MAN Truck & Bus South Africa (SA) has kickstarted a project to increase the local content on its South African assembled buses and trucks.
“We have identified components that can potentially be deleted from the completely knock-down (CKD) kits we receive from Germany,” says MAN Truck & Bus SA group manager procurement Dave Khaled.
“We are working with local parts suppliers to increase our local content.”
MAN Truck & Bus SA manufactures bus bodies at its Olifantsfontein plant in Gauteng, with both the bus and truck chassis’s assembled at a facility in KwaZulu-Natal.
Current local content is between 10% and 15% on trucks, by value, and includes components such as tyres, certain exhaust parts, air cleaners, bracketry and the fifth wheel. The target is to increase this in any way possible, says Khaled.
On buses, local content is somewhat higher, as the bus body sports 80%-plus local content – the minimum required by current legislation for government and municipal tenders. The bus body includes parts such as the dashboard console, glass, seats, roof, body shell and flooring.
For the more mechanically intricate bus chassis, local content is between 5% and 7%, with 10% the target in the short term, says Khaled.
While imperatives such as job creation and being a good corporate citizen are driving the MAN initiative, he adds, more pending changes in legislation is also a powerful motivator.
MAN Truck & Bus SA senior product manager Livingstone Mulaudzi says indications are that the definition for the term ‘CKD’ in the truck and bus industry will change in South Africa by 2017. These changes will render MAN SA, if it continues operating as it does at the moment, a semi-knockdown truck assembler, and no longer a CKD assembler. This will have negative implications on the import duties payable on the kits the company receives from its German parent company.
It is also believed that legislation will demand 10% local content as a starting point on bus chassis by 2013/14, adds Khaled.
“We want to be a CKD assembler,” says Mulaudzi. “We want to be ready for any changes in legislation affecting the truck and bus industry.”
One MAN localisation project already well on its way is a new joint venture between the company and ZF Sachs South Africa for the assembly of local clutch kits for the aftermarket. These kits can possibly also be funnelled into the KwaZulu-Natal original-equipment assembly line, says Khaled.
Other projects showing potential include developing South African-made propshafts, truck and bus drivers’ seats, air receivers, fuel tanks, glass products, chassis hang-on parts, as well as a programme to trim truck cabs locally.
Challenges in sourcing more bus and truck parts locally are numerous, however, adds Khaled. Finding high-quality products can be difficult, while bus and truck assembly volumes in South Africa are also low, which erases the cost advantages provided by large-scale operations.