Askale Cement is not a typical private company. In many ways it operates as a family business, except that in this case the family in question is a very big one, including factory workers, civil associations, corporations, small business owners, local councils and other individuals and entities who together form the 1,000 investors. So how did this all come about? The privatisation of the cement industry in Turkey started in the late 1980s and the Askale cement factory located in Erzurum, the biggest province located in the Eastern Anatolia Region, was put up for sale under the government’s Privatisation Administration in 1992. There was a general will that the factory ought to be owned by the people of Erzurum and, thus, civil organisations and many individuals gathered to find a solution, mobilising themselves in order to raise money to buy the factory. Mr Kilic recalls how, after many meetings and sleepless nights, 1,000 investors from the region got together and contributed the funds to ERCIMSAN and eventually bought the cement factory. From then on a hard, but successful journey started for the company. “A dream started to turn into a reality”, he says.

Time for turning the business around

When the cement factory was first bought it was making a loss and struggling with out-of-date facilities and equipment. Despite this, everybody involved wanted to see the factory come back to life and was willing to help increase productivity and sales despite a very limited financial base. Despite these funding problems, they somehow managed to make new investments in the plant, thanks to the considerable sacrifices from partners, workers and management. The first priority was to cut costs and increase efficiency. While doing so they did not want to compromise on their product range or quality, so initial investments were used for modernising the facilities, which eventually saved a significant amount during the production process. In a few years these efforts started to pay off and Askale expanded its market share and started to gain a very good reputation in its sector. The next stage was new investments to increase the production capacity to match the increasing demand. 

Askale on the way up

By 1996, both production and sales were showing significant growth and this gradually improved to the point that this year 403,000 tonnes of cement was sold. This progress did not go unnoticed and Askale Cement started to be mentioned as a possible candidate for privatisation. Further investments in modern technologies in the factory helped to make even more cost reductions and by 1999 production capacity was increased by 40 percent, rising from 300,000 tonnes a year to 420,000 tonnes a year. From then on investments did not stop and almost every item of machinery and equipment was replaced with more advanced models. Furthermore, considerable sums were invested in a new ready-mixed concrete plant and this contributed towards making Askale one of the top 650 industrial companies in Turkey. The second stage of the capacity increase started within a year, and was aimed at reaching production of 700,000 tonnes per year. 

Overcoming the crisis

When a wide-reaching financial crisis hit Turkey in 2001, the investments were in full swing and could not be halted. Yet, since almost all industrial sectors in Turkey were in difficulty, the company management took the precaution of adopting European standards in order to expand its market abroad. Efforts were made to obtain the ISO 9001 standards certificate and these proved successful, as it was in this year that Askale rose to become one of the top 550 industrial companies in Turkey. In 2002 it gained the ISO 9001 certificate and work to bring about capacity increases continued at full speed. A decision was then taken to adopt OHSAS 18001 Health and Safety Management Systems and the structure of the company was changed accordingly. Meanwhile, the company managed to sell its complete output without reducing its profit margins. Its success was again noted by many organisations and talked about in the media and in 2003, Turkish Dunya Newspaper chose Askele as the “Company of the Year”. 

In 2004 the company delivered its first exports to Iran and sold 655,000 tonnes of cement in total. In the same year the Agri ready-mixed concrete plant commenced production and the Erzurum ready-mixed concrete plant achieved and output of 160 cubic metres per day. The standard of the concrete proved to be of high quality and the company was now firmly established as one of the top 500 industrial companies in Turkey.

Growing fast

In 2005, the Dunya newspaper cited Askale as being the leading company in the cement sector, but growth did not end there. This year, Askale Cement acquired Trabzon Cement and became the 430th top industrial company. One year later $26.5 million of major investment began and cement production capacity increased to 2.5 million tonnes from 700,000. All this success has meant that after 13 years the company has paid out $13 million on investments, $32 million of tax, $41 million on energy bills, $32 million of credit interest and recorded a $20 million profit. Moreover, the company became one of the biggest tax-payers of the Erzurum region.

In 2008 things moved ahead even more, with the company being ranked the 294th biggest industrial company in Turkey, as well as being amongst the top 100 tax-paying firms. Major investment projects started once again, including the construction of the Erzincan and Gumushane cement factories, which are expected to start operating by May of this year. In accordance with all these developments, the product range is expanding to fill new demands. The company’s current facilities have an annual clinker production capacity of 2 million tonnes, a cement production capacity of 3 million tonnes and a ready-concrete capacity of 540 cubic metres per hour. 

“Any country that needs cement is a target market for us”

Mr Kilic explains that from the very beginning of Askale’s privatisation, marketing activities gained momentum and the company started to enter new regions and expand its marketing network. Initially it operated in Eastern Anatolia, South-Eastern Anatolia, and the Eastern Black Sea regions. The competition was fierce in these areas; but Askale managed to stay on top of its sector by producing some of the highest quality products and also by adapting to customer orientated guidelines and principles. This is how, despite the 2001 crisis, the company managed to sell all of the cement produced in its factories with maximum profit margins. At present, it is exporting to Iran, Azerbaijan, Georgia, Iraq and Russia; but, according to Mr Kilic, the company does not feel itself restricted and sees a potential market wherever there is a need for cement.

“The cement sector should watch out for the global crisis”

Mr Kilic warns that the Turkish cement sector is under threat from the financial crisis that is impacting on companies around the world. He says there are more actors then ever in the cement sector in Turkey.  Falling demand in the domestic market and the continuation of high production levels within the country means the industry must rely heavily on exports that are likely to decline because of the global crisis. Mr Kilic reveals that, like many other companies, Askale is also affected by what is going on around the globe. The management has, therefore, taken some precautions to protect its existing markets and continue market research activities to expand its exports. He says the most efficient way to get through difficult times is to make savings and reduce costs and the company is, therefore, making every effort to keep these to a minimum. 

Mr Kilic speaks with pride about Askale providing employment to many in eastern Turkey and proving to be different from its competitors at many levels because of good management strategies. He says it is an important achievement to be able to come out of crisis with minimum damage and the company's crisis management system has allowed it to do just that.  Another underlying reason for its continuing success is that, despite the fact that 1,000 partners own the company, the decision-making process has remained simple and fast. Just as importantly it kept the focus on customer satisfaction. Above all, the company started as a collective effort and has retained this spirit, so that it continues to operate on the basis that all the shareholders and workers are part of a big family united in a common purpose.