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BAIC implementing catch-up strategy to meet 2018 Coega deadline

PORT ELIZABETH FACTORY
In the foreground of the newly completed steel superstructure are BAIC vehicles that will be available in South Africa once production reaches full capacity

PORT ELIZABETH FACTORY In the foreground of the newly completed steel superstructure are BAIC vehicles that will be available in South Africa once production reaches full capacity

20th October 2017

By: Donna Slater

Features Deputy Editor and Chief Photographer

     

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China-based vehicle manufacturer Beijing Automotive Group (BAIC), is accelerating some of its construction plans for its vehicle manufacturing plant, currently under construction at the Port Elizabeth-based Coega Industrial Development Zone, to catch up on delays incurred owing to primarily labour issues and disputes.

The South Africa-based manufacturing plant is a joint venture between BAIC and the Industrial Development Corporation (IDC), with a 65% and 35% shareholding respectively.

Construction has been delayed by about five months, owing to factors such as strikes, social unrest and issues around language and interpretation between Chinese personnel on site and members of the local communities.

Managing the construction project is Uhambiso Consult MD George Gerber, who said of the delays during a media briefing at the end of September: “We are bleeding”, as delays are costly, averring that the “bottom line is that we need to battle ourselves out on that”.

He noted that the delays incurred to date need to be managed: “We must focus on preventing any further delays because they will not impact timeframes too much, but will definitely implicate things in terms of costs”.

To overcome the language barriers, more interpreters have been brought in. In terms of expediting construction, he said a “day-and-night” concrete casting programme running for 25 days will be undertaken shortly, during which 13 000 m3 of concrete will be cast to form the floor of the factory. The main factory, of which the steel superstructure is already in place, is 400 m long and 120 m wide.

Construction activities under way appeared relatively limited during a site visit to the factory in September, but Gerber pointed out at the time that sheeting would start soon, as well as installation of the roof and side cladding of the assembly building.

Responding to questions about localisation and where construction materials originate - specifically the vast volume of steel used to build the factory superstructure - Gerber pointed out that all the steel used for the frame had been imported from China. However, he said this volume of imported material was in line with predetermined thresholds and that, going forward, localisation will be prioritised.

The intention is to still have the first car rolling off the production line in quarter two of 2018, according to BAIC SA representatives.

In addition, BAIC SA also plans to complete Phase 1 to allow for production capacity of 50 000 vehicles a year by 2022, with production during Phase 2 aiming to manufacture at full capacity of 100 000 vehicles a year.

In terms of empowering and creating employment opportunities for local communities, Gerber said a cornerstone of the construction project was to include the community of the Nelson Mandela Bay municipality and surrounding areas, but with “very specific goals and objectives”.

A minimum of 80% to 85% of the procurement cost has been set aside for the building contract to be awarded to suppliers in South Africa, with the next goal to award local plant suppliers a minimum threshold of 15% to 30% of the procurement plant. A third goal entails allocating no less than 75% of employment opportunities at the construction project to South Africans.

Further, the challenge of ensuring that work gets filtered down to local small, medium-sized and microenterprises (SMMEs) includes the vast number of SMMEs showing up to tender meetings. Gerber said, to date, almost 1 000 SMMEs have attended to gain insight into the tender and application processes.

To ensure that a large number of these SMMEs are successful in obtaining work packages, Gerber advised that they form “teams” to bolster their ability, capacity and expertise to ensure their being chosen.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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