Chances are good that if you are in the manufacturing business in Turkiye, you have heard of Sevda Kayhan Yilmaz, or SKY as she is sometimes known. That knowledge may come from her role as CEO of Kayahan Hidrolik in Konya, Turkiye, or her beloved role in working toward the growth of the industry via a leadership post in Turkish Machinery, a not-for-profit group with a mission of expanding exports and gaining efficiency in manufacturing—as well as partnerships that help Turks deal with the large economy and different standards of places like the U.S. and the EU. She is living a full, busy, and interesting life, and she made space in her schedule for a talk with Fifth Wave Manufacturing.
FWM: The Story of Making Tomorrow–that’s what’s happening with my very dear friend, Sevda Kayhan Yilmaz. And she’s known as SKY to her friends and her many admirers. People love you.
SKY: Thank you.
FWM: She has two things that are keeping her busy, not to mention grandchildren and a family. You are the CEO of Kayahan Hidrolik in Konya, and you split your time between there and Ankara, right?
SKY: Yes.
FWM: Yes. And I know you’re very involved with professional associations for manufacturing. Does a lot of that work take place in Ankara?
SKY: Yes. It’s nonprofit work, it’s for improving the wealth of Turkish machinery manufacturers and to improve the exports of Turkish machine manufacturers.
FWM: Well, that’s actually one of my questions. We might as well go there now. It’s just amazing to me what goes on there and the level of work, the level of quality, keeps coming up and up.
SKY: Thank you.
FWM: Some of that is due to the organizations like yours. Some of it’s just due to the fantastic work ethic and creativity that’s coming out of those places.
SKY: Agility. Agility also.
FWM: I agree with that.
SKY: Turks are generally very agile.
FWM: Yes. Some of the universities too, like Uludag University <the full name includes its home city, Bursa Uludag University>…
SKY: … and Middle East Technical University. Yes. Also, the human resource quality is absolutely high. So, due to hard conditions…as you know, Charles Darwin has said that the species which will continue for the next generations are not the intelligent ones or the powerful ones. They are the ones who can adapt to changes. I think we easily adapt to the changes, otherwise we cannot survive.
FWM: That’s a great way to put it, it’s true. I’ve seen so many changes. And as things change across one side of the world, you know, Turkiye is at the crossroads of everything; it is the crossroads of the world. They <the Turks> are aware of what’s going on in development in China, in development in India and in Europe, and in the U.S. So it all comes together at the Bosphorus, right?
SKY: Yes. There is only one place in the world where you can start to drink your tea from one continent, and you finish it in the other continent. Currently we are working with countries in our nearby geography. We are also interested in the U.S. I believe the first problem for us is the <U.S.> standards. And the second problem is the scale of the economy. If you would like to work with a company in the U.S., you must be ready for big quantities in the order. Our scale of economy is not so big. Of course, there are some companies working with us, but in general, scale of economies is one of the problems in working the U.S.
FWM: Yes, and I think even just in terms of exports, the U.S. is not known for its exports, yet I think we export something around $2 trillion per year and Turkiye exports about $250 billion per year. So that’s eight times the size of exports.
SKY: Eight times, yes.
FWM: You know, the US economy is more than eight times the size of Turkiye. The U.S. is about $27 trillion as an economy <and Turkiye’s is about $1 trillion>. So, our exports don’t match our production the way they do in Turkiye. <Export of goods as a percent of GDP is 7.4% in the U.S. and 25% for Turkiye.> But for Turkiye, you have this great export opportunity, no matter if you’re going to Bulgaria, or have offices in Uzbekistan, Turkmenistan, Azerbaijan. But you do a lot of trade with Poland and Germany, and you as a company do some of those things as well, right?
SKY: As a company, we work mainly with the European Union, but as the Turkish machine industry, 60% of our exports are going to European Union, United Kingdom, and United States. So three of them make 60. We are growing very rapidly. The Turkish machine industry is the second biggest growing industry, machine industry, all over the world. The first one is China, the second one is Turkiye.
FWM: I suspect that as Turkiye is growing in its exports, the exports to the United States are growing at least as much as the rate of your export growth, probably more though. Is that correct?
SKY: Yes. You are right. Because Turkiye and United States have an agreement, they would like to increase more. But as I told you, the one of the problems is the scale of economies. The second one is the standards, such as electricity standards Even the dimensional standards are different. And the third problem is if the company doesn’t have insurance for their products. If you supply to the United States, the price increases because the guarantee conditions in United States are tough. So, many people think at first, it’s too much. They are hesitant to enter the United States market. But, there is big potential there. In the new era of the United States, Trump will be more focused on manufacturing in United States. So it’ll increase. The potential is increasing in the States.
FWM: You and I converse so easily. I want to make sure that my questions I sent you are the ones that I’m asking. What about the trends?
SKY: Automation.
FWM: Is that the number one trend in manufacturing here?
SKY: Automation was a trend before. But now it’s not only automation, but green twin transition is the main focus, I believe, since our main export area is the European Union, where the green deal is very important. Sustainability is the number one subject. Plus, considering the economic condition all over the world, not only in Turkiye, but when you consider the economic situation, I believe that there’s a world war now. This world war is a little bit different. It’s now an economic world war. It’s very important to be efficient, and in order to be efficient, the most popular tool is digitalization in production. So the most popular trends are automation, sustainability and digitalization in Turkiye, which helps us to be more efficient.
If I could give an example from our company, in the last four years, we have decreased our carbon footprint 54% for, Category 1 and 2. Sometimes it’s, I feel, meaningless, because Europe is very careful about the green deal, but the rest of the world is not so active in decreasing the carbon footprint. For example, Category 1 and Category 2 of our company was 1.4 thousand tons four years ago. Now, we have reduced it to 660 tons. It’s more than 50% less–under half of what it was. It was very good. We have done many things about sustainability, but on the other hand, if we talk about Category 3, it’s over 12 million tons, which comes from procurement, mainly transportation, and our suppliers’ carbon footprint. So if you cannot do it all together all over the world…it would be a nice utopia if we could. But what I feel is that we must do what we should do. This is our responsibility to lower our carbon footprint. But of course the biggest share is still what we get in Category 3, which we get from suppliers and transportation.
This is a hard point. Hopefully one day all the world decide to do something about this subject. And then China and the United States will also join these activities, and it will be a better world.
FWM: Yes, you’re right. And, there are so many partnerships, and it’s very transparent. You know, you can look at your partner’s website and see what inventory they have so you can order it. But you don’t have transparency into sustainability; you end up knowing after the fact. I think there will probably be a way that you can see the ongoing sustainability, sometime, not today.
SKY: Maybe a few years, hopefully.
FWM: Yeah. Next, the fact that you have this office where you can see the layout…
SKY: The layout, all the machines. Let me tell you, when we are working in two places before <before moving to the new location in 2017>, the average traveling distance of a hydraulic cylinder, was 52 kilometers. Today, we lowered it to 1.9 kilometers, which means cost savings. Of course, when you are located in one place, the efficiency increases. We increased our total sales approximately 70% with the same amount of workers. We are a hydraulic cylinder manufacturer, but it’s not simple hydraulic cylinder manufacturing.
I always say that, yes, we are making hydraulic cylinders, but it’s quite couture. The customer comes to us and says that I have a problem to be solved in this way, and tells us his problem. Then we engineer his problem and make the design after his confirmation, the production starts, and we can manufacture hydraulic cylinders, two, three meters in diameter. Or 23 meters in length. It was really a hard job.
Now, our main aim is to increase the production. The lead times are now a bit long, especially in one of the departments at the backside. Last week, they offered a customer 52 weeks. I said, come on, are you joking? You cannot tell the customer delivery time is 52 weeks. You can say two weeks, eight weeks, then you should increase the price to work overtime. But 52 weeks means, “Do not order from me.”
FWM: Right.
SKY: Instead, you can say that if you would like to order from me, then you should pay this amount. This is a better way to communicate for me <laugh>.
FWM: Well, yeah, because that happens all the time in business, you can have it, what’s the old saying? You can have it fast, cheap, and good. Pick two of those. You can’t have all three.
SKY: Yes.
FWM: You can have it fast and good, but you’re not going to get the cheapest.
SKY: Yes. I also believe that quality is same price everywhere, all over the world. There are small fluctuations, but when the product is high quality, then it can’t be cheap. In our niche, we need a big investment. The tools are very important and expensive. The workers are high quality and highly qualified. Of course, they’re expensive also. So it’s not an easy job.
But I’m accustomed to it. Sometimes I say that I am the victim of destiny <laugh>. If my father was not the founder of this company, it would be really hard to be here and do this job. It’s really hard to protect your father’s inheritance. And it’s really hard to make his inheritance grow. It is a big responsibility. But I’m accustomed, I’m the victim <laugh>.
FWM: I know what you mean, though. It’s as if you had this predestined fate. It was already written into your book of life that you would be the CEO of Kayahan Hidrolik. Tell me a little bit about the story of how it was founded and how you got to be the CEO.
SKY: Of course. When I finished university, I started full-time in the company. But before that, I don’t remember when I started. My father’s factory was my playground. I made my first money from my father. We had a casting store. I picked up the steel parts and sold it to my father, 2.5 lire per kilo back to him <laugh>. This was my first money <laugh> and it was good for the time. I worked on the lathe, I worked on the drilling machine. I worked in many places. I worked in the technical drawing office. They taught me. I worked, but they taught me first, because I’m not an engineer, I’m a manager. I graduated from management school.
I wanted to do exporting, because I believe that if you want to increase your wealth and your country’s wealth, export is necessary. Otherwise, you change from one pocket to the other pocket; it’s not an increase in overall wealth. So, I started trying to export, but I saw that while you are exporting, you must control the quality. And the easiest way to control the quality is to control your own quality. Because if you buy and sell for an exporter, you may not control the quality. You may be cheated, you may make a mistake. But if you have been an expert on some subject, and if you manufacture in high quality, then you can export for a long term. It’s sustainable exporting. So, I said that first we should study on quality matters.
For three years, we made some preparations for quality, for the customers who come to us and make audits, they must be satisfied. Then, we got our first order from United States. It was Ramco Hydraulics. It was a very nice experience for me. Unfortunately, we couldn’t continue because they closed. The same year, we got another order from Austria, because I was looking for alternative customers. We got our first order from Austria, it was 152 cylinders in 36 different types. For us, this was an incredible order, because each year, we were manufacturing 200 pieces. Our production manager said, “Okay, we can cut this job. I don’t want this, because I don’t want to take this responsibility.” I say, “Why?” He said that after the production period on the last day, he started to assemble the hydraulics cylinder, and saw that he forgot to manufacture one of the parts.
I said, “Come on, this is not even a question. You can prepare a Gantt chart. You can follow the production, and then at the end, everything should be ready.” Then we applied this system with paperwork. And now we are doing it with computer. We are manufacturing around 12,000 hydraulic cylinders now. At this point, you can see 9,000 open work orders downstairs. So it was an incredible growth, but we always followed the renewal of the machine, renewal of the technology. We always try to be alert. And in the year 1993, we got our first order from the Austrian customer. That customer is still our customer after 31 years. I’m really proud of working with them for a long time. We are their number one supplier, and they are our number one customer.
A one-shot customer is not as important as others. We want a continuous thing. And I would like to add one more thing. In 1993, Turkiye’s hydraulic cylinder export figure was slightly over $90,000. And we exported one hydraulic cylinder to United States with the total amount of around $30,000. So one third was done by us, but the amount is very low. Next year, in 1994, the total amount of hydraulic cylinder exports was slightly less than $1 million. We increased tenfold.
FWM: Any idea what it is today?
SKY: $15 million.
FWM: So we’ve come a long way.
SKY: Yes. When you see the machine or production sites, which you can find in YouTube in Kayahan Hidrolik page, you may think that for these machines it’s a low amount. I accept this, but, as I told you, this is couture. There is risk to be in markets competitors are in. We prefer to stay in this niche area, for us to manufacture different products that are very interesting. We not only manufacture hydraulic cylinders; from time to time, we manufacture some very large industrial mixers.
FWM: Industrial mixers, like for paint companies?
SKY: Yes.
FWM: That’s, adapting, like you said. I’ve seen you adapt, and I’ve seen you be very hands-on in the factory. Last time I was there, you were on the floor measuring the vibration level of one of these giant cylinders. And you knew you were doing, and over the years, you’ve picked up all of the engineering stuff apparently, too.
SKY: Maybe!
FWM: Adapting from a management point of view I remember speaking to you back when Covid was still fairly new, and you told me about what you did, making different teams of people, and one team would show up for one week and one would show up the next. That was brilliant. It’s a great way to handle it and a great way to keep people working through a very, very tough time in the world’s history.
SKY: Because I don’t think like a classical capitalist. For a classical capitalist, the main figure is the main point. We can say the main target is to make profit. I feel a little bit different. Of course, the main figure is to make profit and to grow. Of course, this is the main target, but from time to time, you can change or you can fluctuate a little bit. For example, during the pandemic, before Covid started in Turkiye, we said that if the illness starts in Turkiye, all our targets are eliminated. There are two new targets for the company. First, nobody will die. Second, we will not go bankrupt. We were very successful. Nobody died, and we didn’t go bankrupt.
This year, due to the economic situation in Turkiye, the Euro currency and the dollar currency do not increase. On the other hand, due to inflation, the salaries are increasing. Yes, I said that. We are a 75 year old company. Losing one year or not making profit one year is not a loss for the company. If I increase the prices for customers, or if I decrease the salaries of the workers, this is the loss I set. For 2024, our main target was to make zero profit. Now, we are very successful because I made “one” profit. It’s very good <laugh>, but there is no decreasing in sales. Nobody has left from our staff. Just the opposite. We increased the salaries more than they expected.
New people have joined our team. So this is a successful year. Now we are planning a new era for 2025. Once I asked one of my friends why Chinese translations were so long, because Chinese people say a lot of things to tell things. I said, why? They told me that there are no tenses in Chinese language. There is no “time” while speaking in Chinese. There is no present continuous tense. There is no past tense because China is very big culture starting from many years back, continuing until the end of the world. So for, for them, its time is just now. If you would like to tell something about past or future, you must say more things. Then I thought in this way for Kayahan, we are now in our 75th year.
Not making profit is not a loss. Companies do not go bankrupt with one year’s loss or one year’s less profit. They go bankrupt if they can’t take care of their cash flow. If you arrange your cash flow, then you can resist every shock. Of course, this is a 75 year old company. If it was at the beginning, it would be a problem. But for us, 75 years old company, it was one year. Making no profit is nothing. It’s not important. It’s only shows that I’m not successful. For me, it’s not important being successful or not because I’m the boss <laugh>.
FWM: But you bring up a really interesting point that I wanted to explore, which is, now tell me if I’m wrong, but as I interpret the Turkish business world or manufacturing business world, I see it’s all family-owned companies, big companies like Durmazlar, Ermaksan, Akyapak and others. It’s not that way in the US because as soon as you get a company that’s as big as an Ermak or a Durmazlar, somebody buys it and then they go public. And then it’s run with a different set of rules in mind because you’re doing quarterly forecast and now monthly forecast, and now weekly forecast. And that filters down into even the smaller companies in the US who are still private companies. But when you own your company, it’s different. How many, how many employees do you have?
SKY: Two hundred and fifty. Because according to Turkish regulations, if you are more than 250, then the rules change. Now, we are an SME. Generally, Turkish machine manufacturers are SMEs, but of course, Baykal, Akyapak or Durma, they are not SMEs. They are big companies. There are some advantages of being SMEs. I think about machine industry. I think all of them, maybe 99% are SMEs. You generally talk about machine sheet metal industry, press brake industry, etc. These are family businesses, and it’s why we are a growing sector. Second, the investors do not prefer to invest in the machine industry. I think being in the machine industry is a little bit different, because we move down slowly and we move up slowly also. But the investor would like to earn much more quickly. It is a long run to have a business grow up in machine industry. Maybe it’s not very interesting for the investors and our risk premium is not good. Maybe they are not investing. If I have money, I really invest in the Turkish machine industry, because it has almost 20 years of continuous growth and that’s not just a coincidence. Yes, there is a diamond here, which is growing, but very slowly growing.
FWM: Yeah.
SKY: Hopefully they’ll see.
FWM: But it has consistency. And I think as you say, with a family-owned business environment, that’s what you can do. You can have the slow, steady growth and not worry about too many things. And you don’t have to double, double, double. You can grow like an account at the bank. If you make 10% on your money, that’s great, because 72 months or 7.2 years later you’ve doubled that. So you are doubling, but just not every single year.
I wanted to move to another question, if I may. I think people look at you as, wow, she’s this woman in Turkiye running this business with 250 people and in all of the organizations that are Turkiye-wide. How how can this be, how can how can a woman be such a force in not only her business, which you’ve been great at, but in the <general Turkish> business environment?
SKY: Woman–it’s hard for a woman, all over the world. If you do not share your life with your partner…the woman in Turkiye who can share the life with their partner, it’s very easy for them. If they cannot share it with the partner, the job, at home, in social life, it will be, of course hard. If you cannot share, we have some advantages in our culture, our children are cared for by our parents. It’s an advantage for us. For example, my mother has raised my daughter and my son. Now, you may ask me, are you raising your grandchild? I reply no <laugh>, his grandfather is taking care of him because I’m very busy and he’s already retired. For a woman, what I believe is, if a woman wants to do something, she does it. The father should take care of the family <financially>, that mindset is wrong. Of course, the family should be run by two partners, husband and wife.
But I never feel myself as a woman in my business life. My father never taught that I am a girl. He didn’t let me say that I afraid, or I am weak, or it’s hard. It was forbidden to say these three things. One night, I was maybe at the age of seven, he told me to go to a dark place in our apartment. And I said that, sorry, I am afraid. Do you know what he said? If you stay here, there’s more things to be afraid of <laugh>.
And now I’m working with my nieces, they’re a mechanical engineer and an industrial engineer. They are also raised to be here. So it’s a little bit related to the culture of the family. But there are a lot of women-run business in Turkiye, for example, in Konya, which is more conservative. In our industrial zone, there are more than 120 women who are working with their husbands, parents, or they own the company. So, if a woman wants, she does; the one who didn’t want does not. I think this is a choice.
FWM: Someone I always think of when I think of you is Hulya Gedik, who runs Gedik Holding in Pendik, on the Asian side of Istanbul, because it’s the same thing. I think it was her grandfather who started the company then her father ran it, and then she had, what did you call it, a victim of?
SKY: Destiny. Victim of the destiny.
FWM: That she was a victim of destiny, yes.
SKY: Hulya is also is a victim. <laugh>.
FWM: Yes. And she has a job like yours. It’s very hard. There is a lot to do. But I do note a few points. One, I think you’re a natural manager who was also well educated in management. I think that your people skills are spotless. I mean, I see you out there with the whole industry, and that’s a big thing too. Also, it’s very interesting, your take on women in business. I mean, that’s how it is. And that’s how it should be. It should be just everyone’s choice. But the most important point is you are running your business from the perspective of a family.
A lot of people say, we’re just a big family here at Mega Corp. No, it’s not a family. We know what it is, but in your case, what got you there is that you are there to protect the legacy of your father and build on it. And that’s why you’re there. It’s very important. More than this week’s profits. It’s more important than trying to keep from having a loss by getting rid of people or reducing their salaries. You’re coming from that family perspective, and that makes a huge difference. And you probably don’t have too much of a problem recruiting either.
SKY: Last week, my father asked me something. Nowadays it’s hard days for all over the world. There are different problems in different areas of the world. I’m so sad about the wars, and I’m very suspicious about the future. There is an uncertainty. And I was telling my father this, who is at age 95, and I’m happy that he’s 95. He asked me, do you sometimes ask why you inherited such a job? It’s very hard. Are you happy? He said that If you are tired, just give up. I said, no. First of all, I’m very happy that I inherited such a job. And I try to grow the company.
And I am a role model for women. There is a nice lady from BVS Crane <headquartered in Ankara>. I hope I will introduce you one day. She said in an interview, “I have met with Sevda, and whenever I’m passing through the hard days, I think that if Mrs. Yilmaz has done this, I should do this.” I remember this, that if I give up, she will give up also. So I never give up.
FWM: You’re helping somebody else by being quietly strong.
SKY: Sometimes I think about 25 years ago, or 30 years ago, how was Sevda, and I see a little child, very naive, and of course I have changed very much. I had to change, I must be tough. I must be resistant. And there is one interesting point. Sometimes I ask myself, am I crazy? Because when there’s a problem, do you know what I think, Dave? I immediately think, this is a bad problem. I should solve this. If I solve this, then I become more powerful. So this is a chance to be more powerful. This is how I manage, in my mind, the tough days. And then it passes. One day, life will end, but in this way, <laugh>.
FWM: You mentioned the 250 people before. When you were younger you were like a violinist who could play music wonderfully by yourself. But as, as time came forward, now all of a sudden you’re a conductor with 250 musicians, and you have that baton, and now you can play any symphony that was ever written. You have so many tools available to you. Tools is the wrong word. You have so many resources available to you, human resources, and you can do just about anything. From 1993 to now, your options have grown a million percent.
SKY: Exactly. I sometimes I think my problems are same with my father’s problems. Some of them, yes. Some of them never change because the human part doesn’t change, but the tools are changing, and I try to do my best. This is what I can do. I prefer to work all the time, but I don’t like to work for money. Working for Turkish machinery was something better, something I like more because I affect only this company in the role here. But if I work for Turkish machinery, one thing you do may affect many companies. So it’s a total growth. And I’m happier working there.
FWM: It’s the difference between the country doctor who has a few patients and helps them along, versus, maybe, a researcher for a new drug that will help millions of people. So that’s where you are now. You’re able to help more people.
SKY: It’s, it’s not a retailer. It’s a gross <laugh>.
FWM: Yes. I have one last question for you, and I did not meant to take up so much of your time.
SKY: It’s my pleasure to talk to you.
FWM: Thank you. You know so many people. Last time I was there, I was visiting Mr. Vasif Inan from MVD, and he said, where are you going next? I’ll give you a ride. And I said, oh, I’m going to Kayahan Hidrolik. He said, I’m coming with you, we will go to lunch with Sevda. This is one more thing about the family aspect of Turkish business. You two went to high school together.
SKY: Yes, but he is younger than me, and of course I am ageless <laugh>. I’m not old, I’m vintage.
FWM: You and me!
SKY: Yes.
FWM: So you have this wonderful environment, and I see you out there in your Turkish Machinery role, getting cooperation among people who normally wouldn’t cooperate. They’re competitors. And yet now it’s more, we have a word for it, co-opetition. And that’s really what you’re achieving. First, how to you handle and manage that? Second, as you get those kinds of relationships to work together, it has the potential of making Turkiye’s profile in the world market rise. If you could address those couple of things.
SKY: This is my personal belief. I always believe that there is no competition. You can cooperate easily with your competitor. I have many cooperations with many competitors. They are not my competitors. They’re my friends. Because it’s a good opportunity to grow together. I have done it with many companies–as customer, as supplier. This helps us overcome the problem of scale in the States. It’s a good opportunity to come together and sell all together to the States. If we are manufacturing one side of the machine and you are making the other side of the machine, if we combine together, it’s easy to sell. We give this example: we are manufacturing hydraulic cylinders, and hydraulic cylinders need a hydraulic system. If we come together with a system and cylinder production, the producers come together, it’s easy to go forward.
That’s why I try to tell my friends around me, there are limits to every line. You show them their limit, and then you can easily work together. I have some funny stories about this. I tell this to my competitors in the same sector, I say that, okay, we are working. We can work all together for everything. One day somebody has called me and requested a technical drawing, which was done by us. So they feel that I can give them this technical drawing, because I always say, we can cooperate. I said, yes, we can cooperate, but this is a knowledge that can only be sold, not given. So I write the limits. I show them my limits, and then you can grow with my Austrian customer. We grow up together. even though we can compete in the markets.
FWM: That’s good. And then, if you can address the second part of that, if you think that as exports grow, Turkiye’s profile as a country and as an economy grows too, and that, that could be a big help.
SKY: Yes, to address the scale of economies, and to cooperate together is a good potential. Also, for example, as the compressor industry has done, they came together and established their test units, or we hydraulic manufacturers come together and establish our own educating system. Even though we are competitors in the world, we can do many things.
FWM: Anything you would like to add that I didn’t cover?
SKY: I can add a few words to the producers in the United States. It is a good option to cooperate with Turkiye because we are very accustomed to work for many years with the European Union with the same standards and quality requirements as the States. And we are growing rapidly. So please check Turkiye and if you need anything, Turkish Machinery, which is a nonprofit organization, is always ready to help you. Please contact us if you need any product from Turkiye.
FWM: Sevda, it has been such a pleasure. I’ll talk to you later.
SKY: Okay. Alright. See you!