State-owned implementation agency, the Automotive Industry Development Centre (AIDC), on Wednesday launched construction of its new R80-million incubation centre, located at Nissan South Africa's manufacturing facility, in Rosslyn, north of Pretoria.

This would be the AIDC’s second incubation centre. The first such centre was launched at the Ford Motor Company of Southern Africa's (FMCSA’s) manufacturing facility in Silverton.

Speaking at the sod turning event, Gauteng Premier David Makhura noted that the establishment of the 7 200 m² facility flowed out of the province's programme for reindustrialisation and the country's National Development Plan.

"This is where we want to build a globally competitive automotive manufacturing hub, but it is only possible through partnerships with globally competitive manufacturers," he said.

He highlighted that the story of the automotive industry revival in Gauteng was a “good story to tell”.

“We have built [the industry], from scratch, in the most difficult period during the recessions and we have protected jobs in the automotive industry. We worked together to save jobs and ensure that there is no real substantial shutdown.

“It is exciting to launch this second incubation centre,” Makhura commented.

AIDC executive Dineshan Moodley added that the aim of the centre was to reduce the barriers of entry for entrepreneurs in the automotive industry.

“One of the barriers is start-up capital. There is a high level of investment that needs to be done to make a component manufacturer competitive and to enable it to participate in the value chain.

“Supplier experience is also a barrier to entry,” he said, adding that companies were often reluctant to procure the services of small- to medium-sized enterprises (SMEs) that did not have experience, but that experience could also not be gained if they were not afforded exposure.

“Through the incubation centre, SMEs can gain experience, with no risk to the original-equipment manufacturer (OEM).”

Citing the success of the incubation centre at FMCSA’s premises, Moodley highlighted that a number of parts for the OEMs Ranger model was manufactured there, including the drop-in liner, a number of metal components, a bumper series, the air conditioning unit and the grill.

“Part of that vehicle is proudly South African. The Nissan incubator will not necessarily follow the same route [with regards to the components it will make],” he added.

He noted that, in terms of transformation, the automotive industry was lagging far behind. "Through this incubator, we are trying to force [transformative] change in the mass of 3 000 automotive component suppliers."

HOLDING HANDS
Moodley further explained that the AIDC had a five-year-plus incubation model for entrepreneurs. The incubation process involved three phases and was designed to reduce risk and ensure the right candidates were chosen.

In the first phase, the AIDC would implement its “parenting” strategy. “We [AIDC and Nissan] literally do the work for them while [the candidates] observe and learn.

The next phase would be the “hand-holding” process, where monitoring and coaching was implemented. “Phase three is more where we let them do [the work].”

Nissan South Africa MD Mike Whitfield pointed out that the facility supported the vehicle manufacturer's planned production of a new one-ton pickup model later this year.

He explained that the centre would deepen the local supply chain, while advancing transformation in the automotive sector. "Only 5% of suppliers are equity owned and we need to find a way to accelerate that."

He added that the centre was not for the exclusive use of Nissan, but that manufacturers such as BMW, Iveco and others in the area could also use it. "We encourage them to use this facility."

Job Funds head Najwa Allie-Edries noted that the incubation centre, would lead to the creation of 3 861 new jobs and 4 985 training opportunities.

Allie-Edries highlighted that, through other partnerships with the AIDC, 7 782 individuals would benefit from training interventions.

She added that R202-million in grant funding was allocated to four AIDC partnership projects, potentially leveraging an additional R183-million from project partners.

It was estimated that this would result in 4 332 new permanent jobs and 3 279 temporary jobs.