Company Spotlight: Şişecam

According to the Turkish Daily News, Şişecam, Turkey’s largest glassmaker, had $2.5 billion of sales in 2007, as reported by Teoman Yenigün, head of the company’s glass-packaging department. The Istanbul-based company is planning to boost sales by 20 percent to $3 billion this year, said Yenigün. Şişecam will increase output to 3.5 million tons in 2008 from 3 million tons last year and more than double investments to $1 billion.

And last month featured even more promising news from the glassmaking giant, when it opened the doors of its $ 380 million valued glass complex Thracia Glass Bulgaria. The complex, first stone of which was symbolically laid by Turkish Prime Minister Recep Tayyip Erdogan in 2004, consists of glass packaging unit, glass warehouse unit, processed glass plant and mirror glass facilities. The complex will be manned by 1500 employees. It is the first stage of a massive investment project with one more glass packaging factory, automotive glass unit, coated glass production line and laminated glass facilities to be completed by 2010. The new $ 415 million complex will provide employment for another 1700 people.

Turkish Prime Minister Recep Tayyip Erdogan, Minister of Industry and Trade of Turkey Zafer Caglayan, Bulgarian Minister of Economics and Energy Peter Dimitrov, President of Turkish Exporters Association Oguz Satici, President of Şişecam Group Gulsum Azeri and many more highly esteemed guests took part in the inauguration ceremony at the Bulgarian city of Targovhiste. The total worth of the two-staged project will amount to nearly $ 1 billion, the greatest amount invested by Turkey elsewhere up till now.

“Thracia Glass Bulgaria is the most sizable foreign direct investment in Bulgaria as yet”, stated Ahmet Kirman, the Board President of Şişecam Group.

Expanding production in Bulgaria serves a long stated main goal of Şişecam’s, namely to expand into Eastern European markets, even though said factories will admittedly have limited capacity. “This investment [in Bulgaria] is very important for us as the automobile industry is continuously growing. It is also connected to our strategy for expansion of our production that has high added value. Besides automobile industry glass, we will also manufacture products with high emission-holding properties, which, in turn, save energy,” Azeri said. Şişecam’s Turkish plans currently cover 75% of the demand for glass by the car industry in Turkey.

There was a time, however, when the Bulgarian investment looked doubtful. After announcing the success of its first investment in the then-new Turgovishte glass complex worth $220 million, in May 2007, Şişecam management was troubled by Bulgaria’s labour laws. Their main beef was with the perceived contradiction between the Labor Code and Collective Labor Disputes Settlement Act, which Şişecam worried would allow unions to organize unregulated strike actions. According to the company, these regulations neglected the collective labor contract arrangement, which has been in effect since May 1, 2006 and regulated the relationship between the two parties.

Turkish glass making has a storied history that frontier market investors should be familiar with. My interest in this industry was piqued, per usual, by Jim Leitner of Falcon Fund Management, whom I consider to be one of the world’s preeminent “frontier” market investors.

The history of Turkish glass making began with the Seljuks in the 11th century. Following the conquest, Istanbul became the center of Ottoman Turkish glass manufacture. A glass factory, established on the Asiatic shore of Bosphorus in 1795, produced the famous opaque twistware known as cesmibulbul. In 1934, 11 years after the establishment of young Republic of Turkey, the glass industry featured in the first Industrial Plan, which envisaged first a factory producing 3.000 tons of bottles and tumblers per year, was followed by a flat glass factory with a capacity of 2.000 tons. Turkiye Is Bankasi was entrusted with the task of founding these factories. Finally, in 1936 Turkish Glass Company “Şişecam ” was founded.

Today, Şişecam is considered Turkey’s leading glass company, using the latest technology to manufacture a wide range of glass products, including flat glass, automobile glass, fibre glass ando glass tableware. Total production is now one million tons per year, of which a high percentage is exported to 104 countries around the world under the “Şişecam” brand, which has international reputation.