Issue: Jul 2005


General Motors Sources Components from South African Region



General Motors is looking to South Africa for the supply of components and fully built up vehicles. GM returned to South Africa this year following the purchase of a company which had been handling GM products since the American company withdrew from South Africa in the 1980’s as part international sanctions.

General Motors is looking to South Africa for the supply of components and fully built up vehicles. GM returned to South Africa this year following the purchase of a company which had been handling GM products since the American company withdrew from South Africa in the 1980’s as part international sanctions.
When GM withdrew from its South African operations in the Indian Ocean city of Port Elizabeth in 1987 due to political pressures, local management bought out the company and established Delta Motor Corporation. Having initiated a catalytic converter industry in its home city, Delta exported this sought-after component, as well as a range of other high value added products.
GM returned to acquire 49% of Delta in 1997. The backing of the world's largest motor manufacturer gave Delta access to many global markets. General Motors Corporation returned to South Africa in full force in March 2004, setting up GMSA after acquiring 100% shareholding in Delta. This decision to reinvest in South Africa has made a significant impact to GM’s global sourcing of components, says GMSA procurement and engineering director, Evan Dold.
“The South African segment of the world’s largest vehicle manufacturer has been operating within the GM World Wide Purchasing structure for a number of years under the umbrella of the Latin America, Africa and Middle East region (LAAM).”
Dold says that “the return of General Motors to South Africa has added momentum to our initiatives and has allowed us to operate with an even more integrated approach. On an ongoing basis GM is looking to secure the services of globally competitive suppliers. South African suppliers who can compete on this basis have more opportunity than ever before to grow their global business with GM.”
Port Elizabeth, on South Africa’s south east coast, is home to GMSA and is seen as the strategic gateway for the rest of the world into Africa's relatively untapped business potential. In addition, it is already home to some of the country's major motor and automotive component manufacturers, most of which are involved in export-driven manufacturing programmes. The government has earmarked the region around Port Elizabeth for future industrial development, with automotive and metals clusters the 11 500 hectare Coega Industrial Development Zone set to attract major anchor tenants. GMSA is ideally placed to effect efficient logistics operations both inside the country and for export markets. “South Africa is well placed to export its products worldwide,” says Dold.
Indeed, the country has developed an excellent infrastructure and enjoys low energy and input costs. Competitive logistics costs in relation to other emerging markets, socio-political stability, and an abundance of natural resources are major factors working in South Africa's favour. Dold notes that GM intends to maintain the drive with the catalytic converter market that was initiated by Delta.
“Catalytic converters are a very important part of our component export programme,” he says. Besides catalytic converters, GMSA exports stainless steel exhausts, components, flexible couplings, aluminium heat shields, exhaust tailpipe tips, air-conditioning components, alloy wheels, car jacks, door latches, electronic control systems, leather products, metal stampings and wiring harnesses.
GMSA has nurtured selected local suppliers into becoming globally competitive players, whilst also attracting various international manufacturers to set up manufacturing operations in South Africa. Components are exported not only to the traditional markets of Europe and North America, but also to countries such as Australia, Brazil, Chile, Egypt, Mexico, and India. Today GMSA is one of the largest component exporters in South Africa and it is continually exploring new markets and opportunities.
To maintain this momentum, GM is bringing training, skills and technology to component manufacturing in South Africa.
“Technology will be driven by new model platforms and component export opportunities as these roll-out in South Africa. It will be essential for local suppliers to develop technical relationships with source plant suppliers on future models in order to have access to the required technologies,” says Dold.
The company is helping to improve quality and skills within its local supplier base. “GMSA has been active in assisting suppliers with training and skills development for a number of years, and will continue with this in the future. Our primary areas of focus have been Advanced Product Quality Planning (APQP), the Production Part Approval Process (PPAP), Project Management skills and Process Audit methodology. We will also be looking at Supplier Quality System Basics in the future.”
Looking ahead, Dold says that “many local suppliers need to improve their competitiveness. Those who manage to do this, and become truly globally competitive, will have significant opportunities with GM. As the manufacturing base of South African OEMs grows, this will bring additional opportunities to the supplier industry.”
The need to remain competitive is highlighted by the fact that “multinational suppliers are currently focussing their growth and investment efforts into the Asia Pacific regions, such as China and India As a result of this, their South African operations are currently not their main priority areas - particularly with regards to investment opportunities. Local suppliers will therefore need to ensure that they are competitive versus suppliers
based in these regions.”
Besides components, GMSA is an exporter of fully assembled vehicles to right-hand drive countries in sub-Saharan Africa including Zimbabwe, Zambia, Mozambique, Malawi, Kenya and Mauritius. With total local new vehicle sales (including GM) in the region of 360 000, South Africa is GM's largest market in Africa and the second largest in the LAAM region.
GMSA operates using GM's common Global Manufacturing System that is centred on people and leverages the best practices of all global operations. GMSA has the benefits of GM's global design, engineering, purchasing, manufacturing, sales and capital investment resources, he says.

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