A new joint venture (JV) – National Spring Manufacturers – between Italian suspension products provider Mollebalestra and local auto spring manufacturer Golden Spring & Engineering Services was launched last month, boosting the availability of the international brand and creating employment opportunities in the local automotive sector.
The new JV will facilitate the manufacture of Mollebalestra’s range of products – which includes parabolic springs, air suspension linkers, shock absorbers in original and reinforced versions, air springs, stabiliser bars and U-bolts – at the Leeukuil Mill facility, in Vereeniging, Gauteng, from March next year.
Mollebalestra business development manager Spyros Papaspyrou explains that this will enable the company to enhance its offering for local railway wagon, heavy-duty vehicle and trailer original-equipment manufacturers and aftermarket suppliers. Historically, Mollebalestra’s heavy-duty suspension products have been imported into South Africa from its Turin manufacturing premises, in Italy; however, with demand for its products stabilising at good levels, the company has decentralised its manufacturing capabilities.
“The JV will ensure the complete availability of Mollebalestra’s range of products in South Africa while providing an economic win for both us and our customers by reducing import costs,” says Papaspyrou.
He further highlights that parabolic springs – a type of leaf spring – are new to the country, and sure to cement the JV as a market leader in heavy-duty suspension. Leaf springs form the vital link between the chassis and the axle of a vehicle, functioning to absorb, store and release energy as the vehicle moves. Papaspyrou explains that the assembly of parabolic springs requires fewer leaves than conventional springs, although they can carry an equal load and are suitable for long drives. However, with the weight of the spring reduced by as much as 30% through parabolic assembly, the payload of the vehicle increases. The steel grade used for manufacturing parabolic springs – 50 chrome (Cr) V4 – moreover, has a higher strength profile than the 55Cr3 used in conventional springs.
Papaspyrou points out that, in Southern Africa, the automotive components supply chain is driven primarily by the availability of a variety of high-quality parts, rather than cost, and the localisation of production is, therefore, the next natural step for Mollebalestra. Considering the global and domestic business cycles, together with South Africa’s monetary and fiscal policies, infrastructure development and exchange rate, the company decided to enter into an agreement with its automotive aftermarket local distributor Golden Spring to enhance the well- established relationship.
The JV will target the transport, storage, wholesale and retail trade markets, which have demonstrated a strong and sustainable demand for high-quality suspension products. Papaspyrou explains that these sectors indicate a positive income elasticity of demand, making Mollebalestra confident that brand loyalty and market demand for its products will remain strong, despite possible economic fluctuations in the automotive sector.
“Ensuring this was a critical first step to furthering our investment in South Africa, as it will help us to secure capital, labour and technology, and weather any challenges that may arise. This elasticity of demand . . . will, moreover, enable us to predict sales, and possibly . . . expand further into sub- Saharan Africa, with the local facility . . . the manufacturing hub for the region.”
Despite Mollebalestra’s optimism, Papaspyrou highlights that the company’s business model will have to undergo significant modifications to ensure the JV’s success in the local market. “We are aware that simply importing a Europe-based business model into new or emerging markets cannot lead to success. What will follow is, thus, a process of testing essential assumptions and adjusting our strategies as we learn.”
He explains that the JV will follow a start-up model to identify and meet specific local needs. Product development and manufacture will be underpinned by the latest developments from Mollebalestra’s global research and development activities and tested through the group’s comprehensive fatigue testing programme to ensure the highest quality. Technical and management training programmes will also be available for all employees and the progress of the facility will be monitored against objective, external key- performance indicators.
“Our strategy is to replicate our strengths in other regions while being flexible enough to adapt to the local realities affecting our manufacturing model. The production and supply chains will actively reflect European best practices while meeting the requirements of the South African commercial and heavy-duty vehicles manufacturing industry. We are also looking forward to growing our seed business beyond South Africa’s borders with Golden Spring.”
The launch of the JV was celebrated at an event hosted by the Italian-South African Chamber of Trade and Industries at the Southern Sun, in Hyde Park, last month.
“This was an ideal opportunity for us to showcase our plans and network with current and potential new clients from leading automotive manufacturing companies, as well as the broader Italian business community in South Africa, who we are excited to be joining,” concludes Papaspyrou.