Defence Turkey: Could you give us information about the partnership structure, board of directors, personnel, the production facility, and infrastructure capacity of Aselsan Sivas, which was established for Precision Optics Production in 2016, as well as some details about your procurement and engineering department in Ankara?
Murat ŞAHİN: The Aselsan Sivas production plant started operations on May 28, 2016, in Sivas/Turkey. 50% of the shares belong to Aselsan and 50% of the shares belong to SOM (Sivas Optical Material Inc.). Our Board of Directors consist of 4 members. 2 of them are from Aselsan namely MGEO-Aselsan Vice President Prof. Dr. Sezai ELAGÖZ and UGES-Aselsan Vice President Dr. İbrahim BEKAR and two of our Board Members are from SOM Inc. namely Mr. Osman YILDIRIM and Mr. Mahmut DERELİ. We employ 300 colleagues. 250 of our workforces are blue-collar technical staff and 50 of them are white-collar engineers and administrative personnel. The important point is that our employees’ average age is 27 and 95% of them are from Sivas. We are manufacturing highly sophisticated electro-optical products with these young colleagues. They are highly motivated to produce these technological products in Sivas. For four years we grew rapidly and invested US$ 25 Million in total in the Sivas factory. We currently manufacture 40 different electro-optical products. Besides, we conduct efficient backward integration and have the capability to manufacture our optical and optomechanical subcomponents. This gives us the opportunity to supply good quality products at inexpensive prices. In a rather short period of time, our sales increased 10-fold (we were declared by TOBB to be among the top 100 rapidly growing companies). In the beginning of 2019, we opened our Ankara Branch as a Design Office in where we have engineers and administrative personnel to organize product designs/development, perform quality control at the source, and conduct purchasing and customer relations operations.
Defence Turkey: Do you think that the investment structure of Aselsan Sivas can set an example for other industrial investments in Anatolia? What would you like to say about the products and projects you have nationalized? What is the added annual value to the country’s economy?
Murat ŞAHİN: Absolutely, Yes and I’ll briefly explain it; in 2014 we started to organize how the investment structure would be applied. The contribution and leadership of Mr. İsmet YILMAZ was very important, as a member of our parliament and formerly our minister of defense for the investment of Sivas. He is continuously supporting Sivas in pursuit of new investments. President of Defense Industries Prof. Dr. İsmail DEMİR, Vice Presidents Mr. Mustafa Murat ŞEKER, Mr. Celal Sami TÜFEKÇİ, Our Department Heads Mr. Halil İbrahim ÖZTÜRK, Mr. Erkmen ÖZÇELİK, Mr. Ahmet AKYOL and Mr. Murat ÇİZGEL gave us great support as well.
At that time, I was an optical and optomechanical design manager at Aselsan. I was also appointed as an Acting General Manager of Aselsan Sivas by the Aselsan Board of Directors. We recruited engineers and technicians to Aselsan Sivas and started to train them at Aselsan. Comprehensive training was held in every aspect i.e. theoretical study, on the job training, optical and optomechanical manufacturing courses, quality control and machinery maintenance training. This took almost one and a half years. During this period, Aselsan and Aselsan Sivas engineers selected the required machinery and test equipment. Factory plant design was also a collaborative effort with Aselsan’s relevant management team. Although, it was planned that Aselsan Sivas was organized as an optical manufacturing plant, at that time a big tender was won by Aselsan, the Commando Modernization Project for electro-optical devices. Aselsan design engineers worked hard to finish almost 9 different electro-optical, day sights, night vision clip-on and thermal clip-on products and we obtained permission from our Aselsan Board of Directors to consider mass production in Sivas. It helped Aselsan Sivas to get extra business enlargement. Afterwards, the Aselsan Sivas team who were already trained in Aselsan/Ankara started to produce these products, including their optical and optomechanical components in Sivas. It was a smooth integration and a perfect collaboration.
We nationalized the mass production of more than 250 optical components and more than 40 electro-optical systems. These products were mainly imported. In 2019, nearly US$25 million was contributed to the Turkish economy.
Defence Turkey: What can you say about Aselsan Sivas's performance in 2019? Can you share your turnover and domestic sales figures for 2019? Can you evaluate the current situation?
Murat ŞAHİN: Starting from 2016, each year we have increased our product range and product quality. Our Board members always support us in efforts to increase investments and explore new projects. Aselsan Chairman of the Board and President/CEO Prof. Dr. Haluk GÖRGÜN always supports us, collecting weekly reports for analysis on how to further advance Aselsan Sivas. We work hard as a team and strive to reach our goals. In 2019 we achieved a leap in our revenue figures and we also doubled the number of our employees. From 2016 to 2019 we were manufacturing products designed by Aselsan. In 2019 we started 3 new projects designed by Aselsan Sivas. Also, in 2019, we worked very hard with Aselsan engineers, the quality team and project management team to increase production capacity in Sivas. We invested in new mass production lines to increase capacity especially in A940 day sights and A600 night vision clip-ons. In short, I can say that 2019 was a springboard year for Aselsan Sivas in terms of the amount of increases in investment, production capacity, employee numbers and quality. We achieved total sales of around US$25 million in 2019 and this was more than double of the previous year’s figures.
Defence Turkey: How do you ensure a competent and effective supply chain, especially in terms of subcontractors in Sivas and the cities in its region? What can you tell us about your analysis to further develop your current supply network and your improvement methods?
Murat ŞAHİN: After we started production, we noticed that it was not easy to sustain production at the required quality and quantity unless we had reliable suppliers in Sivas. Most of our suppliers had been in Ankara. We immediately opened our Ankara Office to conduct quality control checks at the supplier source. Secondly, we started to engage in meeting with potential Sivas(local) investors. We encouraged them to invest in several industries which are useful for us. These branches were, precise optomechanical manufacturing, electronic card manufacturing, Alodine/Anodizing surface coating, Injection molding for hard cases and manual optical manufacturing for our excess optical lens demands. In these branches, investors started to invest and established companies. It took almost two years for our Sivas suppliers to deliver qualified products. Aselsan Sivas provided technical and administrative support for these companies. Starting from 2018, we started to procure reliable products from our local suppliers, and this gives us great flexibility to execute our delivery plans. In furtherance of expanding our local supply chain in Sivas, we assist our suppliers to invest in the correct products with the correct equipment. We forecast that the share of business from our local suppliers will increase year over year in Aselsan Sivas’s overall supply chain.
Defence Turkey: One of the most essential resources that will provide added value to Aselsan and the Defense Industry is, of course, Human Resources. Training of qualified and competent expert personnel is one of the primary goals of all defense industry companies. Various prominent universities feed the engineering structure of defense companies operating in our metropolitan cities such as Ankara and Istanbul. However, the scarcity of universities of this caliber in other cities makes it difficult to employ qualified engineers and technical personnel. In this context, how does Aselsan Sivas cooperate with the relevant departments of universities and technical high schools in Sivas and its region to create a competent and effective workforce? Will your current university-industry collaboration be sufficient to meet your needs? What type of areas of opportunity are there in terms of improvements and solutions that can be made?
Murat ŞAHİN: As you clearly noted, the collaboration between the industry and the Universities are essential, especially in Anatolia. When Aselsan decided to invest in Sivas, we organized meetings with Cumhuriyet University regarding how to collaborate. As a first step, the Optical Engineering Department was established at Cumhuriyet University and started graduate studies. Most of our engineers applied for the graduate school for their Master of Science or PhD. Education. We collaborated in several TÜBİTAK projects. As you know, a second University in Sivas opened, Sivas University of Science and Technology. This university focuses mostly in defense technologies and has opened many courses related to defense technologies such as optics, missiles, precision mechanics, investment casting and composites. We are also involved in different kinds of projects with Sivas University of Science and Technology. Both of our Rectors, Prof. Dr. Alim YILDIZ and Prof. Dr. Mehmet KUL support these collaborations. We have a Research & Development Office at Cumhuriyet University in their Teknokent area. This year we renovated the building and plan to start new projects there. Furthermore, beyond that, we also considered collaboration with Sivas IT and Technical Anatolian High School in Sivas to train and to guide students for their future. We have started lessons to this end and our engineers give weekly lessons to these students and generate simple projects to train them in electro-optics. These activities are designed to prepare these students for their professional life and to increase defense industry awareness. Our Sivas City Governor Mr. Salih AYHAN closely supports these activities as well.
Especially, in optics and in electro-optics, there are not enough lectures in our Universities. It is noted that engineers are not starting their professional career in these fields with the level of knowledge required. Aselsan Sivas is planning to provide lectures and practical, functional activities at our Universities in Sivas in order to prepare the students for the defense industry.
Defence Turkey: Going back to your projects, can you inform us about your A940 and KND series optical sights and other products that are primarily used by the Commando units of the Turkish Armed Forces and Gendarmerie General Command? What can you say about the current status of the delivery process? What kind of feedback did you get from the end-user? Can you briefly share some details?
Murat ŞAHİN: As far as optical sight deliveries for the Commando Modernization Project for the Turkish Land Forces and day sight deliveries to the Gendarmerie General Command, we have been manufacturing the products designed by Aselsan in mass production. These products are: A940 Day Sight(1X-4X Magnification ), A960 Day Sight (1.5X-6X), 3-12 Sniper Scope, 5-25 Sniper Scope, A600 Nigh Vision Clip-On, ARN12 Reflex Sight (Red Dot), ARN12K Reflex Sight(Closed Enclosure Red Dot), E35/E60 Mini Thermal Clip-On Objectives, E35/E60 Mini Thermal Clip-On Collimators. We improved our mass production techniques in the last two years by working with professionals having experience in the Automotive Industry. In addition to this, we recruited technical staff from Germany and from South Africa to improve our mass production optical manufacturing capability. These professionals also helped to train our employees. The Aselsan Sivas team worked diligently, day and night to be successful in these projects. As a result, we achieved our target to deliver more than 20,000 Day Sights, more than 15,000 Night Vision Clip-Ons, 27,000 Red Dots, 2,000 Sniper Scopes, 10,000 thermal objectives and collimators for thermal Clip-Ons. We are receiving positive feedback from our end users, Land Forces and Gendarmerie General Command. They use all our products in operations and all these products are combat proven by the Turkish Army. The number of products coming in for repair and maintenance is very small and this is also in an indicator of customer satisfaction. We came to this point through the tremendous dedication and assiduous effort displayed by my management team and my colleagues. I would like to thank Prof. Dr. Haluk GÖRGÜN (Chairman and President of the Members of the Board and CEO of Aselsan) for his continuous support of Aselsan Sivas. Without his support, we could not have made this leap in the last two years. He has a great vision for us, with a focus on enlarging our business and he is intimately involved in our operations. I would also like to thank Mr. Osman YILDIRIM (Vice President of Members of the Board of Aselsan Sivas) who always supports us in all our projects. He has a wealth of business experience through his different kinds of Entrepreneurship and from his 18 years of experience as President of Sivas Chamber of Commerce and Industry. We learn a lot from him every day through his seasoned background and expertise.
Defence Turkey: What indigenous projects are you currently working on, apart from the rifle scopes? What can you share about your investments in R&D and production? Do you plan to grow your company in the future?
Murat ŞAHİN: As I expressed before, Aselsan Sivas manufactures more than 40 electro-optical devices. Apart from Sights, the one of our main production line fields is the mass production of highly precise and sophisticated continuous zoom thermal objectives designed by Aselsan for thermal cameras. These products had been imported before. After Aselsan finished the design of these objectives namely F#5.5, F#4 and ATS70, Aselsan Sivas began to produce them by the thousands per year. With this collaboration, millions of dollars remained in our country and all these products were nationalized. Aselsan Vice President and Aselsan Sivas Chairman of the Board Prof. Dr. Sezai ELAGÖZ helped us a lot in managing these operations. We also produce civilian surveillance cameras for UGES/Aselsan. Aselsan Vice President and Aselsan Sivas Member of the Board Dr. İbrahim BEKAR is in constant support of the initiation of new projects with UGES/Aselsan.
At our Ankara Design Office, we completed the designs for the pistol reflex sight (red dot) and different kinds of periscopes for armored vehicles. We have started mass production of these products. We also finished the design and tested the first national Holographic Sight. We think that there will be great potential for this product worldwide since it is our original design. Last year, we were approved as a Research and Development Center in Sivas. Aselsan Sivas is continuously increasing Investments in Sivas. We are also expanding our design, quality and purchasing operations in Ankara.
Defence Turkey: You are currently producing components for the Aselsan CATS Electro-optical system, which has recently become a hot topic again. Can you give us information about this? Are you planning to expand into different areas such as Night Vision technology? What can you say about your current studies and future projects in the field of electro-optical systems?
Murat ŞAHİN: We produced most of the day optical components, and a lot of mechanical parts for Aselsan’s design of the CATS (Common Aperture Targeting System) project. We are proud to deliver these important optical/optomechanical parts from Aselsan Sivas for this important national project. We must work hard and do our best to replace the products which might face future embargo risks from foreign countries.
Regarding Night Vision Image Intensifying Tube technology, Aselsan Sivas would like to be a part of this endeavor to nationalize this technology in Turkey. We are working with Aselsan on how to collaborate.
We have a lot of electro-optical projects for the near future. 3X and 4X magnification day sights, different kinds of pistol reflex sights, and different kinds of tank periscopes are the main defense product activities. We have been receiving quite a few medical product design demands like microscopes. We are working with UGES/Aselsan to design a Medical Fiberoptic Endoscopy Device for surgery.
Defence Turkey: You carry out most of your current production for Aselsan; other than that, which other companies are you in contact with? What can you share about your collaborations with other companies or the ongoing processes? What would you like to say about the scope and objectives of the projects you are carrying out with Samsun Yurt Savunma and FNSS, etc. companies that have achieved great success in the export market?
Murat ŞAHİN: We mostly produce Aselsan designs in mass production. We are thankful to Aselsan management, engineers, our Aselsan Vice General Managers to help us to manufacture these products. With these supports, we are highly motivated to help Aselsan deliveries. We are also working on different projects with MKE, Roketsan, Baykar, FNSS, Samsun Yurt Savunma, Meteksan, and Huğlu. We have foreign distributors to penetrate different markets.
We collaborated with Samsun Yurt Savunma for the Pistol Reflex Sight from the design phase till the first prototypes. We received a mass production purchase order from them and delivered the first part. For armored vehicle periscopes, we collaborated with FNSS and received a mass production order from them. These examples have significant sales opportunities in Turkey and abroad. All these products were nationalized together. I think, this way of product-based collaborations are solid examples of our defense industry in our segment. These products certainly have great export potential.
Defence Turkey: What is the demand for your products abroad? Could you give information about your future export goals and target markets?
Murat ŞAHİN: We produce products designed by Aselsan and deliver them to Aselsan. A lot of them were exported by Aselsan to different countries. As far as products designed by Aselsan Sivas, we have different kinds of demands from foreign countries; products such as medical microscopes, holographic sights, reflex sights, and continuous zoom thermal objective subcomponents. We have a target to reach at least 10% of our revenue from exports in three years. We recently started but are working hard to reach this goal by the end of 2023. Afterwards, year by year we would like to reach 25% of our revenues coming from exports. Our biggest advantage is that we can serve both defense and civilian markets with our design and product range.
Defence Turkey: Finally, what message would you like to convey to our readers?
Murat ŞAHİN: We know that we need to improve ourselves in a lot of activities. There is a long way to reach perfection. However, we are really motivated to demonstrate that these technological electro-optical products can be produced in Sivas, in the center of Anatolia. This can be a good example for our youth, seeing that young Anatolian engineers and technicians can produce a variety of technological products and play an important role in the supply-chain of other Anatolian Cities and throughout Turkey. I feel very fortunate to work with a robust team of many dynamic and brave colleagues. I must thank my Vice General Manager Mr. Kürsad ERBAŞ and my management team for their sleepless nights and steadfast dedication. We are focused on making Sivas Turkey’s ‘Optical Valley’ and we are not far from seeing that become a reality