Transcript Turkish offset practices

MINISTRY OF NATIONAL DEFENCE
Undersecretariat for Defense Industries
TURKISH INDUSTRIAL PARTICIPATION-OFFSET POLICY
A. Güzin ODUNCUOĞLU
Offset and Local Content Department
3rd International Seminar on Offset and
Industrial Participation
7-9 May 2007, JERUSALEM
PRESENTATION PLAN
 Undersecretariat for Defense Industries (SSM)
 Headlines of New Industrial Participation/Offset Directive-2007
 Offset Commitment & Realization Figures
 Notable Offset Projects
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STRUCTURE OF MOD
MINISTRY OF NATIONAL DEFENCE
UNDERSECRETARY (CIVILIAN)
Undersecretariat for Defence Industry,
SSM
• Co-production & Modernization
UNDERSECRETARY
(MILITARY)
• Direct Procurement
OFFSET
SSM
INDUSTRIALIZATION DEPARTMENT
Offset and Local Content Branch
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UNDERSECRETARIAT FOR DEFENSE
INDUSTRIES / SSM
SSM’s major responsibilities;
 The Modernisation of the Turkish Armed Forces [TAF]
 The Development of Turkish Defense Industry
 The management of offset and export of defense industry products
SSM is the single offset authority in the country for defence
procurement.
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NUMBER OF PROJECTS MANAGED BY SSM
100
90
80
70
50
40
30
20
10
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
0
1985
PROJECT
60
YEARS
Signed Agreements
: US$ 7,6 B
On-going Agreements
: US$ 6,8 B
Total : US$ 14,4 B
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HEADLINES OF NEW IP/O DIRECTIVE
INDUSTRIAL PARTICIPATION/OFFSET (IP/O)
DIRECTIVE
Effective as of 14.02.2007
www.ssm.gov.tr
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HEADLINES OF NEW IP/O DIRECTIVE
New Concept: Industrial Participation/Offset
New IP/O Categories:
Category-A: Local content
Category-B: Defence, aeronautics/aerospace goods and services export
Category-C:
- Technological cooperation,
- New and/or expanded investment,
- R&D activities
in defence, aeronautics and aerospace industry and/or other fields requiring high
technology.
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HEADLINES OF NEW IP/O DIRECTIVE
 Threshold
: US$ 10 M
 Obligation
: 50% of the Contract Value
 Penalty
:6%
 Bank Guarantee
: 6 % of the obligation
 Fulfillment period
: end of the delivery plus 2 years
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HEADLINES OF NEW IP/O DIRECTIVE
 Swap
 Export Guarantee is required for T/T and Investment
 Pre-approval for each offset transaction
 Causality is required for offset projects
 Banking of excess offset credit:
- utilization within 5 years after fulfillment
- transfer to another eligible company
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HEADLINES OF NEW IP/O DIRECTIVE
MULTIPLIERS FOR EXPORT
Platforms
4
Systems
3
Software
3
Sub-system
2
Parts/components
1
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HEADLINES OF NEW IP/O DIRECTIVE
MULTIPLIERS FOR T/T, INVESTMENT, R&D
System Integration
3
Network, information, satellite, sensor systems
3
Electronic Warfare
3
Missile, Guidance, Control
3
Other (Defense, aeronautics/aerospace, high technology)
2
Investment in Advanced Tech.Industrial Park (ITEP)
2
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EVALUATION OF PROPOSALS (1)
MUST CRITERIA
• Format and the content of Offset Bank Guarantee Letter
• Penalty Clause (paying penalty does not relieve the commitment)
• Escalation (according to Main Contract terms)
• Turkish Law (arbitration is allowed)
• Language (Turkish)
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EVALUATION OF PROPOSALS (2)
OFFSET
CATEGORIES
First
Year
Second
Year
Third
Year
…..
Nth Year
TOTAL
(USD/EURO)
A. Local Content
B. Defense Goods and
Services Export
C. Technological
Cooperation,
Investment, R&D
TOTAL
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COMMITMENT & REALIZATION FIGURES
CURRENT OFFSET STATUS
• 60 OFFSET AGREEMENTS SIGNED SO FAR
• 20 OUT OF 60 OFFSET PROGRAMS WERE
SUCCESSFULLY COMPLETED
• 40 OFFSET PROGRAMS ARE STILL EFFECTIVE
• TOTAL OFFSET COMMITMENTS : US$ 6,1 B
• TOTAL OFFSET FULFILLED : US$ 3,2 B
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COMMITMENT & REALIZATION CHARTS
OVERALL COMMITMENT
Realized
INDIRECT
2,9 B$
47%
DIRECT
3,2 B$
53%
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OFFSET REALIZATION STATUS (1985-2007)
AMOUNT
( Mil. US$)
%
Defense Goods and Services Export
1084
34
Export of Industrial Goods and Services
1038
32
R&D, Tech. Coop., Investment, Others
724
23
Services for Turkish Armed Forces
359
11
3205
100
OFFSET CATEGORY
T
O
T
A
L
16
Million $
REMAINING OFFSET COMMITMENTS AS OF YEARS
500
450
DIRECT
400
INDIRECT
350
300
250
200
150
100
50
0
2000
2002
2004
2006
2008
2010
2012
2014
2016
YEARS
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REMAINING OFFSET COMMITMENTS BY
COUNTRY (US$)
COUNTRIES
DIRECT
OFFSET
(Mil. US$)
INDIRECT
OFFSET
(Mil. US$)
TOTAL
(Mil. US$)
USA
850
523
1373
FRANCE
113
121
234
ISRAEL
65
152
217
GERMANY
116
64
180
SPAIN
125
0
125
ITALY
738
96
834
37
1
38
UK
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COMPANIES WHICH HAVE OFFSET
OBLIGATION
GERMANY
•ABEKING & RASMUSSEN
•EADS-LFK
•LÜRSSEN
•RENK AG
•MTU
ITALY
AGUSTA S.P.A.
ALENIA
UK
•ASTRIUM LTD.
•THALES UNDERWATER SYS.
SPAIN
EADS – CASA
USA
BOEING
RAYTHEON COMPANY
SIKORSKY
GENERAL ELECTRIC
LOCKHEED MARTIN
BAE SYSTEMS
ISRAEL
ELTA ELECTRONICS IND. LTD
ELBIT SYSTEMS LTD. / ISRAEL
ISRAEL AIRCRAFT IND. LTD. (IAI)
ISRAEL MILITARY INDUSTRIES (IMI)
FRANCE
EUROCOPTER INTERNATIONAL
THALES AIRBORNE SYSTEMS
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NOTABLE OFFSET PROGRAMS
• AWACS (PEACE EAGLE)
• MARITIME PATROL AND SURVEILLANCE AIRCRAFT
• S-70B SEA HAWK HELICOPTER PROCUREMENT
• F-16 MODERNISATION PROJECT
• MINE HUNTING VESSEL PROJECT
• UNMANNED AIR VEHICLE
• COAST GUARD BOATS
• ELECTRONIC WARFARE SYSTEMS
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COOPERATION IN SCOPE OF OFFSET (1)
SIKORSKY INC. – ALP AVIATION
 Sikorsky Inc. owns 50% partnership of Alp Aviation.
 Alp Aviation manufactures various flight safety parts and assemblies
for Sikorsky helicopters.
 ALP Aviation is the sole source for Tail Rotor Drive Shaft Assemblies to
Sikorsky Inc.
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COOPERATION IN SCOPE OF OFFSET (2)
BOEING - KALEKALIP
 A long term cooperation agreement was signed between Kalekalip
Defense & Aviation and Boeing.
Manufacturing of various fuselage and wing parts and all of the
special processes and installations with respect to Boeing 737, 747,
767, 777 airplanes.
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COOPERATION IN SCOPE OF OFFSET (3)
BOEING – Turkish Defence Companies
 Within the framework of the “Airborne Early
Warning and Control (AWACS) Aircraft”
program, Boeing will provide 500 Mil. USD worth
of work package to Turkish Defence and Aviation
sectors.
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A. Güzin ODUNCUOĞLU
SSM
Offset and Local Content Department
[email protected]
www.ssm.gov.tr