MARBLE INDUSTRY IN TURKEY

SİNAN ÜNLÜ S000192 FATİH YILMAZ

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INDEX EXECUTIVE SUMMARY…………………………………………………………………3-4 DESCRIPTION OF SECTOR AND PRODUCT…………………………………………5-6 GENERAL INFORMATION ABOUT SUPPLY AND DEMAND……………………...6-10
Turkey’s Natural Stone Reserves Turkey’s Natural Stone Production Conditions Turkey’s Marble and Tiles Production Capacities and Conditions

TURKEY’S NATURAL STONE FOREIGN TRADE……………………………10-11
Import Export Turkey’s Demand for Finished Goods

SWOT…………………………………………………………………………………..12-15 PORTER’S FIVE FORCES…………………………………………………………..16-19 MARBLE SECTOR IN THE WORLD………………………………………………19-20 CONCLUSION…………………………………………………………………………21 BIBLIOGRAPHY……………………………………………………………………….22

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Executive Summary

Natural stones have been a symbol of civilization for ages and societies use marble for art, buildings and their living areas and we know that natural stone industry is one of the oldest industry on the world. In these days, usage of marble is increasing and this situation brings marble sector important situation in Turkey. Companies who doing business in this sector, face of some competition because building materials are becoming every day more popular. Natural stone industry is one of the potential profitable industry in the world.

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In local and international marketing managers decide that how they will increase their sales and they should analyze industry and realize variables. In this report we will give some general and detailed information about marble sector in Turkey. Firstly, we will examine our reserves and stone types in Turkey, after this we will examine our import and export numbers and we will continue SWOT analysis for marble sector and then we will continue with porter’s five analyses for Turkey’s marble sector. Lastly we will look at world natural stone sector and we will finish our report. Turkey has very important role for marble sector because we have rich reserves and variety. According to Enerji ve Tabii Kaynaklar Bakanlığı, we has rich and powerful potential related to our geological structure. According to today’s data, there is 3,8 billion m³ extractable marble, 2,7 billion m³ extractable travertine, 995 m³ granite reserves. According to these numbers, our country has approximately %40 of the world natural stone reserves. On the other hand, there are more than 650 colors and textures of marble. The types of marble produced in Turkey best known in international markets are, Suprene, Elazığ Cherry, Akşehir Black, Manyas White, Bilecik Beige, Tiger Hide, Denizli Travertine, Aegean Burgundy, Milas Lilac, Gemlik Diabase and Afyon Sugar. Emparadore and Burdur Beige. In the picture, we can see Turkey’s marble quarries distribution on Turkey’s map.

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From : Enerji Ve Tabii Kaynaklar Bakanlığı In Turkey Natural Stone Industry, Investment and Growth rate is nearby %17. This number show us more than twice whole world average growth rate. You can find export numbers for marble sector on the table.

Year Turkey

2012 (000$) 1,901,426

2013(000$) 2,225,036

Difference (%) 0,1701

Table 1 : From İstanbul Maden İhracatçıları Birliği Authorities believes that in marble sector, this growing is increasing and it will continue in the future. Thanks to our rich resources and variety, marble sector is very suitable and good for investment and growing in Turkey.

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1. Description of Sector and Product

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According to DPT sector classification, block marble production is in mining sector, sand and clay quarry. Marble slabs, marble tiles productions are in production industry. If we give scientifically marble description “Marble is a metamorphic rock form composed of coarse crystals from parent limestone or dolostone rocks. Pure marble is white and composed of the mineral calcite.” (http://hyperphysics.phyastr.gsu.edu) If we give industrial description of marble, polishable shinable and cutable whole stones describes marble. According to this description, calcerous, travertine, sandstone, quartzite, and granite are named marble. To prevent confusion, in last years sector name was changed “sized block stone” instead of marble sector. Marble is the most consumed natural stone in all over the world. Most common usage areas are building sector and decoration. Marble is used for plating in building,decoration,monuments,souvenir and etc. Especially, inside the buildings, Architectures use marble for floor covering, wall covering, stairs, colums,fireplace, kitchen and bathroom. Another usage area is decoration and marble is using kitchen counter,table and production of different furnitures for decoration. You can find GTİP number for marble on the table: GTİP 2515 Product Name Marble and Travertine,Alabaster and Limestones 251511 251512 Marble And Travertine (Raw) Marble And Travertine( Block,Thick Slabs,

2. General Information About Supply and Demand

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Table 2 : From Antalya İhracatçılar Birliği

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2.1 Turkey’s Natural Stone Reserves Turkey location is very important for natural stone reserves. Our country is in Alp Zone and Turkey has powerful reserves thanks to this situation. Turkey has lots of different naturel stone with different color and mineral. Turkey has reserves for natural stones in all geographical regions. We examined that, Turkey has 5 billion cubic meter natural stones. We can see distribution of these reserves on the table: Visible Reserve Probable Reserve Possible Reserve Total Potential Reserve 589 million m³ 1,589 million m³ 3,027 million m³ 5,161 million m³

Table 3 : From Maden Arama ve Tetkik Müdürlüğü This reserves includes travertine,magmatic stones and any other stones like using marble. Possible reserve numbers endures geolophical Turkey’s maps. We know that this information comes from MTA and this research made in 1966. We think that between 1966 and 2014, lots of new resources were founded and this numbers was increased. We can easily say that our reserves are high than this numbers. Our operable reserves are 3,872 million m³ and distribution of this number for city and region on table: Region/City Operable Reserve (1000 m³) Marmara Region Balıkesir 1,468,500 1,300,000 Distribution (%) 37,9

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33,6

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Bursa Kırklareli Aegean Region Afyon Aydın İzmir Muğla Kütahya Uşak Central Anatolia Region Ankara Eskişehir Kırşehir Niğde Total 135,000 33,500 1,026,500 135,000 9,000 1,500 181,000 200,000 500,000 1,377,000 2,000 960,000 165,000 250,000 3,872,000 3,5 0,9 26,5 3,5 0,2 0,0 4,7 5,2 12,9 35,6 0,1 24,8 4,3 6,5 100,00

Table 4 : From Devlet Planlama Teşkilatı Our important reserves spread between Anatolia to Thrace. Most important cities are Afyon,Balıkesir,Denizli,Tokat,Muğla and Çanakkale for marble quarries. In our country, we have more than 80 different structure and more than 120 different color and pattern for natural stones. In international markets, our most famous stones are Süpren, Elazığ Cherry,Akşehir Black, Manyas White, Bilecik Beige, Tiger Lilly, Denizli Travertine, Agean Mahogani, Milas Lilac, Gemlik Diyabaz and Afyon Sugar.

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2.2 Turkey’s Natural Stone Production Conditions

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In Turkey, in 1985, marble was entered mining law and after this situation, marble sector was saved by permission and after this situation production was increased. On the table, we can see Turkey natural stone production for last years: 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1,507,248 m³ 1,848,529 m³ 2,281,008 m³ 2,896,164 m³ 3,820,971 m³ 3,050,113 m³ 3,787,583 m³ 4,285,577 m³ 5,834,822 m³ 5,263,347 m³

Table 5: From Enerji ve Tabi Kaynaklar Bakanlığı If you look at the table between 2010 from 2011, you can see %36 increase for production but this increase will change in 2012 and production decreased nearby %10. Because of stagnation of domestic market but if we look at table from 2003 to 2012, we can easily say that production was increasing swiftly and good way. Every year, Turkey was getting bigger in natural stone production. In natural stone sector, there are more than 2100 quarry, 1500 factory, 7500 workshop. If we look at employment numbers of marble sector, there are more

We can see distribution of production for different countries on the table:

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than 250,000 employees.

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Year Country China Turkey India Italy Spain Egypt Brazil 2008 % 26,1 10,8 12 7 5,4 4,6 4,4 2009 % 28,6 11,9 12,9 6,9 4,8 4,8 4,1 2010 % 25,8 13,6 10,3 6,5 5,1 3,9 4,6 2011 % 27,3 14,5 10,5 6,2 5,2 4,5 4,4 2012 % 24,3 15,4 14,6 6,1 5,3 4,9 4,3

Table 6: From Ekonomi Bakanlığı Sau Paulo Ticaret Ateşeliği Application of new technologies and investments helps to increase Turkey’s production on all over the world. We can see that we are the second country for marble production all over the world. We joined 7 leader country for marble production. 2.3 Turkey Marble and Tiles Production Capacities and Conditions From Marble quarries, marble extracts block and these blocks are cutting from factories with gang saw etc. and it becomes tiles and slabs forms. In Turkey there are lots of factories, small factories and workshops to produce marble slabs and tiles. We don’t have lots of information about factories and small factories from Turkey but we know that there are nearby 250 integrated plant and 9000 factory and small factory but we said that we don’t have any information about production capacities. Thereby, we don’t have lots of information about production capacities

production capacities for tiles and slabs are nearby 6, 5 million m². We can

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of these factories but according to enerji bakanlığı maden işleri müdürlüğü our

Mezunlar Grubu 2014 make some predictions from m³ to m² but it doesn’t provide us health information. We want to give some coefficient about marble tile and slab production.    1 m³ = 2,7 1 m3 = 27 m² 1 ton = 10 m²

2.4 Turkey Natural Stone Foreign Trade 2.4.1 Export Swiftly developing natural stone sector gain value last years. If we look at table one from executive part, in 2011 our export was 1,674,121,880 $ this number became in 2012, 1,903,116,787 $. In 2011 and in 2012, our finished good (means polished, cutted) has average %49 our whole marble exportation. We are exporting our materials more than 200 countries and most important countries are China, USA, Iraq and England for our export facilities. 2.4.2 Import If we examine our import numbers, we can easily say that our import facilities are very low. If we look at 2009, our import was 152,713,000 $. If we look at export for 2009, our export was 1,232,371,000 $. We want to show this information on table: Turkey Export 2009 (000$) 152,713 2010(000$) 337,685 2011(000$) 214,965

Table 7: From T.C Ekonomi Bakanlığı 2.5 Turkey’s Demand for Finished Goods

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We examined that before, tiles and slabs (sized products) are used in construction, floor covering, stairs etc. If we are making a ranking, we can say that mostly marbles are using in floor covering and then tombstone has second place. We can say that, last years, inside and outside usage of marble covering was increasing. You can find list of usage of natural stones on the table: Usage Areas Floor Cover Tomb Stone Special Works Sculpture İnside Wall Covers Outside Wall Covers Stairs Other % 36,5 17,5 13,0 10,0 9,5 7,5 3,5 2,5

3. Swot Analysis For Marble Sector In this part, we will examine marble sector for Turkey. We will look at strength, weaknesses, opportunities and threats. For find these information, we met with lots of people from marble sector and we benefit from some magazines and articles about marble sector and achieves these results.

3.1 Strength part of Marble Sector in Turkey

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        Powerful reserves Variety of structure, color and pattern World knows Turkish marble and demand is increasing Marble production machines and technology are developing. Turkey organized most famous stone fair in İzmir. Capable to compete market Marketing strategies are developing. Powerful organizations, export unions, efficient activities We have lots of different color and textures of marble in Turkey. Our geological place provides us different colors and textures and our stone structure is very effective. We mean that we can produce big size and big blocks. This is very important for export facilities because buyers want to big blocks to use whole areas of containers. We said that we have lots of colors and different textures of marble and world started to know Turkish marble. Our stones are becoming brand whole over the world. Our marble sector is developing and people invest money for mining and related to this issue, machine producers are researching and follow new technologies to produce new effective machines. We have lots of machine producers for marble sector in Turkey. We don’t depend on other countries. In 2014, we will organize world stone fair in İzmir and this organization will be 20th world stone fair. Lots of potential customer participate this fair and we can introduce our stones whole over the world. In 2014, 1187 firm will participate this organization from

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Turkey. In 2013, 77 different countries visited İzmir World Stone Fair.

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Related to technological developments, marketing techniques are becoming more effective. We can access lots of different countries to use technological utilities. We can market our products whole over the world. Marble producers use lots of different products to reach their target customers. They use Facebook, twitter etc. to introduce their stones easily.

3.2 Weaknesses          High energy costs Lack of encouragements Lack of qualified employee Lack of operational capital Price competition High labor cost (insurance,bonus etc.) Lack of inventory Transportation’s cost is high. Lack of ports. Banks doesn’t assume stone’s licence for assurance.

Most important problem in Turkey energy costs. We know that gasoline and electricity are very expensive in Turkey. If we will examine small quarry, they spend 200 liter diesel in one day. This is very important and high number. Electricity prices and gasoline prices are weaknesses of Turkey for production sector. Another important thing is encouragements of government. Government doesn’t give any encouragements for marble quarry owners. They want to achieve some encouragements
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when they open new quarry.

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Lots of quarry works on hard land conditions. They work high altitude and far away from city for this reason quarry owners cannot find qualified employees easily. If you find, wages are very high for owners. In Turkey, there isn’t any school for only marble. There should be some trade schools related to marble, especially important areas like Burdur,Afyon. Bank doesn’t apply quarry license for assurance, this situation causes lack of operational capital for owners. Government doesn’t give encouragements and these two reasons causes’ big capital problems in Turkey for quarry owners.

3.3 Opportunities     European reserves are going to over. Production is decreasing. Foreign companies and intuitional companies have interest for marble sector. Depends on our geological structure, there can be new reserves. All over the world, Natural stone’s demand is increasing every year trendily.

World demand is increasing every year and European reserves are going to over. Their production is decreasing and Turkey is becoming more important place in the world for marble production. Our reserves are so powerful and we are taking who lose their role in production. We will become more popular in the future about natural stone industry. We suppose our reserves are high and we suppose that we will find new reserves more than now. 3.4 Threats  In Turkish Parliament, there isn’t mining ministry. There should be agent for mining sector.

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    Difficulty to take new marble quarry license. Unconscious environmental awareness. Social influence for quarry owners. Imported product usage, especially in public corporations. Terror blocks new quarry searches some places.

In 2008, quarry license was connected prime minister Office and it became difficult to take new license. Transfer of quarry was blocked and taking new quarry license became difficult. Marble quarries work on country sides and they live some problems with villagers. Villagers don’t want to quarries nearby their homes and they use environmental awareness to complain quarries. If this situation reflects media, government cannot give right decision because of social influence. In Turkish Parliament, there isn’t mining ministry. There is energy ministry and it separates lots of different industries. If you come up with some problems, you cannot solve this easily because of you cannot find any answerer for mining sector.

4. Porter’s Five Forces Analysis For Turkey Marble Sector

In this chapter, we will examine Porter’s five for Turkey marble sector. We can say that, this method can be simple but it is very helpful to understand
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Mezunlar Grubu 2014 competition and market structure for marble sector in Turkey and all over the world. We will look at five different information and these are competitive rivalry, threat of new entry, buyer power, threat of substitution and supplier power. We want to give some information about Porter’s steps. Competitive rivalry refers the strength of competition in the industry. There are some several effects for competition in the market. These are number of rivals, high fixed cost of production, slow growth of industry, brand identity, low switching cost, concentration and etc. These factors affect competitive rivalry. Another step is threat of new entry that refers new companies can enter market which can be competitor in the future. In this step, enter barrier is very important for new entry threats. Every industry has different characteristics. Some factors can raise new entry barriers which are capital requirements, economies of scale, switching cost, differentiation, government policies. If new competitors can easily enter the market and growth rate is low for this industry, there will be big problem for firms. If new entrant barrier is high and industry has high growth rate, there will be big opportunity for firms. Buyer power refers power of your customer to decrease your prices. Differentiation and high switching cost are very important for this step. Threat of substitution refers extent to which different products used in place of your company’s products or offered by other industries. If company or product has low switching cost threat of substitute will be high. In contrast, if

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substitution isn’t easy, this will be power of companies.

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Supplier power refers the power of suppliers to increase price of your raw materials. If supplier can change your prices easily, it shows us that they have power. Internal competitive rivalry is high in natural stone industry. There are lots of existing companies from different countries and markets. They are competing each other effectively. We will look at causes of this competition.   Lots of companies compete each other for same customers. There is slow market growth rate and this causes competition in the market because companies try to gain market share.  Low switching cost increase competition.

Therefore, competition is high and intense in natural stone sector and this situation affects prices on the bad way. It decreases prices. Specialist believe that competition will increase next years. Threat of new entry is high for natural stone industry. Start of business in natural stone industry requires significant money investment but in developing countries, there are lots of incitements to support this industry. Related to this situation, new companies can easily enter the business thanks to government from different countries like Egypt, India and China. These companies reduce profit. We know that this industry is very competitive and there is a threat for new entrants from different countries. Buyer power has important impact for companies. We know that there are lots of companies and different marbles but there are limited buyers and wholesalers for the marble industry. Natural stone

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Mezunlar Grubu 2014 companies don’t have lots of power over their customers. All producers try to attract buyer’s attraction with good prices. This situation cause low prices in the market. There is high threat from substitute of natural stone products. People have lots of advantages and these advantages are increasing continuously. Production techniques are increasing and related to this ceramic is becoming very significant. It is cheap and easy way to apply. Important information is that marble supply is higher than demand and producer should compete each other significantly. 5. MARBLE SECTOR IN THE WORLD Related to usage of marble in the world stone production became very important whole over the world. We know that related to technological developments, marble processing have been increased with minimum lost.

As you can see, China,India,Italy,Iran,Turkey,Spain and Brazil have

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%71 of total production whole over the world. Marble called

Mezunlar Grubu 2014 limestone,granit,diyarit,travertine,limestone,breccia,syenite,serpatin and marble rocks. We can see natural stone distribution for Europian countries on the table: Country Germany Austria Belgium Bulgaria Czechoslovakia Finland UK Spain Sweden Switzerland Italy Norway Portugal Ukraine Yugoslavia Greece Type of Stone Lime Stone,Granite,Diorite, Beige and Gray colored limestone reserves Limestone Marble,Limestone and Granite Limestone,breccia,granite Granite,Syenite,Labradorit Marble Different Colors Limestone,Marble Granite,Syenite Beige,Gray Colored Limestone Rich Marble,Granite,Limestone Granite,Diorite,Syenite Limestone,Marble,Granite Granite,Labradorite Limestone,Marble,Travertine Limestone,Marble

We want to mention that Burdur beige is the most famous stone in these countries.

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6. CONCLUSION Natural stone sector is swiftly growing and our country plays important role in this area. This sector is becoming one of the most important sector in exports of Turkey. Most of firms sell marbles block forms but if we can increase our finished marble slabs, we will generate more money from these products. We have rich marble reserves and there is high variety and textures. We said that, Burdur beige and some other beige marble which are knowable whole over the world are becoming brand for customer. In the market, there are strong and powerful demand from all over the world. We have young and dynamic work force but we don’t lots of qualified employees, we should increase these numbers.

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BIBLIOGRAPHY http://www.enerji.gov.tr/index.php?sf=webpages&b=mermer http://www.ibp.gov.tr/pg/sektorpdf/sanayi/Dogal_Taslar.pdf http://www.tse.org.tr/docs/standard-ve-ekonomik-teknik-dergi/tse-kas%C4%B1mmail.pdf?sfvrsn=2 http://isma.info/uploads/files/058-porter---s-five-forces-analysis-for-natural-stoneindustry-and-competitive-strategies.pdf http://www.kalkinma.com.tr/data/file/raporlar/ESA/SA/2004-SA/SA-04-0627_Blok_Mermer_ve_Mermer_Isleme_Sektoru.pdf http://www.aiaistanbul.org/files/bilgibankasi/pazarlar/itc/251512_mermer_ve_traverten.pdf http://constructarabia.com/wp-content/uploads/downloads/2014/03/Natural-Stone.pdf

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