Eczacıbaşı Building Products Group Investment Director Mehmet Mercan, appointed to the Secretary General of Turkish Ceramics Federation. In our conversation with Mehmet Mercan, we talked about both the ceramic industry and the Federation. He emphasized that the sector with the highest added value in exports was ceramic.
Interview: Fatma Batukan Belge
Eczacıbaşı Building Products Group Investment Director Mehmet Mercan, appointed to the Secretary General of Turkish Ceramics Federation. In our conversation with Mehmet Mercan, we talked about both the ceramic industry and the Federation.
It is a good coincidence that our previous Secretary General was also from METU, and you are from METU. METU is a source of pride for our country. How did being from METU affect your perspective in your business life?
Yes, being from METU is a privilege. When I studied engineering at METU, it felt as if I had not learned much.But when I started my business life, I saw how much I learned. It teaches the foundation of engineering, research, analytical thinking, and questioning. It is not possible for you to learn everything at the university anyway. But it gives engineering science and perspective very well; to being analytical, to question, to go to the result by researching... I really saw this very clearly in my business life. One of the features of METU that I have seen is that it educates engineers who are more prone to production. If we compare it with other universities - for example, with Boğaziçi University– the profile of people prone to management from METU is less.But, METU gives a lot about being in production and contributing by producing.
Production is very important for a country like Turkey You could not find engineers to work in production in the 80s. Especially if you are from METU, you could have start work anywhere you go.In these years, the situation has changed a little. There are too many engineers looking for a job. However, those who graduate from universities such as METU no longer prefer production. So, there is an increase in the number of engineers, there is a decrease in the number of those who prefer production.
Under the Turkish Ceramics Federation, there are associations that are members of federations representing the European ceramic industry. Do we use the advantages of this sufficiently?
I cannot say anything very clear about this. Because I am very new. But what I have seen so far; there is a lot of benefit of us being here. Many research projects are being carried out especially on subjects such as energy, carbon emissions and barriers in the trade and it is very important for us to be involved. Even though we are one of the biggest producers of Europe, we should be in these organizations. But I do not think we are effective. The fact that we are not EU members may also have an effect on this. We should be more effective in these organizations in the coming periods. Because we are the third biggest producer of Europe in tile. We are also the first in ceramic sanitary ware. We have to make this weight feel in such associations. In such associations, we should bringourpowerinto play.
Does Europe reduce ceramic production? Instead, is it shifting its production to sectors that are not labor intensive this much?
I do not think this observation is correct. When you look at it, Italy and Spain are the biggest in Europe in tile production. They did not quit it, they still continue. A serious production started in Poland. Germany still has tile production. When it comes to the sanitary ware materials, there is a decrease here, but while production in Poland and Portugal is increasing, countries such as Italy and Germany are still producing. It has decreased a little in the UK. There are increases in Ukraine and Russia. Europe does not stop this production in itself, but shifts it to certain points.One of the main factors of reducing a little by Europe is the dependence of this sector on labor and energy. When you look at the total EU productions, there is no obvious drop. Especially after the 90’s, we had a lot of investment. With these investments, we have surpassed Europe.
Is there any alternative material to ceramics?
For now, there is not. Ceramic is an extremely hygienic and useful material. It has no harm to the environment and nature. But when you look at the sanitary ware area, you see that the accessories turn from ceramic to glass and metal. As the sinks turned to countertops, the system decreased in volume, when the closets turned into wall hung w.c. pan, reservoirs decreased. There are mainly toilet bowls left in the sanitary ware, which has no alternative other than ceramic. Even if there are other alternatives in coating materials, the tile maintains its dominance. Ceramic production is an energy-dependent sector, but as Turkey we have problems in this area, haven’t we? In the ceramic industry, the weight of energy in the cost is around 25-35 percent. In Turkey, we are dependent on outside about energy. We have long-term contracts. So, the prices we get are based on oil. The gas we use now is one of the most expensive gases in Europe. It was not like this before. Pricing was stable, Turkey was left a little cheaper. It was subsidized at certain times. LNG entering the market, spoiled the game. Currently in the Netherlands, Italy, England spot markets,1000 cubic meters of natural gas is in the 90-100 Euro band in summer and 130-140 Euro in winter. When you include the distribution and taxes, the final factories can use it for 17-18 cents per cubic meter. In Turkey, it is currently around 24.5 cents. In other words, we are over 30 percent of Europe. Turkey cannot do LNG imports as mush as it wants. Because we have long-term contracts, there are troubles in terminals. Something really needs to be done about it. Because it is Turkey’s net exporter sector. Imports are extremely low, as it meets the needs of Turkey, it also exports as well. A sector with added value above 80 percent. In other words, when 100 dollars worth of export is made, the maximum import needs to be made is 18-20 dollars.This is not the case in any sector in Turkey. It needs to be looked after a little bit. Changes in natural gas prices should be considered.Maybe there is no profit in Petroleum Pipeline Corporation’s purchase prices, but the figures are below ours in all countries where the industry competes.
Ceramic production is an energy-dependent sector, but as Turkey we have problems in this area, haven’t we?
In the ceramic industry, the weight of energy in the cost is around 25-35 percent. In Turkey, we are dependent on outside about energy. We have long-term contracts. So, the prices we get are based on oil. The gas we use now is one of the most expensive gases in Europe. It was not like this before. Pricing was stable, Turkey was left a little cheaper. It was subsidized at certain times. LNG entering the market, spoiled the game. Currently in the Netherlands, Italy, England spot markets,1000 cubic meters of natural gas is in the 90-100 Euro band in summer and 130-140 Euro in winter. When you include the distribution and taxes, the final factories can use it for 17-18 cents per cubic meter. In Turkey, it is currently around 24.5 cents. In other words, we are over 30 percent of Europe. Turkey cannot do LNG imports as mush as it wants. Because we have long-term contracts, there are troubles in terminals. Something really needs to be done about it. Because it is Turkey’s net exporter sector. Imports are extremely low, as it meets the needs of Turkey, it also exports as well. A sector with added value above 80 percent. In other words, when 100 dollars worth of export is made, the maximum import needs to be made is 18-20 dollars.This is not the case in any sector in Turkey. It needs to be looked after a little bit. Changes in natural gas prices should be considered.Maybe there is no profit in Petroleum Pipeline Corporation’s purchase prices, but the figures are below ours in all countries where the industry competes.
Do you have any initiatives with the government in this regard as a Federation?
We talked to both relevant ministries and Petroleum Pipeline Corporation. We are not getting any results right now. Energy prices affect most glass and ceramic industry in Turkey. Apart from that, this affects iron and steel, which are our direct export sectors. Our studies and discussions on this subject will continue. Net exporter sectors with high added value such as ceramics should be supported and should not lose their competitive advantage.
Do you have precautions as a sector against the economic crisis?
There has been a serious contraction in the domestic market since the second half of 2018. In contrast, the sector turned to exports very quickly and achieved a 15 percent increase. The price did not increase much, but you cannot increase the export as much as you want in a year or two. The sector has narrowed slightly. Our hope is that the market will become better in the upcoming period.We held workshops on this, talked about how to increase export methodology. Companies now need to develop long-term export policies within their organization. Each company should make plans to export a minimum of 50 percent of its production.
What are your expectations about UNICERA Fair?
In terms of quantity, it has grown 10 percent compared to previous years, participation is increasing, and those coming from abroad are increasing. It is now the second biggest fair in Europe in its field, after CERSAIE in Italy. We need to protect this. If we are an important ceramic country, we should also be important at the fair. The contribution of the fairs is great. Fairs both promote and commercially develop collaborations. People from all over the world go to CERSAIE. It will be like that here as well. The number of visitors is gradually increasing. As all the components in the world of ceramics, we have to own and develop this fair by joining our hands.
If we return back to you, you continue your duty at Eczacıbaşı. On the other hand, the General Secretary of the Federation is a task that requires hard work. Is your program busy?
It is my 37th year in business life and I have never had unbusy schedule. I always had a minimum of 12 hours of program. I am currently trying to get used to the Federation. As I am of technical origin, I mostly focus on technical issues. Now, as the Federation, we organize a technical training program with Ceramics Research Center (SAM) for the first time. I believe this will be beneficial for the industry. We have seen that there is a demand for technological education in the sector. We are rebuilding our technical committees. Standards and Energy and Environment committees. Besides, we have memberships in Europe. Accordingly, we form our staff.We have added a friend (Yasemin Erçetin Akyar), who is responsible for Industry, Energy and Standards and has more than 20 years of experience in the sector. We will add another person responsible for communication to our staff this year. When we join the Ankara Representative who will carry out relations with the public, we will be a federation that is much more effective and dynamically approaching the sector problems.
The Turkish Ceramic Society, which is among the members of the Federation, has a different structure than the others because it also has an art department. Will you continue to support artistic activities as a TCF?
Of course, we will. Turkish Ceramic Society is a little bit special. I was also a member in the first years. It is art and scienceoriented. We also need this. Art does not have much supporters outside of us anyway. But Turkey is a country that has produced some prominent ceramic artists. We will continue to increase our support.
So, thank you on behalf of all artists and I wish you success in your new duty.
