The Expansion of ERDEMIR

The projects that were implemented during the ‘Interim Expansion’ led to a profound change in the condition of ERDEMIR and in its performance. Sales, profits and productivity all improved steadily and ERDEMIR became a thriving enterprise. This remarkable transformation was due partly to the continued learning that was taking place and to the increased level of mastery that was being achieved but also, more importantly, to the elimination of bottlenecks which had previously limited the plant’s ability to operate successfully. Now the plant could produce at levels that ensured profitability since it possessed a monopoly in a protected market. Although its quality and productivity levels were not high, these shortcomings were overshadowed by a structural flaw: its debt-equity ratio still stood at a very high level. It had declined somewhat in the late sixties as a result of the restructuring but increased again in 1970 owing to the devaluation of the Turkish lira. These developments are summarized in Table 5.1.1