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Jan 20, 2006

Study pinpoints weak spots in local industry

© Reuse this South African component manufacturers have some ground to gain before they can claim a podium position in the highly- competitive developing-world eco-nomies.

Bel-Essex Engineering MD Dave Coffey, also past president of the National Association of Automotive Component and Allied Manu-facturers (Naacam) and former Shatterprufe MD, says the industry has made “significant progress” in an environment dominated by a now “much stronger rand”.

He adds that there has been a “huge improvement in quality”.

However, Coffey notes that South Africa’s main competitor is no longer the developed world, and that the country is now forced to up its game against Central Europe and the Asia Pacific region – which is proving to be a tough task.

He refers to a South African Automotive Benchmarking Club programme which compares 71 South African component manufacturers with 35 manufacturers in Central Europe and 21 in Asia Pacific.

The results of this study (by Justin Barnes) show that South Africa’s equipment is 13,6 years old, on aver- age, compared to ten years internationally.

Also, delivery reliability in South Africa was 93,21% in 2004, compared to 91,96% in Central Europe, and 97,92% in Asia Pacific.

The average lead time from production to international customers was 45,1 days for South African firms, 14,2 days for Central Euro-pean firms and 40,6 days for Asian Pacific firms.

Numeracy and literacy levels were at 80,17% in South Africa in 2004, and 99,24% in Central Europe and Asia Pacific.

Capital expenditure in South Africa as a proportion of total sales was 4,08%, compared with 7,47% in Central Europe and 10,79% in Asia Pacific.

The average automotive customer return rate in parts per million was 613 for South Africa (this was 8 064 in 2001), 1 261 for Central Europe, and 293 for Asia Pacific.

Investment in training as a percentage of the total remuneration bill was 1,95% in South Africa, compared with 2,78% in Central Europe and 7,76% in Asia Pacific.

Coffey says Asia Pacific and Central Europe are advancing in terms of technology, manufacturing excellence and cost, with the latter including raw materials, labour rates and economies of scale.

He notes that South Africa is not spending enough on the training of personnel, and that com- ponent manufacturers need to instil a culture of ‘doing it right the first time’.

“We need to lift our game again. We must react to what our competitors are doing and change our behaviour.” Coffey also believes there is a need for increasing investment incentives in order to lure investors to South Africa.
Edited by: Irma Venter
Creamer Media Senior Deputy Editor
© Reuse this Comment Guidelines (150 word limit)
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