Having Nothing but a Bright Mind, Two Young People Start a Business from Scratch

The fall of 1958... A young business man leaves the construction site, and arrives at his home at night, feeling tired. His wife says that two police officers had dropped by to ask about him, and that they would come again at 10 p.m.". The political environment is quite volatile in those days. The business man gets anxious. He calls his partner, and lets him know about it. That young business man is Üzeyir Garih, a senior mechanical engineer and one of the founding shareholders of Alarko, and his partner is İshak Alaton. They wait until 10:00 p.m. anxiously. The police officers arrive, and then say that they will come again at 7:00 a.m. next morning, detain and bring him to Ankara. This is the first time the business man hears the word "detain". He doesn't understand what it exactly meant, but infers that he will be picked up by the police. He then takes his wife and his one-year old baby girl to his father's house that night. He asks them to check on him if they do not hear about him within a few days, but also tries to keep them calm. He then returns home, gets into his bed, but cannot sleep. The police officers take him to the airport at 7:00 a.m. the next morning. They give him a flight ticket bearing the Prime Ministry stamp, reserve a seat on the front row at the airplane, and then leave. His anxiety starts to vanish to an extent, but he keeps wondering what is happening. What do they want from him and who are they? Two officers meet him at Ankara Esenboğa Airport. They show full respect against him. Their attitude calms him down a bit. He then picks up his courage, and asks where they were going. They say "to the Central Bank" in response, leaving him a little more surprised. He starts to think what business they may have at the Central Bank on Sunday.

That young business man is Üzeyir Garih, a senior mechanical engineer and one of the founding shareholders of Alarko, which will lead the heating, cooling and air-conditioning industry in Turkey. Garih tells about what he has gone through at the Central Bank: "They took me to a large hall, which then I learned it was the Board Meeting Room. The crystal inkstands, the enormous table and the rich furniture were very impressive. I was not anxious any more. I waited for some time, and the door opened. 8 or 10 people came in. There were people I knew among them, which made me feel comfortable". The Head of the Committee Tandoğan introduces himself as the Governor of the Central Bank. Tandoğan tells him that the banknote printing house was ready, that the first banknote would be printed, but the colors overlapped during the printing process since the air-conditioning was not adequately made at the printing house, that they were told that Alarko was the best domestic company that could fix this problem and that they were waiting for a quote from him. Then Mr. Garih feels relaxed, and first remembers that he should make an urgent phone call to his family letting them know that there is nothing to worry about. A car and two technicians are assigned for him. He sets to work enthusiastically, and submits the quote. Alarko then completes the Banknote Printing Facilities of the Central Bank within five months using domestic resources only, and the facility turns into a major success. The very first banknote of Turkey is printed here. Üzeyir Garih comments on this modest but critical contribution of Alarko, which meant a lot for the Republic of Turkey as follows: "The reward for this job was not only the money we were paid in return for this work. This job we have done also opened up new horizons for us. This was a great leap forward for Alarko in the construction business and industry".

The foundation and gradual growth of Alarko, which had already secured an established place in the business world only four years after its foundation, is a story of two young entrepreneurs "starting a business from scratch" without any capital other than their dedication and bright ideas. The year of 1954... Üzeyir Garih has been working as an engineer for three years, and works for the Turkish branch of Carrier. He completes his military service, and gains experience in the business world and the market for almost one and a half year. He manages to establish a wide network of contacts thanks to his hard-working nature, knowledge and honesty. The Turkish industrial market which was not very dynamic in the first half of 50s almost embraces these knowledgeable contractors keen on working in the field of heating-cooling-air-conditioning business. Still, he has doubts about working as freelancers. His doubt is mainly about his lack of knowledge and experience in financial matters rather than technical issues. As he does not have an accumulated share capital, he has to evaluate all offers and possibilities in detail and rationally. After thinking about it, he decides to go for working as a freelancer. He first gains information on fiscal and financial matters working in this field for six months.
Meanwhile he meets the person who will change his life forever and shape their common future. This person is İshak Alaton, who will be his partner for the rest of his life. İshak Alaton has just returned to the country meanwhile from Sweden, where he went for working and gaining knowledge in his business.
Having graduated from Şişli Terakki as his secondary school and Saint Michel French High School, İshak Alaton wished to be an architect. However, the wealth tax which used to be imposed during the World War II was a turning point for his life. Alaton tells about these difficult days as follows: "My father was asked to pay a tax three times of all our wealth. When he couldn't pay for it, his workplace and all the furniture at our home were attached, and he was sent to Aşkale. He returned to his home nine months later with silver hair and as a broken-hearted old man. He could not explain to himself what was done, and never forgave them for what they did. He then closed himself down to those outside. He never tried starting from scratch again, and left the world very early".
Alaton completes his high school education against all odds, starts working immediately when he is 17 years old. Becoming an architect is only a dream anymore. He completes his military service and learns to speak English. He starts working again. Soon he realizes that he doesn't have the required knowledge to make a success in the business life. He decides to go abroad to close this gap. In 1951, the year in which Üzeyir Garih graduates from Istanbul Technical University, he sets off for Sweden. He starts working as a welder in a railway engine plant in Sweden. He attends to mechanical drawing courses, and becomes a technical draftsman. He then works as an air-conditioner seller. Alaton tells about his experience in Sweden: "The companies I worked for believed in teamwork. I was trained in such an environment at the very beginning of my business life in Sweden. I was always aware how important this was, and tried to keep it in mind at all times. I felt the joy of working together and growing the production activities, improving quality and then sharing the success with others. I watched with excitement and full appreciation how a country whose people were facing starvation at the end of the last century and where one-fourth of the people immigrated to the US made it into the list of the world's richest countries thanks to a very wise social democratic administration".
Even though he had the chance to stay in Sweden, he returns to Istanbul in 1954 as an idealist businessman candidate who wishes to contribute to the industrialization of his country and make his dreams come true. He never forgets about the difficult years he left behind, but also never gives up looking into the future. His dreams come true in the years to come, and he also never turns a blind eye against social problems. He always expresses his ideas before the public to help Turkey turn into a developed country just like Sweden, which he always sets as an example.

While Üzeyir Garih was thinking about starting a business in the field of cooling, ventilation and air-conditioning in 1954, İshak Alaton was also investigating business prospects in the very same industry, and wished to find a technically adequate partner. They were almost inevitably supposed to meet each other as they were seeking after the very same dreams at various places and at the same points in time. As a matter of fact, the inevitable finally happens. A common friend of them introduces them to one another. İshak Alaton then offers him a partnership.
Mr.Garih thinks about it for several days. They don't have any money, but their construction works are financed by the customer in those days. In those days, the cooling and air-conditioning business is at its very early days in both public and industrial sectors, there is no significant or adequate company engaged in this business in the market, and the first project office has been founded just yet. Let alone qualified staff, it is highly difficult to find even a master equipped with a modest level of expertise. Ventilation equipment is brought from abroad, and steel boilers are produced in small workshops and in very small numbers with enormous difficulties. On the other hand, it is very difficult to import them because of the shortage of foreign currency.
Üzeyir Garih assesses these negative circumstances, and instead of feeling pessimistic, decides to turn all these problems into a true opportunity for themselves. "Knowledge is just as important as capital" he says. What they have to do is to outstand among the others with their know-how and engineering practices, become known as a "technical company" in the market, and timely and successfully deliver technically changeling works which everybody failed to do so far. They are sure that they will earn the credits of vendors in the market if they achieve said purpose, and thus accept the partnership offer in this belief. This is how the two young people come together as the founders and leaders in the cooling, ventilation and air-conditioning business, which will gain even further strength in Turkey thanks to their presence.

This is how İshak Alaton tells about the very first days of their foundation: "We have become partners with Üzeyir Garih under equal conditions. We have founded Alarko Limited Company with a share capital of twenty thousand liras. We set out on our journey hand in hand. We started our business in an office of Vefai Han in Galata, that overlooks the backyard, where we had only two tables and three chairs. We were two people very different from one another. These differences were what balanced us, meshing the strengths of one of us with the weaknesses of the other. We set reaching a fair amount of financing as a goal, but we knew that this was not enough. Instead of ranking among Turkey's richest and largest companies, we chose to rank among the most respected and trustworthy companies. I believe we succeeded in that".

Meanwhile, they are assigned their first major work. The vapor-dissipating heat recuperation system employed in two independent fabric dyeing plants, where vapor and mist didn't allow people see more than one meter ahead, earns Alarko recognition. This work, which required a high level of engineering, is also an indicator of the upcoming projects. Then they are awarded the contract for the swimming pool facilities of the Naval Military College in Heybeliada, and successfully deliver the project.

Working in the field of utilities requires expertise in production and installation works, and this is why they initiate a pursuit. In 1956, they open a workshop in the basement of a church on Tophane Street in Galata where they did not have anything but hand tools, an oxygen welding and an old lathe. Long years after, Üzeyir Garih describes their efforts as follows: "Finally, we have had a private workshop as a result of the collaboration of an engineer and an experienced master, which was very rare in those days". Production operations that started in this manner then lead the way for the foundation of the first industrial facilities in this area, in addition to the ongoing construction operations.

The story of production of the first unit heaters of Turkey towards the end of 50s proves that Alarko had brought together the required knowledge and skills in the fields of conceptual design, production and application in those challenging times. "They called me from Emayetaş Plant, and asked me for a quote for the heating of a spinning workshop with an area of several thousand square meters. The heat of the processing workshop, which had four brick walls and a roof made of asbestos and cement, used to decrease to 5 or 6 degrees in the winter. The covers of the glazing furnaces next to the workshop used to be opened when materials were to be placed inside the furnaces. We thought that the hot air flowing from the furnaces could be collected by means of a chimney hood, be absorbed by blower fans with water-cooled bearings, and be blown back to the workshop through appropriate air ducts", says Üzeyir Garih commenting on this process. Necessary measurements are made, and a quote is provided. A few days later, they are awarded the job without the need to resort to bargaining. They successfully produce the unit heaters, which were not being used in Turkey until then, and complete the facility on time. Later, Mr. Garih finds out that nobody out of the company employees has ever thought about heating using hot air, and that the quotes given for traditional heating systems were ten times more expensive than their quotes.
Üzeyir Garih makes the following comments on this situation: "We had created a very successful team. Our company Alarko had gained a good reputation and a large portfolio in its field at the end of 1957. We were producing the cooling, ventilation and air-conditioning facilities, as well as the relevant equipment and devices with the best quality and at the best terms possible in those days".

Alarko achieves is priorities within five years, acquires a competitive edge and trust in the market, and starts to be awarded major projects as a turning point in its history. One of them is the Banknote Printing House of the Central Bank and the other is the air-conditioning project of the Ancillary Facilities of Sümerbank Malatya Plant. Üzeyir Garih tells the story of Malatya Plant project as follows: "Sümerbank had completed the construction of the Ancillary Facilities of Malatya Plant, imported the machines and already installed them. They were not able to import the required devices and equipment for the air-conditioning system because of the shortage of foreign exchange. They had decided that they would have a domestic company perform said work, and announced a tender. The tender price was high, but there was no bidder other than us". All equipment which could not be imported was installed domestically at Malatya Plant. Thus, the project helped Alarko go a long way as a manufacturer. Still, Alarko used to outsource its production activities to external workshops. Then Mr. Garih and Mr. Alaton start to think about turning into a true industrial corporation.

"Comfortable" apartments which started to be constructed in Istanbul and the other metropolitan areas in 60s created a higher demand for hot water and central heating systems. This is what encouraged Alarko to take a step towards industrialization. While the company strengthened its organization and financial structure in 1961 under the name of Alarko Sanayi ve Ticaret A.Ş., it focused on the production of industrial products with its engineering staff increased to 30 people. They started the construction of ALSAC Plant in Rami in 1963. With this plant completed in 1966, which ranked among the largest facilities in the industry at that time, Alarko has turned into an industrial corporation in its field with the heating, cooling - air-conditioning, water-conditioning devices and equipment, as well as various types of pumps and dashboards it produces. On the other than, the number of engineers, technicians and workers employed by Alarko has also increased significantly.

In line with this development, Alarko realizes its project of producing the first industrial product catalog. These catalogs include all data, charts and diagrams which introduce each product and help customers to make the right choice, as well as placement and usage info related to the products. Alarko never gives up sharing its knowledge and experience with others. Üzeyir Garih and İshak Alaton share their professional, administrative information and knowledge via the books they publish later, and write articles for various publications and attend at conferences. Üzeyir Garih continues to share his experience, lecturing at universities. He is then awarded with the title of Honorary Doctorate by Istanbul Technical University.

While Alarko carries out production and import activities for meeting the sudden demand for comfort-type heating and air-conditioning systems between 60s and 70s, it also conducts various major projects in an emerging economy and increased investment environment. By the end of 60s, Alarko is ready for "turn-key complete industrial facility" construction projects. These operations are carried out by a division of Alarko, which will later form one of its parent companies. Increased focus on turn-key industrial facility projects and difficulties in import and shipment force Alarko to produce the machines used in such facilities. ALAMSAŞ Heavy Equipment Plant is founded as a result. ALAMSAŞ does not only produce the heavy equipment required by Alarko and domestic companies, but also meets foreign demand, contributing to the heavy equipment exports of Turkey.

Alarko is incorporated as a holding company in 1973 with its nearly 250 engineers, more than 100 white-collars and nearly 1000 technicians and workers. It becomes the third holding to be incorporated in Turkey. Alarko Holding focuses on turn-key complete industrial facility construction, heavy industry, production of industrial processing equipment (furnaces, conveyors, pumps, burners, tables, cooling - air-conditioning), as well as food, tourism, energy, housing and the service industries. It conducts major, leading and prestigious projects both in the country and abroad in the subsequent years. In 1998, Alarko Sanayi ve Ticaret A.Ş., which has become a division of Alarko Holding, enters into a 50:50 joint venture with Carrier, a global leader in the field of air-conditioning. What is interesting is that Üzeyir Garih, who embarked upon his carrier as an engineer in Carrier's Turkey branch, became a partner with Carrier 47 years later. 2000s start with a very devastating event for Alarko Group. The sudden death of Dr. Üzeyir Garih, one of the founders of Alarko, causes immense grief and sorrow not only in the group but also on the public stage. However, Alarko overcomes this great loss without grave consequences thanks to its "professional" structure.

A pioneer and a leading company immune to crises, Alarko today ranks among the top companies in terms of reliability rather than size, just as targeted by Üzeyir Garih and İshak Alaton. The 63 year-period we have left behind is not only the history of Alarko. This tells us a very important part of the history of heating, ventilation and air-conditioning industry. Having such a knowledgeable company in an industry is a plus not only for the relevant industry, but also for the whole country. This is best illustrated by the principle of "high-quality service and production", which has now been characterized by Alarko inspired by the motto "Knowledge is just as important as capital", which has always been followed by Üzeyir Garih and İshak Alaton starting from their very first days. The success Alarko has achieved within 63 years proves the effectiveness of this principle. A memory told by Kevork Çilingiroğlu, one of the leading figures in the heating, ventilation and air-conditioning industry, perfectly describes the dedication to learning, researching and making no compromises on quality, which underlies the success of Alarko. "We have conducted the first fan coil application in METU Faculty of Architecture in 1961. We were the contractor there, and the administration's controller was İhsan Önen. The building was made of bare concrete, and there was a huge heat loss. The only solution was to provide high-capacity heat from a point source. We have consulted Süheyl Desan, who was a senior expert in this business, and he suggested that we use fan coil. We have made our calculations. Three or four fan coils would be fine in an environment. We have used total 212 fan coils. They were produced by Alarko, and Alarko was grateful to us in the end. This is because we have rejected the device eight times for noise-related reasons. Finally, they found balancing propellers from Italy, brought them here and managed to reduce the noise. Üzeyir Garih told me once 'It was very good of you to reject us, because we worked hard, solved the problem and earned an industrial segment for our operations'. He was right, because it was them who produced all silent devices."

Resource: Machinery Exporters Association's Moment Journal

Having Nothing but a Bright Mind, Two Young People Start a Business from Scratch

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