EC continues to experience growth in automotive sector

21st June 2013

By: Ilan Solomons

Creamer Media Staff Writer

  

Font size: - +

State-owned Coega Development Corporation (CDC) intends to attract two additional automotive original-equipment manufac- turers (OEMs), to the Coega industrial development zone (IDZ) and to continue attracting tier-one, -two and -three auto- motive component suppliers to the Nelson Mandela Bay Logistics Park (NMBLP), in the next five years.

“CDC will continue to attract the required suppliers in partnership with assemblers to manufacture automotive components at the required standards. The closer suppliers are located to assembling facilities, the more logistics costs will be reduced and the easier it will be to manage the supply chain, and provide the convenience of better servicing supply commitments to targeted automotive assemblers,” CDC automotive and logistics business development manager Gustav Meyer tells Engineering News.

Since being founded in 1999, CDC has created 3 735 direct operational jobs and more than 45 000 indirect jobs and boasts an investment portfolio in excess of R140-billion, says CDC marketing and communications head Ayanda Vilakazi.

“The investor turnaround time from signing to full operation has also decreased significantly and many investors now experience shorter conversion times from the signing of their lease agreements to the start of operations,” he highlights. The Coega IDZ, established in 1999, in the Eastern Cape, together with the NMBLP, offer automotive companies opportunities to locate and sell to the South African and overseas export markets. The CDC took on management of the NMBLP from the Nelson Mandela Bay Municipality in March 2008. Both automotive supplier parks are experiencing significant growth and, thereby, are creating many job opportunities, says Meyer.

He says the most recent automotive investor is the Fortune 500 company First Automobile Works (FAW), which started building a new truck assembly plant in the Coega IDZ last year.

“The cash injection of more than R600-million by FAW is hailed as a major coup for the region and is expected to boost the local economy,” asserts Meyer.

He explains that the first phase of the construction should be completed by the end of this year and is expected to generate about 300 permanent jobs, with the plant’s yearly output estimated at 5 000 trucks. FAW’s subsequent investment in assembling passenger cars will not only increase its investment to almost R1-billion but will provide jobs to about 1 000 people.

The CDC is working closely with FAW to identify and attract potential suppliers from China and South Africa to relocate nearer to its plant in the Coega IDZ.

Meyer notes that the cooperation between CDC and FAW is sending a strong message to potential Chinese and South African first- and second-tier suppliers that FAW is serious about doing business in the Coega IDZ.

“The NMBLP complements and enhances the location solution offered by the Coega IDZ in its provision of infrastructure and services for the automotive industry. In the NMBLP, the CDC has played a key role in attracting automotive component suppliers and other service providers to supply the Volkswagen South Africa plant, and other automotive component assemblers,” enthuses Meyer.

 

The current automotive component manufacturers in the NMBLP include automotive supplier Grupo Antolin, German automotive parts producer Benteler, interior plastic fuel systems and emission-reduction-related fluids systems Inergy, bumper systems manufacturer Rehau Polymer and the South African subsidiary of German automotive part supplier Hella Automotive South Africa. He affirms that the CDC is continuously trying to improve the position of the Coega IDZ and the NMBLP by ensuring that they are safe and competitive manufacturing locations for the automotive sector in South Africa.

Challenges

Vilakazi says the greatest challenge has been to expedite timelines for establishing and equipping the Coega IDZ.

However, he says in retrospect the process of establishing and equipping the Coega IDZ has been a relatively quick one, considering IDZ development trajectories.

Other challenges that the CDC has overcome include the impact of the European debt crisis, which delayed the completion of projects, owing to funding scarcities, as well as electricity shortages, owing to reduced commitments by power suppliers.

“The Eastern Cape also faces transport challenges such as the need for rail and road upgrades. However, the national focus on and implementation of infrastructure projects should mitigate these challenges in the long term,” notes Vilakazi, adding that a further challenge would be the possible shift from an IDZ to a special economic zone (SEZ), when a new SEZ bill is promulgated.

Further challenges experienced by the Coega IDZ, he says, include the limited support mechanisms for investment incentives currently offered by government, and the continuing European debt crisis, which poses a significant threat to the prospects of new and additional foreign direct investments.

Edited by Tracy Hancock
Creamer Media Contributing Editor

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION