On February 7, 2007, the Reuters News Agency sent its subscribers a seven sentence news item. The news item said that the subprime and risky loans of British-based HSBC Holdings had reached 10.5 billion dollars in 2006, and that this was more than 20 percent over what the analysts had been expecting.
HSBC was the first bank to announce such a high loss. Subprime mortgage credits triggered the global crisis. Following this, New Century Financial, which was one of the biggest lenders of subprime mortgages in the USA, declared bankruptcy. As the crisis that had begun in February 2007 began to grow with a snow ball effect, financial institutions like Bear Stearns, Merrill Lynch, Lehman Brothers, Washington Mutual Bank, and Wachovia were wiped off the board.
According to the latest data, the effects of the global crisis have spread throughout the world. According to data of the American Commerce Department, the foreign trade deficit of the USA was 56.5 billion dollars in September, and its exports decreased by 6 percent. In this way the US suffered its biggest monthly drop since September 11, 2001. According to a poll of 54 economists, the GDP of the US will drop by 3 percent during the last quarter of the year.
According to an OECD report, the GDP of the 30 developed economies will shrink by 0.3 percent next year. In the USA this rate will be 0.9 percent, 0.5 percent in the European Union, and 0.1 percent in Japan. How has this crisis that has enveloped the world affected the businessmen living in the USA and in Europe? TURKOFAMERICA asked Turkish businessmen, who feel this crisis very closely, about their expectations for 2009, the effects of the election of Barack Obama as president, and the precautions taken in their companies.
Ekmel Anda – (President of Unique Settings of New York)
“THIS IS THE TIME TO INVEST. WE SHALL REAP THE FRUIT LATER”
New York, NY - Ekmel Anda manufactures jewelry, aluminum and chairs in New York. He employs a total of 220 people. He says that in this crisis, rather than fire people, they have embarked on an aggressive marketing strategy.
He says, “During a crisis there are not many companies that concentrate on marketing and that are active. While in normal conditions there would be, say, a hundred companies actively pursuing a strategy, this would fall to 4-5 during a crisis. We want to be one of the 3-5 active companies in our market.”
Anda says that the jewelry sector in particular is not a basic necessity, and as such it is easier to postpone expenses concerning it, but underlines the fact that sales have increased by 15 percent during the last month. Anda expects the crisis to last a year and a half, after which things will get back to normal. “Within this context we are expecting the crisis to last for a total of 22-24 months. If we consider that six months have already passed, what we have left before a return to normality is 18 months.”
Anda says that once the markets are back to norma,l the benefits of the investments carried out during the crisis will become clear, and adds, “Thanks to the efforts we are making now, we shall be 3 years in advance in comparison to our competitors once things get back to normal.” Anda underlines the fact that they have used their own resources to carry out investments, without relying on loans, and says that even during a crisis there are many investors who want to invest their money in good investments.
Anda says that he believes that the election of Barack Obama to the presidency has had a positive effect on the population, and adds, “He is a young and positive president. He is a unifier. The names around him are also respectable people. I hope that he will do good for both the USA and the rest of the world.”.
Anda says that Obama’s election is an important step in the motivation of Afro-Americans, and adds, “I always present myself as an example. I started my professional life in a gas station. ‘If I can do it, you can do better.’ Now having realized that one of their own has been elected president, the sense of ‘this means that I can do it also’ has been instilled among Afro-Americans, and they will be able to have a more positive outlook towards life.”
Ilgar Peker – (Gastronomy & Real Estate Investor)
“THE MOST DIFFICULT THING TO CORRECT IN A CRISIS IS LOW MORALE”
New York, NY - Ilgar Peker is the owner of Turkish Kitchen, which is one of the best Turkish restaurants in New York, and a businessman famous for his real estate investments. Peker, who is active in the gastronomy, gasoline and real estate sectors, underlines the fact that the most important factor in a crisis is a low morale. He says that he did not take any extra precautions for the crisis since he always manages his own companies as if there were a crisis.
Peker believes that the food and gas businesses will be less affected by the crisis in comparison to other sectors. Peker says that the real estate market was forming a bubble before the crisis and that he expects markets to return to normal within 2-3 years. Peker thinks that the real estate sector provides people with many opportunities during a crisis, and that during a crisis there are always those with cash to invest. He thinks that between 9 months and a year will have to pass before good opportunities present themselves. Especially now that the stock-markets have crashed, people do not have many investment alternatives apart from real estate, and he himself is waiting for good opportunities.
The young businessman says that notwithstanding the crisis, constructive dialog between Republicans and Democrats was having a positive impact on markets. Peker, who did not vote on November 4th, says, “If I had voted I would have voted for Obama, but since I did not see much difference between the two I did not vote.” The businessman says that if he had voted, his first priority would have been the economy. Peker says also that it would not be right to expect Obama to solve the crisis immediately.
Engin Arık (President & CEO of Luminit LLC)
“THE STANDARDS OF LIFE WILL REVERT TO WHAT THEY WERE 50 YEARS AGO”
Torrance, CA – Engin Arık, President & CEO of the California-based technology company Luminit LCC, (a global provider of innovative light management solutions for the display, lighting, biomedical, and machine vision industries), thinks that in 2009 there will be a recession in the USA, Europe, and the Far East. Arık says, “They are talking of the probability of a depression, but I don’t think that’s very likely.”
Arık says that Luminit had not yet been affected by the recession and that they were expecting growth to continue in 2009. He adds that the third quarter of 2008 had been the best quarter of the year for the year. Arık thinks that nobody can predict the time frame of the crisis, and adds, “The scariest thing is that nobody knows what to expect and nobody can make plans. Anyway, the best predictions up to now were of those who said the worst scenarios would happen.”
Arık said that he was happy that Obama had won the election, and added, “Almost all other countries preferred Obama. One of the reasons why economic problems increased was a lack of faith in the team in power. Obama is a leader who is very intelligent, speaks very well and has the capacity to convince you. At the moment 70% of Americans believe that he will be able to solve these problems. Even though Obama says that these problems are so deep that they cannot be solved in a year or in a ‘term’ (and he is right), the fact that people trust him will make things a bit easier.”
This is how Arık summarizes the way the crisis will change American society: “I think that the standards of living in American society will revert to their former more modest levels of half a century ago, and that this will contribute to the establishment of a more balanced society. In addition to this, a more participatory foreign policy that is based on dialog, which is Obama’s style, will restore America’s reputation in the world.”
İsmail Hakkı Ercan (Businessman, Former Chairman of the Florida Turkish American Association):
“THE CRISIS CAN BE OVERCOME ONLY BY RENOVATING OLD INFRASTRUCTURE.”
Coral Springs, FL – Businessman İsmail Hakkı Ercan operates in Florida, which is one of the places where the real estate sector that triggered the economic crisis has hit bottom. Ercan says that the economy can be revived if the government renovates public infrastructure that is too old, such as roads, dams, and bridges.
He says, “One of the policies of former American President Franklin Roosevelt was to revive the economy by accelerating the construction of dams and infrastructure. This administration also might try a similar method.” In addition to these new sources of employment, Ercan also stresses the importance of reducing dependence on foreign sources of energy, but does not think that Barack Obama will introduce radical changes, even though his message during the presidential race was “change”. Ercan says that he voted for the Democrats and that the main factor leading to this decision was the economy. He says, “The factor that most influenced people in this election was the economy. The other factor was the unjust way of governing of George Bush. In a way, being president of the USA means also being the president of the world. A president has to be just not only to his own people, but to all of the world. I hope that Obama will take this into consideration.”
Ercan underlines the fact that in the USA, political campaigns based on fear are not effective, and says that for Turks to be effective in the political arena the first thing to do is to determine the cities and towns where there are more of them living. He also says, “In addition to this we have to unite in supporting a single candidate. We have to forget distinctions like right or left, secularist or Islamist, and support a single candidate so that we can be successful in the elections. Turks have a mission concerning the elections-- showing the Americans that Muslims are not bad.”
Alpaslan Başdoğan (President of Asia Minor Carpets)
“LEAVES ON A TREE CANNOT FLUTTER BY THEMSELVES”
New York, NY - Asia Minor Carpets, which is one of New York’s oldest companies selling Turkish carpets and kilims, is known for its products for the upscale market. Alparslan Başdoğan says that just like all other sectors, the home furnishing industry will also contract and that one of the main problems is to get paid by customers.
Başdoğan says that since they mostly sell to high-income customers, their sales have not fallen by much, and compares the present crisis with the crisis in 1989 in the following way: “The crisis in 1989 was a financial crisis and the stock exchange and money markets suffered greatly. Back then the real estate sector was not affected. But the present crisis includes both the financial sector and the real estate sector.”
Başdoğan quotes a saying of his father to explain the crisis: “Leaves on a tree cannot flutter by themselves.” Başdoğan stresses the fact that the crisis will inevitably be felt in every sector, and says, “Considering our target segment, we cannot sacrifice for the sake of cost cutting. There is also no point in introducing new products during a crisis, because there would not be any demand for it. The USA is a dynamic market. Its nature will let it recover in a short time. And it is also important to recover morally during the crisis.” Başdoğan stresses the fact that Obama’s election as president represents hope and says, “Americans had got into such a state that they were ashamed to show their passports. The new president will introduce a new period and a new enthusiasm.”
Harun Sevimli (President of AmerTurk, Inc.)
“THE CRISIS SHOWED US OUR WEAK POINTS”
Santa Clara, CA – Harun Sevimli, President of the Amerturk, Inc. Company, which organizes the sale of the unsold products held by great chain stores, stresses the fact that every day they receive lists of new stores that have closed, but that there is no guarantee that these products will be sold.
Sevimli says that they have never preferred to fire people during a crisis, and that in fact they have just hired two new people, one of whom is a marketing person. Sevimli says that if the USA invents something that will affect humanity, this will favorably influence both its spirits and economy, and adds, “In the same way that man went to the moon, and there was the Internet revolution and computer technology providing jobs for millions of people together with all its branches, a similar great invention might change the history of the world.”
Sevimli stresses the fact that the crisis led to the discovery of the weak points of the company, and adds, “If we had established representatives in foreign countries before the beginning of the crisis, at the moment we would have had great opportunities. We learn something new with each experience.”
Sevimli reminds us also of the fact that before the crisis they had had great opportunities, but that they had not had the possibility of profiting fully from them, because they had preferred not to get loans from banks and adds, “It is fortunate that back then we preferred to invest with our own resources, because we now see the difficulties facing companies that took out bank loans.”
Varol Ablak, (President & CEO of Vocelli Pizza)
“PEOPLE SHOULD OVERCOME THEIR FEARS”
Pittsburgh, PA- Operating 135 pizza stores in eight different states, Varol Ablak, President & CEO of Vocelli Pizza, says the current financial difficulties will be felt a year and a half from now. Ablak says that “To defeat the current crisis, first of all people should overcome their fears.”
Vocelli Pizza, recognized by the industry's top trade magazines as a leader in the pizza sector, was ranked in the top 50 pizza companies for growth in Pizza Today’s national "Hot 100 Companies" annual listing. Over the past five years, Vocelli has doubled its annual system-wide sales.
They were actively seeking new franchise partners to develop new Vocelli Pizza stores and Ablak’s projected growth rate was approximately 30% annually. Reaching the company’s target, Vocelli opened 10 stores in 2006 but added only four stores in 2008 and now the total store number is 135. Ablak says that before the current global crisis, they were planning to expand international franchises, but the current situation made them focus on local markets.
“We still have same ambitions to open stores overseas, to go IPO, but right now we should focus on the current situation and markets.” Though he voted Republican in the last election, Ablak believes that Obama’s presidency promises to be a great opportunity for the U.S. and the world.
Turan Kahraman, (President and CEO, Askew Industrial Corp.)
“WE ARE PURSUING NEW CUSTOMERS AGGRESSIVELY”
Los Angeles, CA - The current recession has touched just about every company in the US manufacturing sector. Askew Industrial Corporation, a 51 year-old supplier of production hardware to OEMs, is affected by the recession primarily in two ways:
1- Lesser volume: As our customers (OEMs) reduce their production due to the lack of demand for their parts, they purchase less. 2- Lower margin dollars: The worldwide recession and the related reduced demand caused the material prices (for metals used in the manufacturing of our products) to plummet significantly. A drop in the cost of material would typically be welcome news. Unfortunately, the speed in which this happened left many companies with higher priced inventory. The other major effect of this sudden drop in prices is on the profitability of the companies. Most companies’ overhead structures are built to be supported by a certain amount of gross margin or contribution margin dollars. With the lower amount of contribution margin dollars, companies will have to lower their overhead.
Askew has a two-prong response to the current situation: lowering its overhead and growing sales. We are continuing to lower our operating costs in order to manage our business with lower gross profit dollars. We are also pursuing new customers aggressively in order to grow our sales volume. The business models in which we have operated for the last several decades have proven themselves to be insufficient and inappropriate when faced with the challenges of the current economic crisis. Every company needs to be leaner, more determined and more diligent than ever before. While the current crisis is devastating, the companies that will survive will be much better prepared to weather future storms.”
Ahmet Halaç (President of Halac Iron Works, Inc.)
“THE SOLUTION DOES NOT LIE IN A BIGGER STATE”
Sterling, VA - Ahmet Halaç, owner of the iron and steel manufacturer Halac Iron Works, Inc., is one of the businessmen who have not been too affected by the crisis.
Halaç, who builds schools in Virginia, Maryland, and Washington, D.C., says that their order book is full until mid-2010.
Halaç stresses the fact that the crisis cannot be solved by means of state intervention in the economy, and says, “If the state had been able to manage the economy and improve it, Russia would now be the strongest country of the world. If you understand capitalism, you can find solutions.”
Halaç preferred not to make predictions about how long the crisis would last, and underlined the fact that the American economy was based on consumption, and that this could not be changed.
Haydar Güner – (President of Onur Group)
“THE ELECTION OF OBAMA WAS A GREAT STEP FORWARD”
Vienna, Austria - Haydar Güner, chairman of the board of Onur Group, which is Vienna’s biggest importer of vegetables and fruit, says that European markets, where the crisis was deeply felt, was closely monitoring the application of the decisions made in the USA, and that the solution of economic problems had to come from the USA as well.
Güner says that just as in the rest of the world, the election of Obama to the presidency had been received with enthusiasm in Austria as well, and adds, “As a businessman who lives far from his own country, I also think that Obama’s election was a great step forward. The fact that the son of immigrants can also be elected president is an important step that supports globalization and the harmonious life for humans promised by America and all developed countries.”
Güner says that the George Bush’s approach to humanity and human values had been aggressive, and that his greatest wish was for these errors not to be repeated.
Edip Bayızıtlıoğlu – (President of Wedco)
“THE MAIN REASON FOR THE CRISIS IS INSECURITY”
Vienna, Austria – In the Austrian capital of Vienna, Edip Bayızıtlıoğlu, founder of Wedco High Quality Tooling and president of the Austrian-Turkish Businessmen’s Association, says that the economic crisis has caused a stagnation in the market for cutting tools produced for heavy industry ranging from the car sector to the electronics sector.
Emphasizing that the main reasons for the crisis in the marketplace are insecurity and hopelessness, Bayızıtlıoğlu says that, “While on the Autobahn, one vehicle stopped. Because the first one had stopped, the ones behind it slowed down in panic. I compare the current crisis to this.”
Bayızıtlıoğlu, who points out that Lehman Brothers’ filing for bankruptcy created a major crisis of confidence among deposit holders, says that the American government should not have allowed the bankruptcy.
Noting that they are continuing to maintain three factory shifts in their production centers and that they have not laid off any workers, Bayızıtlıoğlu states that they have pushed their investment plans to the back burner. Stating that the crisis in Austria will lead to a 5-15% contraction, he emphasizes that among the many countries with which they do business, in the crisis the greatest financial difficulties will be felt in Turkey.
“Because in Turkey the business world is used to crises, they put on the brakes faster. They quickly go into their shells. There is not much loyalty towards the consumers, workers, and business partners. Big companies immediately extend the terms of their loans,” he said.
Touching on the election of Barack Obama as president and how that will be a good opportunity for politics and the economy, Bayızıtlıoğlu says he believes that 20 years from now the child of an immigrant family can be elected prime minister. “Today, French president Sarkozy is the son of a Hungarian family and London’s mayor Alexander Boris de Pfeffel Johnson’s great-grandfather was a Turk. Why couldn’t my child one day become prime minister of Austria? But the important question here is how Turkish would he still be?”
Osman Nuri Kır (President of Pasha Whole Sales)
“IT IS IMPOSSIBLE FOR SALES TO BE AS HIGH AS THEY WERE IN 2004-05”
Long Island, NY – Osman Nuri Kır is the owner of Pasha Whole Sales, a wholesale company that markets products sold in the gas stations of Long Island and Queens in New York. He says that business has diminished by around 30 percent as a result of the shrinking of the market. He states, “A gas station, to which I previously sold 2500 dollars worth of goods, now buys the equivalent of 1700 dollars. Our biggest gain during this crisis has been the fall of gas prices. I consume around 150 dollars worth of gas a week. With the old gas prices, this amount was much higher.”
Kır, who added a new route to his distribution web in Long Island, says that the route, that was sold for 149,000 dollars before the crisis, is now during the crisis worth only 70,000 dollars. He stresses the fact that a time of crisis provides you with ideal investment opportunities.
As for Kır’s expectations for the year 2009, they are pessimistic. He says, “It is impossible for us to sell as much as we did during 2004-2005.” He summarizes the present crisis with the following example: “140 people working in a DHL building near a gas station to which we sold products were fired . 140 people, who every morning at breakfast time would get a coffee and cigarettes at the gas station, have suddenly disappeared. The sales of the gas station will fall and this will directly affect my business.”
Last modified onSaturday, 06 May 2017 10:07
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