The programme, which was introduced in 1995 to encourage the local industry to become more export-focused, has seen exports increase from 20 000 cars in 1997 to 108 000 in 2001, with the estimated figure for 2002 being 128 000 units.
“Clearly, for the OEMs, the MIDP has proved beneficial and, in most cases, the same can be said for first-tier suppliers.
“However, the further down the value-chain one goes, the benefits are less obvious,” observes Automotive Industry Development Centre (AIDC) MD Dr Paulo Fernandes.
“It is a commonly-held view that the weakness in the South African automotive industry lies down the value chain.
“While we have world-class first-tier suppliers and assemblers, the same cannot be said for all second- and third-tier suppliers,” he continues.
Most second- and third-tier suppliers do not have international partners, which creates a problem in that they do not have access to the latest technology that the first-tier supplier has, as OEMs have supplier development programmes that aid their first-tier suppliers.
As a result, the second- and third-tier suppliers cannot always adhere to the high standards of first-tier suppliers.
Realising the need to develop the automotive industry across the value chain and develop the weaker section of the chain, the AIDC and the Department of Trade and Industry (DTI) have put together a supplier development programme.
The programme is focused on developing existing tier-two and three suppliers, such as press manufacturers, diecasting companies and welding specialists.
The aim of this programme is competitiveness-improvement – to make suppliers competitive locally by ensuring they can supply at the standard and quality expected by first-tier suppliers, both locally and internationally.
“The aim of the programme is really to ensure that these suppliers are world-class by assisting them in raising the standard of their business, as it is often those that need intervention most that can afford it least,” indicates AIDC production and process engineering manager Ockert van Schoor.
“While many of them are successful at the moment, the automotive industry is extremely competitive and many companies may need new interventions to ensure they are still able to compete in ten years,” he adds.
The programme does not only involve continuous improvement initiatives, but rather looks at the whole manufacturing process, as different companies have different areas where they need improvement.
The DTI has allocated R15-million for the rollout of this programme, which has been contracted out to the AIDC to implement.
Implementation began in October last year and the contract will run for a period of three years, during which the AIDC hopes to make contact with, and assist, South Africa’s 400 to 500 second- and third-tier suppliers.
If companies show an interest in joining the programme a strategic enterprise assessment is carried out on the company.
“The assessment process is actually quite holistic, looking at all elements in the organisation; not only the strength of the elements but also the interaction and alignment between them,” explains Fernandes. The AIDC will work with the companies for a period of three to six months, helping them to enhance strengths and remedy weaknesses.
“It is not a product we are selling.
“We are attempting to offer the industry a solution in identifying what the real problem is.
“Often the company is aware of its problems but is not sure how to tackle them,” comments Fernandes.
The DTI’s funding is aimed specifically at helping the smaller companies more, particularly small and medium enterprises and black economic empowerment companies.
A funding format is used to evaluate a company, and the percentage funding contributed is indicated through the evaluation of the company. However, all companies should contribute to some funding.
“The company has to make some financial contribution itself in order ensure its commitment,” remarks Van Schoor.
The AIDC is currently working with about twenty companies, with about six projects already in the implementation phase.
These include plastic companies, press manufacturers and welding specialists.
The programme is not area-specific and is being implemented in all three nodes of the automotive industry, that is, the Eastern Cape, Gauteng and Kwazulu-Natal.
“This project is actually very timely and a wise decision on the part of DTI.
“The announcement of new export models to be manufactured in South Africa, such as the Toyota IMV and the Corolla, is, of course, good news, but also a challenge, as supply contracts are coming to an end on existing models and new supply contracts are being negotiated on new models, with demands on quality and cost increasing, not decreasing.
“Companies as a result have to resecure their position in the supply chain,” indicates Fernandes .