5 years ago

Eastern Cape Business 2018 edition

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  • Mandela
  • Water
  • Electrical
  • Services
  • Financial
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  • Infrastructure
  • Water
  • Manufacturing
  • Sectors
  • Tourism
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  • Nedbank
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A unique guide to business and investment in the Eastern Cape. The 2018 edition of Eastern Cape Business is the 11th issue of this highly successful publication that, since its launch in 2006, has established itself as the premier business and investment guide for the Eastern Cape. The Eastern Cape’s investment and business opportunities are highlighted in this publication. In addition to the regular articles providing insight into each of the key economic sectors of the province, there are special features on the role of the renewable energy sector on the region’s future and on the growth of tourism (spurred by the hosting of international events such as the 2018 IRONMAN 70.3 World Championship, the first-ever cricket Test match to be played at night at St George’s Park and Vodacom Origins of Golf events at St Francis Links). All of the major business chambers in the province have made contributions to the journal. To complement the extensive local, national and international distribution of the print edition, the full content can also be viewed online at Updated information on the Eastern Cape is also available through our monthly e-newsletter, which you can subscribe to online at, in addition to our complementary business-to-business titles that cover all nine provinces as well as our flagship South African Business title.

OVERVIEW Automotive

OVERVIEW Automotive Beijing Automotive’s new factory is a major boost for the sector. SECTOR INSIGHT Volkswagen SA makes 130 000 engines annually in Uitenhage. • Daimler is introducing a new commuter bus. Already home to some of the biggest brands in original equipment manufacturing (OEM) and automotive components in Volkswagen, Mercedes-Benz, Ford, Goodyear, Continental Tyre SA, Bridgestone and Shatterprufe, the addition of two Chinese firms, First Automotive Works (FAW) and Beijing Automobile Corporation (BAIC), confirms the Eastern Cape’s prime position in this sector. Beijing Automotive Industry Group (BAIC) expects to be building 50 000 vehicles per year at its site at Coega Industrial Development Zone (IDZ) by 2022. Construction of the factory was held up in 2017 because of concerns by local small businesses about the percentage of work that was going to local business. Companies like BAIC 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). Most international brands such as Volkswagen have given responsibility for Africa to their South African offices. 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 formalsector 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. The decision in 2017 of General Motors to disinvest from South Africa does not seem to have had any knock-on effect. The company’s selling of its plant in Port Elizabeth was just one sale of many around the world. Isuzu has bought the factory. Volkswagen’s two new types of Polos started rolling off the production line in Uitenhage in 2018. Volkswagen’s R6.1-billion investment will take production up to full capacity of 160 000 vehicles in 2019, from 110 000 in 2017. The increase will mean that a third shift will be introduced. In addition, VWSA manufactures 130 000 engines for local demand and for export to countries such as Russia, India and Mexico. EASTERN CAPE BUSINESS 2018 52

OVERVIEW Ford in Port Elizabeth is the country’s other engine manufacturer. The potential of computers to improve efficiencies in the automotive sector is enormous. Enterprise Resource Planning (ERP) refers to software that links up various aspects of a business. This is a speciality of SYSPRO, which is active in many sectors, including automotive. A recent product allows for reduced waste in manufacturing and improves links between units (or companies) in the supply chain. Smart factories are the subject of research being undertaken by the Department of Computing Sciences at the Nelson Mandela Metropolitan University (NMMU). The research is supported by Volkswagen SA and Mercedes-Benz SA. A new commuter bus launched by Daimler Trucks and Buses Southern Africa will be assembled at the company’s plant in East London in 2018. Fewer gear shifts are one of the features of the OF-1723, which should increase fuel efficiency. The establishment of the Eastern Cape Automotive Industry Forum (ECAIF) in 2016 is expected to assist black business people to get involved in the sector. A programme to encourage young people to enter the motor industry, PRIME (Programme for Industrial and Manufacturing Excellence), has seen the first group of 137 graduates take up placements. An Automotive Production and Development Programme (APDP) is in place to support the automotive industry and to encourage investment in local facilities. 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 large portions of their production to overcome this: Schaeffler SA exports to its international parent so that it can achieve higher volumes. Shatterprufe supplies most 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. The catalytic converter sector experienced incredible growth for several 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 positioning themselves as sites for the components manufacturing sector. ONLINE RESOURCES Automotive Industry Development Centre: Automotive Industry Export Council: Automotive Production and Development Programme: Catalytic Converter Interest Group: National Association of Automotive Component and Allied Manufacturers: National Association of Automobile Manufacturers of South Africa: 53 EASTERN CAPE BUSINESS 2018

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