Formex is a Level 2 Broad-Based Black Economic Empowerment (B-BBEE) contributor, but what exactly does this mean for our business, suppliers and consumers? B-BBEE is a form of economic empowerment that was initiated by the South African government in 2003.
The aim of the initiative is to distribute wealth across a wide range of previously disadvantaged individuals and communities. This system of broad-based empowerment measures the equity ownership and management representation of business and organisations in South Africa.
Companies are given a score based on their percentage of non-white ownership and management, which aims to level the playing field for previously disadvantaged members of society. These companies are then entitled to various benefits and tender procurement recognition, based on their B-BBEE contribution.
B-BBEE is a points-based system
The following five elements are taken into consideration when assigning a B-BBEE contribution level to businesses:
- Ownership (25 points) – What percentage of the company is owned by non-whites?
- Management control (19 points) – What percentage of the management structure is non-white?
- Skills development (25 points) – Does the company improve the skills of its employees through training and learning initiatives?
- Enterprise and supplier development (40 points) – Does the company support small enterprises and suppliers that are also majority black-owned?
- Socio-economic development (5 points) – How does the company contribute to the socio-economic development of its employees, community and country?
How is a B-BBEE contribution level assigned?
Based on the points system above, businesses are assigned scores (up to a maximum of 114 points) by an independent assessor. The following points outline how these scores are translated into a B-BBEE contribution level:
- 100 points or more – B-BBEE Level 1
- 85 to 99.99 points – B-BBEE Level 2
- 75 to 84.99 points – B-BBEE Level 3
- 65 to 74.99 points – B-BBEE Level 4
- 55 to 64.99 points – B-BBEE Level 5
- 45 to 54.99 points – B-BBEE Level 6
- 40 to 44.99 points – B-BBEE Level 7
- 30 to 39.99 points – B-BBEE Level 8
- Less than 30 points – Non-compliant
It is important to note here that businesses with an annual turnover of less than R10 million are defined as Exempt Micro Enterprises (EMEs). White-owned EMEs are automatically assigned a B-BBEE Level 4. If an EME has 51% black ownership, it is assigned B-BBEE Level 2. A 100% black-owned EME is a B-BBEE Level 1 company.
Formex is a Level 2 B-BBEE contributor
Formex Industries is a Level 2 B-BBEE automotive parts supplier with over 80% black ownership, of which more than 40% are black women. We believe that industry transformation is an important step in securing the future through skills development and equity-sharing.
Formex also believes in the development of our employees. Education and skills development are a priority for us, ensuring that technical and management skills are improved and transferred to our employees. This helps to boost the local economy in the Eastern Cape, where unemployment is a major problem for the provincial government.
In order to get access to government grants and tender procurements, businesses such as Formex need to be B-BBEE-compliant. A major contributory factor for automotive industry participants is to ensure that their supply chains incorporate other B-BBEE-compliant companies. Formex Industries, as a Level 2 B-BBEE contributor, offers a transformation solution to the original equipment manufacturers (OEMs) and 1st Tier Customers that are striving to meet compliance in this regard.
Industry transformation is an important aspect to righting the wrongs of the past and supporting local communities. B-BBEE will also help the automotive sector become more competitive and a better contributor to the South African economy.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex specialises in producing components for the catalytic converter industry, as well as metal components and assemblies for the various vehicles. Formex aims to become one of the foremost suppliers for the South African automotive industry by 2035, aligning itself with the South African Automotive Masterplan (SAAM) which takes effect in 2020.
Formex is a Level 2 B-BBEE supplier with over 80% black ownership, of which more than 40% are black women. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).