Welding Machinery Sector Affected by Contraction in Domestic Demand

Economic difficulties coupled with high interest rates and financing challenges are affecting the welding sector. Serdar Selim Zengin, General Director of Vega Makina, points out that growth in the sector is slowing due to contracting domestic demand, noting that the sector's 2024 turnover may decline by 10 percent to EUR 370 million, the level recorded in 2022.

The welding sector experienced one of its golden years in 2022 with domestic market turnover of EUR 370 million, of which 25 percent comprised welding machines and equipment and 80 percent consumables. By 2023, the sector grew approximately 10 percent, raising turnover to EUR 420 million, but 2024 is not maintaining the same performance. Vega Makina General Director Serdar Selim Zengin stated that the sector's 2024 turnover could revert it two years back and that 2025 turnover is expected to remain at similar levels, offering his assessment of the sector.

June-July 2025 will be a critical period

Serdar Selim Zengin said that since tight monetary policies will continue in 2025 as announced in the Medium-Term Program, they do not expect expansion in domestic demand, public and private investment. "For 2025, we estimate total domestic market turnover will be at the EUR 370 million level we forecast for 2024. We do not expect welding sector activity to improve until June-July 2025, when we anticipate the first interest rate cuts. Growth below 4.5 percent in 2025 will benefit not only the welding sector but no sector, and will have serious negative effects on unemployment rates and impoverishment. For this reason, Turkey's economy must achieve growth above this rate," he said.

"We are experiencing the most difficult year in recent times as a sector"

Zengin noted that all products sold by the sector are investment goods used in industry and continued: "Consumables sales continue in some form since production is declining gradually, but sales of welding machines, which are investment goods, are negatively affected by the current environment. As domestic market demand contracts and investments are halted, and considering declines in purchasing indices (PMI), we have no chance of growth as a sector during this period. Although we started the year with an optimistic outlook, we will not achieve real growth in 2024. As a sector, we are experiencing the most difficult year in recent times. One reason is increased competition as domestic demand narrows. Consequently, while our turnover and profit margins fall, our operating expenses increased 100 percent compared to the previous year. This has significantly negatively affected profitability. Second, difficulties in accessing credit due to high interest rates and high financing costs are creating major cash flow management difficulties for companies."