Executive Interview: Kerim Kalafatoglu, Chairman, ARES Shipyard
(Article originally published in May/June 2022 edition.)
Descended from a traditional shipbuilding family, Kalafatoglu – with support from his father and siblings – returned to his roots with the founding of ARES in 2006. His vision from the beginning has been straightforward and consistent: “You can achieve as much as you dream,” he says. “As long as we dream, we will continue to exist and build. So we keep dreaming.”
Let’s start with you. Tell us about yourself – your upbringing and education.
I was born in 1967 in the Surmene district of Trabzon, which is an ancient town on the Black Sea coast of Turkey. After completing my primary and secondary education there, I graduated from the Department of Econometrics at Uludag University in Bursa. Then I completed my master’s degree in International Economics at Essex University in England.
More recently, I returned to school to take the well-known Owner/President Management Program at Harvard Business School. Of course, it was a source of great pride both for ARES and me to graduate from this program, which lasted three years and granted me official Harvard graduation status in 2021.
Wow, impressive! What did you do before founding ARES?
I started my professional business life in 1994 as the founder of a foreign trade and maritime business based in the Trabzon Free Zone and working in the former Soviet Union market in the Black Sea region. Until the end of 2004, I carried out various foreign trade and maritime transport operations as a ship owner and manager of a logistics company. I had been one of the largest exporters back then between Turkey and the neighboring ex-Soviet Union states.
When did you found ARES and what gave you the idea of founding ARES?
Actually, the idea was already engraved to our minds genetically. As carriers of the surname Kalafatoglu, meaning “son of caulkers,” my siblings and I came from a traditional shipbuilding family where the tradition was interrupted by our grandfather, who became a lawyer. So in 2005 we decided to return to our roots and continue the family tradition with great support from our father. In 2006 we established ARES, where I am currently Chairman of the Board of Directors.
Where does the name “ARES” come from? What does it mean?
Well, I’ll be honest with you. As the founding family of ARES Shipyard, we have always been environmentalists and animal lovers. We believe in the perfect harmony of the world with all living beings. Therefore, we respect and care for those around us. When we decided to continue the family tradition and start shipbuilding again in 2005, we decided on the newly established Antalya Free Zone and decided to move from Trabzon to Antalya. After getting approvals and assignments for the new land in the Free Zone, we moved to Antalya with the whole family including our irreplaceable member, the golden retriever.
While we were discussing the name of the company, I nominated ARES, our golden retriever, the mascot and dear member of our family, as the name of our company. He spent the rest of his life happily with us and all our employees within the shipyard. It may be the most irrational and emotional decision taken in the history of ARES Shipyard, but it was the best and most memorable one for us with no regrets at all. “Rest in peace, son.”
How many offices and employees are there? Is there just one shipyard?
ARES has four separate shipbuilding facilities and a furniture factory in the Antalya Free Zone with over 400 employees. These facilities are separate and dedicated to different build materials – steel, aluminum and advanced composites – under the same name, ARES Shipyard. Within the production facilities we have modern offices for engineers and administrative staff and a yacht management office facility dedicated to clients and owner representatives.
How is the company organized, and what are its main products and services?
ARES has a hybrid organization e consisting of both conventional (hierarchic) and functional (project-based) structures together. Board members have responsibility areas that are non-executive positions, acting as consultants to the professionals in the company. A CEO and two Deputy General Managers are executively in charge with some other executive managers for Financial Affairs, Quality Assurance, Supply Chain and Contracting. Among these, the Quality Assurance Manager is the most authorized and autonomous position, which reports directly to the CEO or may even report directly to the Chairman in some cases.
We have a quite diversified product portfolio in sectors where we believe we are strong and differentiated. ARES is capable of designing and building naval craft, patrol boats, utility and support vessels, passenger craft and pleasure craft (megayachts) in our four separate shipbuilding facilities. We also have an in-house Integrated Logistics Support Department providing lifecycle support services such as training, supply support (spares and tools), onsite maintenance for warranty or contracted maintenance and even manning for end-user operations.
What geographic markets does the company serve and who are your biggest customers?
ARES is a global shipbuilding and related services provider actively operating in Europe, Asia, the Middle East, the Caucasus and Africa.
Our biggest clients right now are Qatar, Oman and Turkey. However, with our new investments in the commercial and pleasure boat markets, we’re expecting to expand even more in Europe, Africa and Asia by the of 2022 and grow more in 2023.
What does “Ideas for Big Blue” mean? Is that the corporate slogan?
“Ideas for Big Blue” is our corporate motto. Yes, ARES is a shipyard, but we differentiate ourselves from conventional shipbuilders. We’re ready and excited to provide any solution related to the “Big Blue,” which is the ocean, and don’t expect end-users to come to us with hundreds of pages of technical specifications. We’re more than happy to simply listen to clients’ operational requests about what they want to achieve and where to do it. The rest is on us to make assessments and recommend alternative solutions with the pros and cons of each and leave the decision to them.
Thanks to our specialists in naval, paramilitary, commercial and pleasure craft operations, we’re not limited to providing design and product solutions. We also provide integrated logistics support, which is a systems engineering approach encompassing lifecycle requirements in terms of supportability, maintainability and availability. It’s a comprehensive approach that’s much more than after-sales support. In a nutshell, we’re not just shipbuilders. We identify ourselves as a total systems service provider in all kinds of manned or unmanned, above and underwater vessels.
ARES is highly regarded for its custom-made military vessels. What gave you that idea – instead of building standardized vessels?
Our vision is not limited to building the best ships. Our aim is to develop our customers’ own vision by working together with them. That is to say, we listen to the needs of our customers and value their requests. We never offer them a ready-made platform and try to persuade them to buy it. We evaluate their operational needs by sitting face-to-face and determining the optimum solutions and most appropriate technical features for them.
In other words, we offer them a consultancy service, gladly and free of charge, unlike many others where such services are provided to government institutions for considerable sums in the preparation of tender dossiers. There are, of course, cases where it is our customers who guide us. In this way, we can provide a win-win solution. As the saying goes, rather than an off-the-peg jacket, we tailor one for our customer that is tailor made, so it fits perfectly.
How have COVID and now the war in Ukraine affected business? Will 2022 be a good year for ARES?
ARES has a well-structured supply chain management system that has proven itself during two years of logistical struggles brought about by COVID-19. When the pandemic hit in late 2019, we had two large shipbuilding programs going on consisting of 14-off ARES 85 HERCULES fast patrol vessels for Oman and 165-off ARES 35 HARPOON fast interceptor vessels for the Turkish Coast Guard. However, since we planned and actually procured our supplies in advance for these two programs, even with no or limited supplies we were able to continue production nonstop and actually deliver all 14 vessels to Oman in advance of the contractual delivery schedule. Likewise, the Turkish Coast Guard program has been progressing on-time and conformant to the contractual requirements.
The war in Ukraine, on the other hand, has had global effects on raw material supplies like aluminum and steel, dramatically increasing prices with extended delivery schedules. Again in this case, since we had sufficient stocks of aluminum our current program for Turkish Petroleum consisting of two aluminum crew transfer vessels is proceeding as scheduled with delivery by the end of the year.
What is your guiding vision for ARES? Where would you like it to be in, say, five years?
I’ve always given the same advice to my family, my close friends and colleagues that “You can achieve as much as you dream. You live as much as you can dream of.” All the achievements we talked about today were just dreams in the past. But they were all ours. We dreamed all these achievements. You might have noticed this in the posts for the fifteenth anniversary of ARES Shipyard last year: “As long as we dream, we will continue to exist and build,” they said. So we keep dreaming.
Five years from now, we dream of working with automation-based production infrastructure offering unmanned solutions, designing and building zero-emission vessels, building out of recycled materials regardless of their size. I’m dreaming this independent of the markets we serve. We set these goals not with the prediction that the trends will follow but to create the trends ourselves. ARES Shipyard will continue to be a challenging company, not a company that simply responds to challenges.
What excites you most about your job? What gets you up in the morning?
I always go to bed with and dream and wake up with a purpose. The idea of “change” has always been the most exciting driver for me. So a new idea from a late night talk, a new inquiry which may lead to a brand new concept, a new region or country to work for, a new end-user segment, a new idea for production, even talking to a newly graduated engineer or technician excites me a lot. Thanks to ARES, I have at least one of them every day, and I wake up early in the morning to meet my colleagues at the shipyard.
Wonderful! What do you like to do in your spare time?
I’m in love with sailing. I’ve had various types of pleasure boats in different sizes and models over the years. However, the best is in production at the moment and is a 61-meter, tailored design, oceangoing sailing yacht named Trapezus, the ancient name of my hometown of Trabzon.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.