6 years ago

Eastern Cape Business 2017 edition

  • Text
  • Trade
  • Maritime
  • Development
  • Province
  • Investment
  • Business
  • Network
  • Eastern
  • Cape
  • Municipality
  • Sector
  • Mandela
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  • Automotive
  • Industrial
  • Province
  • African
The 2017 edition of Eastern Cape Business is the 10th issue of this highly successful publication that, since its launch in 2006, has established itself as the premier business and investment guide to the Eastern Cape Province. The Eastern Cape enjoys an abundance of natural and human resources, as well as established industrial infrastructure that drives the economy of the province. This includes three ports and two industrial development zones which are home to a wide range of manufacturers and exporters. The 2017 edition includes an in-depth look at the province’s two Industrial Development Zones, a focus on skills development and investment climate information from the Nelson Mandela Business Chamber and the Border-Kei Chamber of Business.

OVERVIEW Automotive

OVERVIEW Automotive Vehicles and components anchor manufacturing in the Eastern Cape. SECTOR INSIGHT A Chinese OEM is part of an R11-billion investment. • 10 000 C-Class Mercedes- Benzes left East London Port in the month of August 2016. Recent investments by Chinese state-owned enterprises have boosted the Eastern Cape’s automotive sector. Already home to some of the biggest brands in original equipment manufacturing (OEM) and automotive components in Volkswagen, Mercedes-Benz, General Motors, Ford, Goodyear, Continental Tyre SA, Bridgestone and Shatterprufe, the addition of First Automotive Works (FAW) and Beijing Automobile International Corporation (BAIC) confirms the province’s premier standing in this sector. FAW’s R600-million assembly plant can now be seen as having tested the waters because BAIC followed in 2016 with one of the biggest foreign investments in recent years. BAIC is taking a 65% stake in an R11-billion joint venture with the Industrial Development Corporation at the Coega Industrial Development Zone. BAIC is a Chinese state-owned enterprise with several brands. The intention is to start production on the 85 000m² site in 2018 and the target is annual production of 100 000 cars, bakkies and sports utility vehicles. About 2 500 jobs are expected to be created. The Coega IDZ is run by the Coega Development Corporation. Companies like BAIC and FAW may well be positioning themselves to push into Africa, not only for selling vehicles but for sending automotive parts and partly assembled kits further north. A new pan-African organisation has been established to promote the auto industry on the continent, the African Association of Automotive Manufacturers (AAAM). The Eastern Cape manufactures half of the country’s passenger vehicles and provides 51% of South Africa’s vehicle exports. The sector accounts for over 40 000 formal sector jobs in the Eastern Cape. The South Africa automotive sector makes up about 7% of South Africa’s gross domestic product and is responsible for approximately 12% of the country’s manufacturing exports. In 2014 South Africa exported 276 404 vehicles and in 2015 a new record was achieved, 338 802. The total value of this (together with automotive parts exported) amounted to R151-billion. Total production in South Africa in 2016 was expected to reach 640 000 units. In 2015, Mercedes-Benz South Africa built its millionth vehicle EASTERN CAPE BUSINESS 2017 42

OVERVIEW in East London. Mercedes-Benz set new exporting standards in April 2016 when it moved more than 10 000 vehicles out of East London Port in the month. Transnet Port Terminals (TPT) and Transnet National Ports Authority (TNPA) shared the accolades for the logistical achievement, which was part of a three-month total of 25 860 new Mercedes-Benz W205 C-Class vehicles shipped. In the same month, the Eastern Cape Exporters’ Club named Volkswagen Group South Africa as “Best Exporter OEM” with Ford receiving a merit award for increased turnover and job creation. VWSA exported 20% more Polos in 2015 than the year before, and kept up the momentum into 2016. Coming off investments totalling R5.9- billion between 2007 and 2014, VWSA will put up another R4.5- billion for new models to be produced in Uitenhage from 2017. The “Best providers of services to exporters” award gives an interesting insight into the support industry that something as complex as the automotive industry requires: the 2016 winner was logistics company Morgan Cargo and a merit award was won by Motor Industry Customs Brokers, a company that specialises in helping OEMs deal with red tape and customs. An Automotive Production and Development Programme (APDP) is in place to support the automotive industry and to encourage investment. It is run by the Department of Trade and Industry (dti). Components Only 35% of the components and parts used to make vehicles in South Africa are produced locally. The large number of vehicle models produced in South Africa is a complicating factor for the components sector: low volumes often mean high prices. Two Port Elizabeth companies export significant portions of their production to overcome this: Schaeffler SA exports to its international parent so that it can achieve higher volumes. Shatterprufe supplies the majority of windscreens to the South African market but there are 12 model ranges to serve. About 150 automotive suppliers of various types operate in the Eastern Cape. Sectors include leather works, batteries, automotive tooling, catalytic converters, glass, lamps, radiators and alloy wheels. Foundries, such as those run by Murray & Roberts, supply the industry with cast iron and aluminium. The catalytic converter sector experienced incredible growth for a number of years but some volatility in the platinum mining sector, together with increased interest in electric vehicles and hybrids, means that exporters (largely based in Port Elizabeth) have had to work harder. SJM Flex SA, manufacturer of flexible, stainless-steel couplings, was named overall exporter of the year by the Exporters’ Club in 2016. Catalytic converter Eberspächer SA won a merit award in the corporate category for what the judges called its “entrepreneurial flair and major accomplishments”. Testing company Jendamark Automation also won a merit award. Firestone was the first tyre company to be established in Port Elizabeth. It was soon followed by Goodyear (in Uitenhage) and General Tyre (now Continental Tyre SA). Continental has about 1 600 employees and sells tyres domestically and internationally. Bridgestone has production facilities in Port Elizabeth and Brits. Both the Coega IDZ and the East London IDZ are trying to attract companies in the components manufacturing sector. ONLINE RESOURCES Automotive Industry Export Council: Automotive Industry Development Centre: Automotive Production and Development Programme: Catalytic Converter Interest Group: Coega IDZ: East London IDZ: National Association of Automotive Component and Allied Manufacturers: National Association of Automobile Manufacturers of South Africa: 43 EASTERN CAPE BUSINESS 2017

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