A union representative said the company recently laid off about 30 white-collar workers. Blue-collar workers also fear mass layoffs. Burak Ege Bekdil wrote to Defense News that BMC, the manufacturer of the Altay tank, which Erdogan is very ambitious about, has entered a serious bottleneck. It was stated that the cash-strapped company started to lay off staff, reduced shifts and had to delay tank production for at least five years.
American Defense News has learned that leading armored vehicle manufacturer BMC, a Turkish-Qatar venture, is experiencing serious liquidity shortages after a recent ownership change.
An official of the company, which has a multibillion-dollar contract to produce Turkey's first new generation domestic tank, Altay, said it is in the phase of downsizing on an unknown scale, speaking on condition of anonymity.
A union representative said the company recently laid off about 30 white-collar workers. Blue-collar workers fear mass layoffs or unpaid leave may follow.
The union representative also said that some production units have switched from three shifts per day to one shift. BMC also stopped the production of the civilian Tuğra truck.
Construction of a large production facility in Sakarya, Karasu, in northwest Turkey, has come to a standstill for financial reasons. Subcontractors complain about unpaid bills.
A BMC official said, “Cash inflows are weak to support enterprise-level operation. "We hope this is a temporary situation," he said.
Another BMC official put the blame on the company's huge debt stock during the takeover: “We took over a debt stock that has become difficult to manage. The company needs new big contracts.”
BMC'S HISTORY IS MENTIONED ON THE SITE
BMC has a politically controversial history. In 2014, businessman Ethem Sancak's Es Mali Yatirim Danışmanlık acquired BMC, then a troubled armored vehicle manufacturer, for $350 million. BMC had taken over the management of the government's banking fund due to its former owner's $75 million in outstanding debts.
Sancak, a close aide to President Erdogan, served on the higher boards of Erdogan's ruling AKP. Erdogan's distant relative, Talip Öztürk, also invested $100 million in BMC to become a partner in Sancak.
Erdogan also brokered a deal in which a Qatari fund invested $49,9 million to buy a 300% stake in BMC. Sancak now owns 25% of BMC and has already raised a net $50 million for the entire venture.
In a highly controversial move, the Erdogan government allocated a 544-decare public land (in Karasu, Sakarya) to BMC to be used in the company's future investments. Later, BMC defeated its two rivals and won a strategic contract for the initial production of 250 Altay tanks. Defense industry sources estimate that an eventual 1.000 Altay contract will cost approximately $11 billion.
In May 2018, the government gave BMC an investment incentive of 1,4 billion Turkish lira (approximately $250 million) for the Altay program, including tax breaks, pension premium reductions, subsidized energy and bonuses.
The government also allocated the military tank production and maintenance factory in Arifiye, near Istanbul, to BMC with a free agreement. The company had to invest only 25 million dollars in exchange for the right to operate the Arifiye factory for 50 years. Opposition parties in Turkey sought a parliamentary inquiry into the BMC story, but that effort was rejected by Erdogan's AKP.
Based on BMC 2020 defense revenue, it was ranked 533th in the Defense News Top 100 with the equivalent of approximately $89 million.
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