Turkey’s share on the list of world's top construction companies decreased from 3.8 percent to 3.3 percent.

Recently, when I was in Palestine, I pondered the problems of Palestinian constructors. A local businessman told me that Palestine’s contractors cannot afford to undertake a project worth more than $5 billion. Back then I noted that Palestine’s construction companies were small-scale and lacked bank support. During our conversation, I told him that Turkey ranked second after China on the list of the world’s largest construction companies. I bragged that Turkey outperformed the US. If was later when I checked the figures that I found out the picture was not as bright. Let me tell you why.

ENR (Engineering News-Record) magazine ranks the world’s top construction companies on the basis of construction revenue generated from projects outside their home countries. There used to be 225 companies on the list. Now there are 250. True, Turkey ranks second on the list with 38 companies as of 2012. The figure was 33 in 2011. On the 2012 list, there are 55 companies from China and 34 from the US. This is good for Turkey. Concerning the total revenue from overseas projects, however, Turkey ranks 9^th. Turkish contractors earned overseas revenue of $16.8 billion in 2012, with which Turkey’s share on the list decreased from 3.8 percent to 3.3 percent. Is this successful? It is concerning the number of companies. But the fall in the market share does not bode well.

If the relative market share has decreased despite the increase in the number of companies, then you have a large number of small-scale companies. To be honest, the top five companies on the ENR list depressed me a bit. The annual business volume of individual companies from Spain, Germany and the US each is twice that of the total business volume of Turkish companies on the list. Out of the overall $511 billion of annual business volume, the Spanish company on top of the list alone accounts for $42 billion. Turkey’s total is a meager $16.8 billion. What can I say? Better than nothing? There are 9 Korean and 5 Turkish companies in the top 100. Korea’s top company Samsung ranks 13^th. Korea’s companies on the list are concentrated among the first 50, Turkey’s are among the second 50. The share of Korean companies in the total business volume doubled from 4 percent to 8 percent, whereas Turkey made no headway. I was most impressed by the performance of the Middle East and North Africa, which increased their share from 12 to 30 percent. Korea, from the far end of earth, engages with our neighbors whereas Turkey is on bad terms with all of them. Hence, Korea advances its business volume by far while we lose ours.

Why is that? Although important, politics alone is not enough to render the situation. Rather, it is impossible to advance your share in project revenues simply by taking active part only in the construction phase of the value chain. You have to have a share also in design and procurement processes. It is critical to be able to be involved in concept design and promote construction supplies from Turkey. This requires Turkey to progress in not only construction, but also consultancy, engineering, and procurement. It should ground its competitiveness on engineering capacity, not cheap labor. That’s the only way to catch up with Korea. It appears that Turkey’s construction sector needs to make a leap as well. It is what projects the companies undertake that matters, not the number of them.

Korea’s Samsung started with construction and then switched to electronics. Its Turkish counterparts do the exact opposite. Samsung, switching to electronics one the one hand made a qualitative leap in construction sector on the other. Turkish companies, however, are not able to go beyond build-and-sell projects. Where does the hope rest? It rests within the framework the 10^th Development Plan draws concerning the construction sector. One focus of the plan is to design urban transformation process as a policy instrument for construction materials sector. I find this important. It might help Turkey to focus more on other phases of the construction value chain. It makes me feel that Turkey for the first time thinks like Korea, and raises my hopes.

This commentary was published in Radikal daily on 17.09.2013