Defence Turkey: As Vestel Defence Industry, your primary area of focus is UAV systems, where you have amassed considerable knowledge, technology and experience, especially in tactical UAVs. The Turkish Armed Forces is expected to start using the Karayel UAV in the near future. How is testing coming along for that product? Can you provide information on its delivery schedule?
While our primary focus is UAV systems, we also have two additional areas of corporate interest. One, while smaller in scope, is nevertheless highly important – we are conducting authentic technological research concerning fuel cells. I truly believe that what we are achieving in terms of research and development is at a scale that is unheard of in Turkey for a private sector firm, both in terms of the amount of investment we are making, and the quality of the research we are conducting. Our efforts related to fuel cells are continuing, and we are one of the companies cited worldwide in fuel cell research. We have several joint international projects that are ongoing.
Our other area of interest is naval systems, and we currently have offices located in Gebze [port town in Turkey located on the Sea of Marmara with a concentration of shipyards]. That location develops command and control hardware. However, as you have also mentioned, our primary area of interest is UAV development. In this regard, we do have international goals that transcend our objectives for the Turkish market, but of course, things do take time. We are therefore employing various strategies, such as making our presence known at trade shows, and establishing partnerships through local companies to get our foot in the door in Western Europe.
There were serious delays in the delivery of the Karayel UAV, some due to us, but mostly due to factors beyond our control. Such delays need to be taken in stride when doing platform development and production projects, where brand-new requirements are being implemented. Especially the U.S.-based export license problems, related to the camera system, caused significant deferments on our end. That problem has been resolved and I believe the cameras are expected to be delivered within a month’s timeframe; we are continuing to do testing in the meantime. Presently, we are in a position to make delivery of the product. However, a critical feature request that was tagged on late is affecting delivery: testing for catapult launch and parachute recovery have not yet been conducted. Due to this, certain cascading delays may take place. Production of all UAVs slated for delivery is nearly complete, but the aforementioned issue may delay the delivery schedule somewhat.
I should also point out that this is the first project implemented in Turkey that adheres to the NATO STANAG 4671 standard, and Vestel Defence Industry is the first company in Turkey to do so. We understand that this standard will be a requirement in future Defence projects as well. The scale of additional overhead imposed by having to adhere to the 4671 standard and its overall effects may not be immediately apparent in any early assessment. As this standard casts an entirely new perspective on the design, production and testing processes, it has multiplicative results in both the project schedule and associated costs. Other than that, testing is proceeding well and, the delays notwithstanding, I am confident that we will be providing the Turkish Armed Forces with a quality product.
Defence Turkey: As you have mentioned, the Karayel project is a pioneering one, since it also happens to be one of the first projects where SSM’s [Turkish Undersecretariat for Defence Industries] Airworthiness Certification has been implemented. For fixed-wing UAVs, what criteria must be met to qualify for the NATO STANAG 4671 standard? And as a follow-up question, what advantages does compliance with STANAG 4671 airworthiness standards provide for the Karayel UAV with respect to its export potential?
Responding to the first part of your question is somewhat difficult, as the standard in question is an exhaustive one. But I need to reiterate that adherence to the standard places a high level of burden on the implementing organization; each step that you may have already carried out will need to be redone per the NATO STANAG 4671 standard in question, as it is not possible to adapt to the standard any activity which you may have already completed.
I would like to emphasize one thing in particular; we knowingly took a hit on this one, and while that hit was larger than we had expected, we knew from the start that the decision to implement the standard would cost us time and money. Indeed, it truly raised our costs. However, we had anticipated that compliance would help us achieve a much higher quality product and would provide us with leverage in overseas markets, and in fact, those are exactly what have happened. Whenever we have met with representatives from an international company, we have observed an immediate change in their perception of us once we mentioned compliance of our product with the 4671 standard.
I would like to share with you a recent experience. I was meeting with representatives from a company that could be construed as the leader in Europe on UAV systems. When the topic was raised, they mentioned our efforts on the 4671 standard, and asked me whether they could observe in detail the processes we employed. They added that although they had been active in UAV systems for several years, they had started experiencing negative effects, relating to not having implemented their design and production processes in compliance with the STANAG 4671 standard.
I feel that the difference will become better understood as the Karayel enters the Turkish Armed Forces inventory and starts to be used, and also as it is readied for sale in overseas markets.
Defence Turkey: Besides the Karayel UAV, what research and development are you conducting on any other fixed-wing and rotary-wing UAV systems? Are you making related investments?
As Vestel Defence Industry we have the capability to be active in all categories of fixed-wing UAVs, and it is our intention to do so. Besides the Karayel, we have two other, smaller UAV models. Additionally, we are conducting preliminary studies on a UAV that will be somewhat smaller in size than the Karayel, with differentiating features. We do not have any production activities for a large-scale UAV. For such a product, we would first need to see a request for tender be issued. So, to sum it up, I do not foresee any factors that could be limiting for Vestel Defence Industry in terms of fixed-wing UAVs. Indeed, of the outstanding UAV contracts in Turkey, we handle part of them solely on our own, and we partner with leading players in the industry for the remaining projects, which are few in number. We are also targeting to be active in a number of projects issued by the Turkish Ministry of National Defence and the Turkish Undersecretariat of Defence Industries.
However, all of what I have mentioned so far involve fixed-wing UAVs only, as the rotary-wing UAVs are a different ballgame altogether. My comments earlier about AYESAŞ, and being viewed there as a somewhat conservative organization, apply to some extent for Vestel Defence Industry as well. We do not see ourselves as contenders in terms of a large-scale rotary-wing UAV, where we produce the entire range of components ourselves. And this is not due to any lack of initiative on our part. Rather, we know better than anyone else the challanges that would be involved for large-scale rotary-wing UAVs. We do have certain initiatives involving UAV electronics and aircraft-to-drone conversions, but we do not see ourselves capable in producing a rotary-wing UAV where we can tackle everything ourselves, as we do in the case of fixed-wing UAVs. And we think that those in Turkey who feel they can tackle it all by themselves do not have the domain knowledge. We are involved in the software and electronics aspects, but we do not have plans for a rotary-wing UAV platform.
VESTEL/TURKEY + LH Aviation/FRANCE = Optionally Piloted Vehicle [OPV]
a new project
Defence Turkey: At the Eurosatory 2014 Land and Air-Land Defence and Security Exhibition held in France, Vestel Defence Industry promoted its ground control station on the premises of the French firm LH Aviation’s exhibition stand, which was a first. Can you please comment on your cooperation with LH Aviation?
We did not initially announce that we would be exhibiting at the Eurosatory 2014 show, as we first wanted to observe certain preliminary results and wanted to wait and see how the whole thing developed. As you may know, for an extended period now we have been carrying out the design and production activities for our Karayel tactical unmanned aerial vehicle and its associated systems, including software development for the ground control station, the autopilot and core software control components.
LH Aviation is a mid-size but a a well established French firm that does design and production of piloted aircraft. They approached us to explore opportunities for business cooperation. In the introductory meeting held in our offices, LH Aviation stated that while they had experience in piloted aircraft, they were inexperienced in UAVs in general, and specifically in converting an existing piloted aircraft into a drone by taking the pilot out of the equation, and that they were seeking to work with a firm experienced in UAV technology. Following up, we had technical and administrative discussions held in Turkey and France, and have recently reached an agreement. The project involves taking LH Aviation’s aircraft with a two pilot crew and transforming it, partially or in full, into an Optionally Piloted Vehicle [OPV].
Such optionally piloted aircrafts, which are able to fly with or without human crew on board the aircraft, have been gaining serious traction in both Europe and the U.S. One reason for their increase in popularity is the fact that in comparison to the U.S., Europe has much stricter rules governing the use of civil airspace by unmanned aerial vehicles. Thus, an OPV provides for piloted navigation of the UAV when such a vehicle needs to fly over populated areas, and unmanned operation otherwise. Our first presentation was to French prospects at the Eurosatory 2014 event in France, and we received an incredible level of interest. Our exhibits were inspected by over twenty high-level French and regional delegations. At present the business process is ongoing; we have completed preliminary agreements, and started on technical studies. Active implementation will most probably be started in the coming weeks. In this partnership, Vestel Defence Industry will be responsible for all electronics, software development, and autopilot development as well as for the ground control station.
We are aware that it would be difficult for us to sell our product, the Karayel UAV, completely on our own in France; for sales success, you need to partner with a local company, and this is especially true for Western Europe. No matter how technically superior a product you may have, executing sales is very difficult. Partnering with a local company forms an important aspect of our strategy. As a platforms-builder, you may have some success establishing yourself in the East or even in certain countries; however, to do the same in Western Europe or the U.S., you need to do so on a “systems-basis” [by selling sub-systems and critical technologies], or by partnering with a company located there. Therefore, we decided that the local partnership approach was our only option to sell to French customers in France, a country that is at the forefront in Europe for unmanned aerial vehicles; and as such, our efforts are moving along successfully.
It needs to be emphasized that this partnership is also an indication of the progress made by Turkey, and by Vestel Defence Industry, in terms of UAV technologies.
Defence Turkey: When will you be commencing to the development phase?
As a first stage, we will develop a prototype of the system and will demo it to the user. The prototype will use the same electronics as our Karayel tactical UAV system, and a ground control station that is similar to the one used again by the Karayel system. Modifications corresponding to user requests and enhancements will be implemented in the second stage. Additionally, LH Aviation commands a large market for its products outside of France, and there is an especially high level of demand originating from North Africa. As such, this project is being closely watched.
Defence Turkey: Will this partnership also involve joint marketing of the resulting platform to third countries?
Yes, one of the goals of this partnership is sales of the platform to third countries. Frankly speaking though, as this is a project that has just been launched, we have not yet explored such marketing activities. But as I have mentioned earlier, LH Aviation has very active marketing relationships in North Africa and the Far East, as well as in certain Central Asian countries. There are no restrictions on the sales of this product; it is one that can be marketed anywhere. However, at the outset, we need to first have our French customer endorse the product, which we can then use as a reference in our marketing efforts elsewhere in other countries.
