The growth of South Africa’s automotive manufacturing industry lies in localisation and producing components within our own borders. This is the belief of the National Association of Automotive Component and Allied Manufacturers (NAACAM) commercial director, Shivani Singh. Currently, South African vehicle manufacturers import most of their components.
Singh argues that there needs to be a shift in focus to local automotive component manufacturers – companies like Formex Industries. This will boost job creation and the economy, as well as providing numerous other benefits for South African manufacturers, such as more affordable components.
Manufacturing alliances will encourage localisation
Singh suggests that local manufacturers need to form alliances to boost their capacity and ability to meet the high industry demands. This will help to transform the country from a consumer-driven society into a world-class producer and manufacturer of vehicles. Localisation will also boost local export opportunities and business partnerships with multinational vehicle brands.
The manufacturing industry currently offers the most potential for job creation, according to Madala & Associates chief executive officer (CEO) Diley Naidoo. He says that around 90% of jobs in South Africa will come from small, medium and microenterprises (SMMEs) by 2030.
The South African Capital Equipment and Export Council CEO, Eric Bruggeman, says that South Africa imported R178-million worth of goods in the last financial year. This is six percent of our total gross domestic product (GDP). Bruggeman also notes that partnerships between automotive component manufacturers will be key to localisation – echoing Signh’s sentiments.
Businesses need to take charge
SMMEs will need to forge ahead with their business and form these alliances without relying on the government. They need to take stock of where they are, currently, and where they want to be in 10 years’ time. The quickest way forwards is to form these partnerships and grow local businesses without waiting for the government to step in.
By addressing problems now and forming lasting partnerships, manufacturing SMMEs will be able to meet the challenges of localisation in the near future. This will also help to improve the quality, flexibility and costs of automotive components manufactured in South Africa. Localisation is a key driving factor that will improve the entire automotive sector in South Africa, but the groundwork needs to be laid now.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and the 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).