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issue: December 2005 APPLIANCE Magazine

Arcelik - International
Creating Value in Cayirova

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by Paul Roggema, European Correspondent

Near the Bosporus Bridge that links Europe and Asia, Turkish appliance maker Arcelik centralized its laundry appliance production.

This Italian-made, 1,250-ton Rovetta press has a three-axis electronic transfer unit. Free programming of the three axis allows for decreased cycle time and the unit works at up to 24 strokes per minute. New link-drive technology enables more complex designs to be formed on the press.

To Europeans, the country of Turkey calls to mind great holidays (it currently offers more value-for-money than Spain), the exotic city of Istanbul and ongoing discussions about EU membership. Not as widely known is the substantial appliance manufacturing base in Turkey. For example, BSH Bosch und Siemens Hausgeräte GmbH has its largest single production site here. However, Arcelik is the strongest force in the Turkish white goods market. With its Beko brand, Arcelik claims it is now the fifth-largest appliance manufacturer in Europe. The appliance maker is part of Koç Holding, the country’s largest industrial conglomerate with 62,000 employees. Koc manufactures a wide range of products, including Fiat and Ford automobiles, mostly made for Turkey itself.

Arçelik started in 1955 with the manufacturing of steel office furniture. The company began producing agitator washers and refrigerators in the 1960s. Cooking appliances were added in the 1970s, and the first drum washer was produced in 1979 under license from GE. Starting in 1986, Arçelik turned to a washer design from BSH (now its biggest competitor), until 4 years later, when an in-house washer design was developed.

Two key moments can be singled out in the recent history of the company: the 1996 Customs Union, in which Turkish trade barriers with the European Union were removed, and the currency crisis of 2001.

Prior to the Customs Union, Turkish import taxes on white goods gave the company a sheltered life—too sheltered to face competition on the free market. When these barriers were removed as an initial stage of joining the EU, many thought Arçelik would not survive against Italian competitors, who are traditionally strong at cost-cutting. The threat refocused the company and a new formula of operations was developed—to offer more features and better quality than the competition in the value-for-money market segment.

The new focus galvanized the company. Not only did it manage to hold its strong position in its home market, it eventually gained a strong sales position in several European markets.

Then came the 2001 Turkish economic crisis, with 60-percent inflation, high government borrowing and high interest levels. The Turkish lira lost more than two-thirds of its value. Like all Turkish businesses, Arçelik needed an emergency plan and the company began a campaign to increase its exports. The campaign succeeded. Appliance production nearly tripled to approximately 7.5 million units by 2004. Washer and dryer production accounts for 3 million of those units.

Arçelik also achieved its production expansion with existing factories, although it did make important appliance industry acquisitions in 2002—German appliance maker Blomberg and Austrian OEM ElektraBregenz.

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Suppliers mentioned in this article:
Arcelik AS

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