Local manufacturers in bid to stop battery dumping by Korean companies

11th April 2014

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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The South African Battery Manufacturers Association is in the process of launching an application with the International Trade Administration Commission of South Africa (Itac), for protection against what it views as the dumping of Korean manufactured vehicle batteries, says Metair MD Theo Loock.

Metair manufactures batteries in South Africa, Romania and Turkey.

Loock says it is a “natural progression” that Korean component manufacturers will follow its homegrown car brands, such as Kia, to South Africa, but believes the “extensive export grants” provided to the Korean battery manufacturing industry are “anticompetitve”.

These grants amounted to $300-million over the last five years, he notes.

The association is specifically focused on the AtlasBX battery range, distributed by Tiger Wheel & Tyre.

Loock says South Africa is the latest country to seek protection against the importation of Korean batteries, following Kenya, Morocco and Botswana, among other countries.

He believes AtlasBX has a 15% to 20% share of aftermarket battery sales in South Africa.

Metair in April reported revenue of R5.23-billion for the financial year ended December 31, compared with R4.6-billion in the 2012 financial year.

The vehicle component manufacturer recorded operating profit of R445.6-million, down from R569.8-million in 2012.

Without the positive contribution from Rombat, this would have been “a very different set of results”, with last year’s nine-week strike in the South African automotive industry largely to blame for the decline in profit, notes Loock.

He estimates losses owing to strike action at R87-million.

Metair also supplies batteries to the strike-prone South African mining industry.

Loock says a new approach to labour negotia-tions is necessary in South Africa.

“We can’t have a situation where the first resort is to withdraw your labour. This must not happen at the beginning, but as a last resort.”

Metair acquired Rombat, a Romanian battery producer, in 2012, followed by the R2.9-billion December acquistion of Mutlu Akü, the largest battery manufacturer in Turkey.

Loock says Metair is busy with “controlled international expansion”.

The Mutlu acquistion turned JSE-listed Metair into the third-largest battery manfuacturer in Europe, the Middle East and Africa. It now has three manufacturing sites – Romania, Turkey and South Africa – giving the company a production capacity of 11.7-million batteries a year.

Metair’s diversification strategy has also seen its dependence on Toyota decline from 75% to 80% of group business in 2006 to 30% to 35% following the Mutlu acquisition.

Loock says Rombat provides Metair with access to the European market, while Mutlu opens up the North African, Russian, Middle East and Turkish markets.

Metair’s focus in its international expansion is specifically on producing stop-start battery technology for the global market by 2016. The company is already supplying the BMW and Mercedes-Benz plants in South Africa, and is being evaluated for participation in international supply contracts, says Loock.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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