom was expected in the white goods supply industry. Do you agree with this?
The supply industry is growing in terms of numbers. But I don’t think that it will grow by very much from the point of view of development, income and opening up to the rest of the world. It is very difficult to develop strategies such as being a global player or buying important brands.
I think there will be major problems in terms of price as a result of pressure from the Far East, the decline in the importance of brands in the white goods sector and the fact that people are beginning to see these products as just pieces of equipment. In order to counter this, companies will have to create margins by either looking for alternative ways out or by producing on very large scale. Or they will have to adopt a structure which can produce a more different system.
There is intense competition between global players. In the near future you will be able to buy a washing machine in Europe for 200 Euros. Then the price will fall to 100 Euros and that will be the end of the road. Companies will merge. The number of players will decline. This scenario is always talked about for automotives but you will see that it will occur more rapidly in the white goods sector.