Could you please assess the year 2020 in terms of the global pandemic, the industry in general, and therefore your company specifically?
2020 has been a unique year full of uncertainties due to the pandemic. First of all, spreading of the virus from China – the global supply center and one of the countries where we are operated – created issues in terms of the supply chain and logistics. As we faced hardships in material procurement, costs rose up. We overcame this process with the strong support by our suppliers in Turkey and our flexible production abilities.

Next, Europe’s taking a big hit from the pandemic, which is our top export market, and enforcing limitations one after the other impacted our entire production network from supply to logistics, production, and sales. As of March, the European market faced severe shrinking. We had to temporarily halt our production in China, India, Bangladesh, Pakistan, South Africa, and Russia by the orders of the local authorities.

The conditions of the pandemic moved the focus of the competition to the virtual media. Consumers gravitated towards online shopping because of the quarantine and also heightened concerns for health and hygiene. The year 2020 saw an 25% increase in e-commerce compared to the previous year. The European online market grew by 38%.

Priorities and shopping preferences of consumers changed; white goods became more essential for consumers who cannot travel any more, spend their whole time at home, and have an increased need for hygiene. As lockdowns began to be lifted and a normalization process began as of May, we experienced a rapid recovery in white goods sales. Our factories worked overtime to catch up with the increased demand.

During this time, we launched our hygiene line to meet the consumers’ need for increased hygiene. The appliances in our line that includes a refrigerator, a washing machine, a washer-dryer, a dryer, a UV cleaner, an oven, and a dishwasher block bacteria and viruses up to 99.9%.

Arçelik produced ventilators which are essential during the COVID-19 treatment process in the leadership of the Ministry of Health and the Ministry of Industry and Technology and in cooperation with Aselsan, Byosis, and Baykar. We are proud to be serial producing the first local ventilator. The Arçelik ventilators, one of the best examples of the company’s R&D and flexible production abilities, were exported to 20 countries in line with the guidance of the Ministries. We also donated ventilators to those countries in need. The support given by our supporters located in Turkey round the clock during this time made such a huge contribution.

What are your forecasts  for 2021 regarding the changing customer demands, the market volume growth, and production and investment plans?
As the year 2020 is coming to an end, the numbers of the infected by the pandemic began to climb up globally and therefore, a re-quarantine period is underway. Although we receive happy news about vaccine trials, the distribution will take time, as well. We need to be cautious during the first half of the year. With the shrinkage in the global economy, purchasing power will also diminish.

We foresee that the online shopping trend heightened with the pandemic will continue to go up in 2021. The global e-commerce turnover is expected to rise to 2.7 trillion US Dollars. Also, we predict that habits like spending time at home and cooking will stay after the pandemic is over. White goods will still be an essential staple for consumers. Investments in digitalization will continue and take a momentum. Digital production technologies will be at the forefront.

The pandemic raised an awareness for consumers about what to do for a sustainable life. Companies’ producing brands that are benefit-oriented and ecological awareness became more important. I believe sustainability will become a focus for all the companies.

What kind of a change do you expect to happen in the production and supply processes, and market and demand structures of your company and industry in the medium run? What kind of technologies and products do you consider will prove to be critically essential in the medium run?

With COVID-19, the significance of digitalization in the supply chain and production is appreciated. We, as a global company that is operated in nearly 150 countries, are migrating our entire supply chain to the digital medium. With the experience we gained with the pandemic, digitalization of the supply chain and setting alternative supply centers are among top priorities.

In 2019, we opened our Washing Machine Facility equipped with digital technologies complying with the Industry 4.0 standards. Our washing machine facility in Romania was named one of the top 10 facilities in the ‘Global Lighthouse Network’ selection held by the World Economic Forum (WEF) last year and is among the world’s most advanced production centers. We are going to extend the technology here to our production facilities located in Turkey and overseas.

Artificial intelligence, data analytics, cloud technologies, and big data will be the most critical technologies in the upcoming term.

Moreover, we see that the carbon neutral by 2050 strategy under EU’s Green Deal declared before COVID-19 has been located at the very heart of healthy recovery with the pandemic. In the next 5-10 years, this issue is expected to affect all the policies of the EU; therefore, considering our high amount of bilateral trade relations with the EU, compliance with the regulations mentioned above has a critical importance for all the actors in our sector. In compliance with the said strategy, with our vision “Respecting the World, Respected in the World,” we will continue with our investments and operations on both the product and production levels for the future of our planet in the upcoming term.

For instance, as we have recently shared with the public, Arçelik balanced its greenhouse gas emissions in its 2019-2020 global production operations and became a carbon neutral company.  Also, we are proud to be named the Industry Leader in the Durable Home Goods in the Dow Jones Sustainability Index in 2019 and 2020 for two years in a row.

Considering Turkey’s place in the global value chain, what are the advantages/ disadvantages of Turkey and our industry?
The producers in Turkey used the advantage of proximity to the market as well as of not halting production, while many production facilities in Europe stopped production during the pandemic.

Young and qualified human sources, its geographical location and quality production are Turkey’s top advantages.

I believe that the temporal and logistics advantages of the producers in Turkey for being in closer proximity to Europe compared to its Far Eastern competitors as well as their human resources, cost advantages and the investments they will make in their production capacities will reinforce Turkey’s status as an important production base for Europe. 

Turkey may become an attraction center with its strong R&D, and quality and flexible production for our main export market Europe for diversifying its supply chain.

For taking actions to use the opportunities and to take measures against risks, what should be done on the level of country, industry and companies?
In order for our country to preserve its international competitive power, first of all, steps regarding digitalization in all the sectors should be realized promptly. With the support of the government, the private sector must make the necessary investments and steer towards innovated-focused production with high added value for a sustainable development. Moreover, transformation in human resources for the digitalized world should be initiated.

What are your expectations of your suppliers to adapt to such changes?
We support our suppliers’ progress in digitalization, innovative product development, sustainability, quality production and efficiency. For this reason, we organize technology and innovation cooperation days with our suppliers and suppliers’ days and trainings and we hold audits and visits to our suppliers. We provide trainings on energy efficiency, government incentives, production technologies, efficiency in production, and quality, regarding which we also share our expectations of them.

We informed our suppliers on our production status and the measures we took during the time of COVID-19 and we also gave our suppliers recommendations on actions they could take. We gave a detailed explanation on general hygiene-cleaning, cafeteria and working conditions, follow-up of employees’ health control and practices in case of a possible infected employee.

In order to create a sustainable structure and a supply chain that receives a minimum impact by pandemic shocks, the top goal should be, first of all, to protect the health of our employees and to create a safe working environment. As a matter of fact, it is obvious that the impacts of the shocks caused by the current situation will not be limited to that and will challenge us and our suppliers both organizationally and financially. Therefore, our priority is to take actions to enable financial sustainability in the maximum level. Also, we will be able to effectively carry out organization and capacity management that can flexibly respond the ever-changing market trend.

What do you think BEYSAD should do in this period? Do you propose any ideas for events and activities?
I believe that BEYSAD (White Goods Suppliers’ Association) makes such significant contributions in determining the needs of suppliers, the development of the sector, and solving problems.  I care that BEYSAD continues playing a guiding role for Turkey taking the chance of becoming a global alternative supply center which got more evident with COVID-19. I find it important that BEYSAD leads the way for creating a road map for the digitalization of the White Goods Suppliers’ Industry as well as setting up the necessary legal and technical background.