Kollmorgen Hopes Turkish Acquisition Will Open Eastern Europe, Middle East Markets

By Reina V. Slutske

Turkey has often been viewed as the gateway between East and West, remaining a center of trade for centuries. It’s something that Kollmorgen also understands. The motion control company recently acquired Turkey-based Elsim Electrotechnical Systems A.S. to fuel its global expansion into high-performing regions.

“The dynamics are very strong in the Turkish market,” says Andrew McCauley, vice president of marketing for Kollmorgen. “We wanted a high-growth region, and one of them we identified was in Turkey.”

Kollmorgen specializes in serving diagnostic imaging, in vitro diagnostics, and other life science OEMs. The company caters to OEMs that have both manufacturing and engineering footprints, says Dennis Gallagher, general manager of Kollmorgen’s medical and laboratory division, adding that it also has a portfolio of applications in molecular diagnostics, with a core spot in DNA sequencing. Kollmorgen works closely with with OEMs’ technical staff, allowing their systems to have a variety of applications, from positioning of samples to helping companies focus on their objectives, says Ken Huffenus, marketing manager for Kollmorgen’s medical and laboratory automation.

Turkey is defined as an emerging market economy by the International Monetary Fund. It currently has the world’s 16^th largest economy, and globally its economic growth rate is second only to China. McCauley sees Turkey as a geographic bridge markets ranging from the Middle East and Asia to parts of Eastern Europe.

“A lot of competitors look at these markets for cost plays,” McCauley says. “We’re looking at them as market access plays.”

Although the population of Turkey is rather young, with 93.7% under the age of 65 according to the CIA, the underlying infrastructure of the economy, such as nine-year GDP growth of 5.2% and foreign trades at $135 billion at the end of 2011, will drive growth in the market, McCauley says. In addition, the Turkish government is looking to become a country that has its economy driven by exports more than domestic consumption.

Elsim, which offers value-add motion control solutions, has 25 years of experience in the region with 47 employees. Kollmorgen plans to keep the company as a family-run business, as Elsim is more familiar with the customers and the region than its new parent company.

The acquisition is part of Kollmorgen’s strategy to expand to reach local OEMs instead of sending experts from other parts of the world.

“If [OEMs] have a facility in Turkey, they want someone to answer their questions locally,” McCauley says. “They don’t want to fly in Germans or Americans to solve their problems. They want a local team to look at a local team.”      

As for future expansion, Kollmorgen is keeping an eye on the BRIC markets, particularly Brazil and China. Although the company already has a presence in China, it may accelerate its growth in the country, while it’s taking a “wait-and-see” approach to Russia, although McCauley points out that Kollmorgen’s move into Turkey can help it take advantage of the market eventually.

The company is also keeping its eyes on the Middle East. With a distributor already in Israel, Kollmorgen is looking for even more growth in the region. Its most recent acquisition is helpful both economically and politically.

“With the Turkey piece added to our portfolio, it gives us significantly more credibility in that region,” Gallagher says.

Reina V. Slutske is the assistant editor for MD+DI.