South Africa’s automotive industry is one of the oldest in the world – the first car (a Benz Velo) was imported in 1896, and assembly of the Model T Ford began in a former Port Elizabeth wool packing shed in 1924.
It remains the biggest auto industry in Africa, and continues to grow in the face of globalization and a relatively small market share – Africa accounts for less than one per cent of the world auto market, and South Africa makes up around 85% of that market. South Africans are both resourceful and good at forming partnerships.
Helping to develop partnerships between business, local, provincial and national government, labor, universities and colleges is the Automotive Industry Development Centre (AIDC) mission. Its task is to help South African component manufactures and OEMs to overcome challenges such as long logistics lines to the main markets and within South Africa itself, as well as the need for technical skills.
With the market being systematically opened to international competition since the first democratic elections in 1994, South African component manufacturers particularly in the lower tier levels are on a steep quality improvement curve. Many are succeeding through forming joint ventures or selling a part of the company to international suppliers, who bring expertise, access to markets and established logistics systems.
One of the most recent is the formation of Dorbyl Magnetto wheels – a joint venture between the listed company Dorbyl South Africa and the Italian family-controlled Magnetto wheels, whose other shareholder is Indian steel giant Arcelor Mittal. Dorbyl Magnetto wheels will manufacture a targeted two million steel passenger and truck wheels a year in an existing Dorbyl factory in Port Elizabeth.
The AIDC and the importance of such partnerships
The AIDC has pioneered and excelled at such partnerships since its inception. An Automotive Manufacturing Technology Workshop held in September 1997 under the auspices of the South African Centre for Science and Industrial Research (CSIR) and the Fraunhofer Institute identified the need to establish an engineering centre of excellence to support the development of a competitive automotive industry
A feasibility study and business model for a national industry support centre was developed by the CSIR and Fraunhofer Institute with joint funding from the Department of Trade and Industry (DTI ), the local Tshwane Metro government and the Gauteng Bavaria Partnership Agreement. Beyond the feasibility study, the Gauteng Provincial Government through its Blue IQ programme played a pivotal role is establishing the AIDC in 2000. This model as later replicated in the Eastern Cape through a CSIR and Eastern Cape Development Corporation (ECDC) partnership. This resulted in the building of an Automotive Supplier Park in Tshwane, near BMW, Ford, Mazda and Nissan assembly plants. Supplier parks have since been developed in the Eastern Cape province town of Uitenhage – the home of Volkswagen South Africa. Based on this track record, the AIDC has assisted with the developmental process of supplier parks in the KwaZulu/Natal city of Durban and the East London Industrial Development Zone in the Eastern Cape province.
International AIDC links include those with the Society of Motor Manufacturers and Traders (SMMT) Industry Forum in the UK. These links also support skills development. An example is a KwaZulu/Natal partnership with the DTI and Japanese organizations such as JICA (Japan International Cooperation Agency) and JETRO (Japan External Trade Organization) to open a high-tech training centre in the province.
Research and Development is also being promoted by the AIDC, which provided seed funding for a Light Metals Development Centre (LMDC) to support the growth and sustainability of an internationally competitive downstream South African light metals industry
In addition, the AIDC is instrumental in the establishment of the first of four AMTS Advanced Manufacturing Laboratories for Mechatronics and Robotics at the Nelson Mandela Metropolitan University (NMMU). This laboratory will facilitate a growing involvement of SME’s in the manufacturing of automotive componentsÍ¾ stimulate research and design and the development and transfer of relevant skills. The AIDC has also established the first ever professional degree in Engineering (B Eng. (Mechatronics)) in collaboration with the Nelson Mandela Metropolitan University.
Another project, the South African Tooling Support Initiative (SATISI) aims to improve South Africa’s tool making capacity. The AIDC facilitated the establishment of a “Tooling Design Development Centre” at the Walter Sisulu University in East London, offering research capacity building, in-service training, development of learnerships and implementation of small commercial projects for industry.
The AIDC’s Supplier Development Department develops internal capacity to deliver on Quality Management Systems implementation at supplier level. Companies are being assisted to complete the implementation of ISO 9000 and TS 16949 systems.
The AIDC’s mandate is to develop the South African automotive industry to world-class standards. This requires an integrated approach which involves a number of stakeholders and industry partners who support us to realize our mandate. The AIDC does not have infinite resources so partnering is an effective means to magnify our impact through the many existing networks that we heavily rely upon. Thedti and its agencies, the merSETA, various tertiary education institutions (FET’s) and further education and training (TEI’s) institutes, all tiers of government and industry have forged a symbiotic relationship with the AIDC to further our objectives and create a meaningful socio-economic impact. Our reach is exponential through our partners.
Automotive Industries (AI) asked Barlow Manilal, AIDC Acting Chief Executive Officer, what South African component manufacturers had to offer the world market.
Manilal: South Africa is home to seven assemblers. This has provided a global platform to our manufacturing base. The government’s incentive and support programs have also started showing dividends in productivity improvements and international best practice. We consider ourselves as a niche manufacturing base for lower volumes relative to USA and Europe. With South Africa ranked at 44th in the World Economic Forums global competitiveness index, we are a viable alternative to India and China. South Africa’s ICT and banking infrastructure is amongst the world’s best.
AI: What is the AIDC doing to help optimize logistics channels?
Manilal: The AIDC has identified Logistics and the Supply Chain as one of its three key focus areas. We undertake a number of inventions that fall within the following service areas: (i) Infrastructure (ii) Process Improvements and (iii) Collaboration. Within the service area of infrastructure, we have been instrumental in developing automotive supplier parks throughout the country. Within the service area of process improvements the AIDC has led the development of a number of world first interventions that have enabled the industry interact and integrate seamlessly. South Africa has ranked 24th in the World Bank’s New Logistics Performance Index (LPI), making it the leading African country in trade logistics.
AI: What are the main strengths of the South African motor industry?
Manilal: The industry has built an enviable reputation as niche manufacturer of lower volumes runs that are unsustainable in most other countries. This is augmented by the Department of Trade and Industry’s Motor Industry Development Program (MIDP), which can largely be credited for phenomenal growth rate. Most of the assemblers resident in the country have been successfully operating for around 70 to 80 years. The past 10 years has seen unprecedented growth in the local market. Total sales last year were more than double the figure for 1999 – only eight years previously. The industry and key Government agencies are targeting production volumes of around 1.2 million vehicles by 2020. This is almost a doubling of the current outputs.
The local vehicle industry has also demonstrated the ability to design components specific for African condition. The global growth surge over the next 20 years is undoubtedly going to come from Africa. This country will be the platform from which to spearhead any brand penetration into new African markets.
AI: What services does the AIDC offer?
Manilal: The AIDC should be seen as a key stakeholder in the South African automotive industry and an entity that will continue to provide high value support. This is validated by the numerous local and international awards the organization has received in recognition of leadership, high quality delivery, innovation and customer satisfaction.
The AIDC is an industry support centre established by government to assist the automotive industry in its quest for global competitiveness. Establishing automotive supplier parks has become a specialist service, whilst our productivity improvement initiatives yield incredible benefits in a sustainable manner.
Another focus is training. Over the past seven years in excess of 50 000 students have benefited from our skills development initiatives and this number continues to grow.