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THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY SOUTH AFRICA Fact Pack

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Title: THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY SOUTH AFRICA Fact Pack


1
THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT
INDUSTRY SOUTH AFRICA Fact Pack
  • Swedish Trade Council South Africa
  • 2006

2
CONTENT
  • Overview South African Manufacturing Industry
  • South African Automotive Industry
  • South African Construction Equipment Industry
  • Recommendations
  • References

3
THE MANUFACTURING INDUSTRY CONTRIBUTES 20 TO THE
SOUTH AFRICAN GDP
  • The total turnover of the South African
    manufacturing industry is an average of SEK 847
    million
  • the Swedish manufacturing industrys turnover is
    SEK 1,357 billion
  • There are approximately 30,000 companies within
    the manufacturing industry in South Africa
  • 1,2 million employees
  • The metal products and automotive industries are
    traditionally strong
  • The south African automotive industry amounts to
    85 of Africas vehicle output.
  • The average wage for a industry worker in South
    Africa is SEK 43.3 per hour
  • The Automotive Sector is supported by the MIDP
    export complementation scheme

5 largest manufacturing industries in South Africa
Million SEK
The automotive sector contributes 7 of the GDP
of South Africa
Source Stats Sa Department of Trade and
Industry Department of Labour. Currency _at_
23/06/06 rate
4
CONTENT
  • Overview South African Manufacturing Industry
  • South African Automotive Industry
  • Passenger Cars
  • Commercial Vehicles
  • Suppliers
  • South African Construction Equipment Industry
  • Recommendations
  • References

5
THE SOUTH AFRICAN PRODUCTION OF CARS AND
COMMERCIAL VEHICLES TOTALS SEK 74 MILLION -
automotive exports are 13,5 of total South
African exports
Sale of cars and commercial vehicles industry in
South Africa
Thousand units
Components and accessories SEK 48 million
Vehicles and engines SEK 74 million
Trailers and containers SEK 6 million
Growth due to higher export demand and local
economic growth and demand
Source National Association of Automobile
Manufactures of South African (NAAMSA)
6
554454 VEHICLES ARE PRODUCED IN SOUTH AFRICA -
397307 passenger cars and almost 190 000
commercial vehicles
VEHICLE MANUFACTURERS
COMMERCIAL VEHICLES (157 147 vehicles)
BUSSES (1147 vehicles)
MEDIUM / HEAVY TRUCKS (20985 vehicles)
PASSENGER CARS (397307) vehicles)
LIGHT COMMERCIAL (135015 vehicles)
  • 2 manufacturers
  • Evobus (DC)
  • MAN
  • 1 manufacturers
  • Isuzu (20985)
  • 8 manufacturers
  • BMW (43356)
  • Daimler Chrysler (41408)
  • Fiat (4286)
  • Ford (61468)
  • GM (61804)
  • Nissan (8539)
  • Toyota (64920)
  • VW (111526)
  • 7 manufacturers
  • Daimler Chrysler (9608)
  • Fiat (1944)
  • Mazda (21460)
  • Mitsubishi (9960)
  • Nissan (32416)
  • Toyota (59810)
  • VW (817)

South Africa is responsible for only 85 of
Africas vehicle output
Source NAAMSA. OICA
7
CONTENT
  • Overview South African Manufacturing Industry
  • South African Automotive Industry
  • Passenger Cars
  • Commercial Vehicles
  • Suppliers
  • South African Construction Equipment Industry
  • Recommendations
  • References

8
THE PASSENGER CAR PRODUCTION IN SOUTH AFRICA IS
STABLE - capital investment plans by virtually
all the OEMs
Passenger Car Production in South Africa
Development the last 5 years
  • Growth in local and export demand has lead to a
    gradual increase in passenger car production over
    the last 5 years
  • Automotive exports, as a percentage of total
    South African exports, increased significantly
    from the 4 in 1995 to over 13,5 in 2005
  • Significant capital investment plans by virtually
    all the OEMs have been unveiled to accommodate
    export programmes.
  • In the domestic market new vehicle sales in 2005
    achieved all time record levels.
  • GDP growth rates over the past 5 years have
    translated into an annual growth in domestic
    vehicle sales

Vehicles
9
THE MAJORITY OF PURCHASE DECISIONS ARE MADE IN
GAUTENG PROVINCE
Passenger Cars
Source NAAMSA
10
THERE ARE 8 CAR/LCV ASSEMBLY PLANTS IN SOUTH
AFRICA - Toyota and Volkswagen produce the most
cars in South Africa
NISSAN
BMW
FMC
FIAT
TOYOTA
VW
GM
DAIMLER CHRYSLER
Source NAAMSA
11
TRENDS WITHIN THE PASSENGER CAR INDUSTRY
Trends within the South African passenger car
industry
  • South Africa has been able to enter the global
    car production market and now exports to over 100
    countries globally. This is mainly due to
  • Motor industry development programme initiated by
    the South African Government
  • Competitive currency

Globalization
  • Landed costs of imported components continues to
    be dependant on local currency strength
  • Competition Commission has criticized local
    pricing practices
  • OEM have been fined and sanctioned for collusion
    practices

Competition and pricing
  • Significant capital investment plans have been
    unveiled by virtually all the OEMs
  • Capital investment by motor manufacturers is in
    excess of SEK 15,0 billion

Investment
Source STC
12
CONTENT
  • Overview South African Manufacturing Industry
  • South African Automotive Industry
  • Passenger Cars
  • Commercial Vehicles
  • Suppliers
  • South African Construction Equipment Industry
  • Recommendations
  • References

13
PRODUCTION OF LIGHT TRUCKS CONTINUES TO GROW -
limited local production of heavy commercial
vehicles
Commercial Vehicle Production in South Africa
Development the last 5 years
  • There has been a steep growth commercial vehicle
    production from 2003
  • Production in 2003 was low due to the
    competitiveness of the local currency.
  • Although local production appears low, sales of
    new commercial vehicles estimated at SEK 92
    billion in 2005

Vehicles
14
PURCHASE DECISIONS ARE MADE AT THE LOCAL SOUTH
AFRICAN HEAD OFFICES
Commercial vehicles
Source OICA
15
THE COMMERCIAL VEHICLE INDUSTRY IS CONCENTRATED
IN THE GAUTENG PROVINCE
ISUZU
DAIMLER CHRYSLER
NISSAN
FIAT
TOYOTA
TYCO
VW
Source NAAMSA
16
THE SHARE OF FOREIGN PRODUCTION IS INCREASING IN
THE COMMERCIAL VEHICLE INDUSTRY
Trends within the South African commercial
vehicle industry
  • The share of South Africa in foreign production
    is still relatively low
  • Main locations for production are the USA,
    Brazil, Poland, Spain, Mexico and Canada
  • South Africa is viewed as a viable investment
    amongst developing countries

Globalization
  • There is limited local production of commercial
    vehicles
  • The domestic as well as international production
    of light and heavy commercial vehicles increased
    during 2005
  • Increase of the production of light trucks mainly
    due to increase in local demand

Domestic production
  • Local sales of commercial vehicles is closely
    linked to the local economic growth cycles

Success factors
Source STC
17
CONTENT
  • Overview South African Manufacturing Industry
  • South African Automotive Industry
  • Passenger Cars
  • Commercial Vehicles
  • Suppliers
  • South African Construction Equipment Industry
  • Recommendations
  • References

18
THERE ARE OVER 200 AUTOMOTIVE SUPPLIERS IN SOUTH
AFRICA -most suppliers are classified as both T1
and T2
Geographical concentration of automotive
suppliers
South African automotive suppliers
  • There over 200 suppliers for the automotive
    industry in South Africa
  • 19 of the 100 largest automotive suppliers in the
    world (if you look at the turnover) are located
    in South Africa
  • There his a very high concentration of automotive
    suppliers in the Gauteng and Eastern Cape
    Provinces
  • Many of the companies have multiple plants in
    different locations

19
ONLY 19 OT THE TOP 100 AUTOMOTIVE SUPPLIERS ARE
LOCATED ON SOUTH AFRICA - Visteon and Faurecia
are amongst world top 15 Automotive suppliers
T1 AUTOMOTIVE SUPPLIERS
Electrical systems
Interior equipment
Propulsion
Body
Running gear
  • Cables, bus systems, embedded systems
  • Hesto Harness
  • Magneti Marelli
  • Pasdec Automotive Technologies
  • SAS Automotive
  • Power train, exhaust systems, engines
  • Autotube Manufactures
  • SAS Automotive
  • Senior Automotive SA
  • Visteon S.A
  • Cockpit, seats, dash-board, air conditioning
  • Automotive Leather Company
  • Automould
  • Faurecia Interior Systems
  • Feltex Automotive
  • Lear Corporation
  • Smiths Plastics
  • Body, roof, glass, doors, lighting etc.
  • Baisch Engineering
  • Murray Roberts
  • Nedschrof
  • Rand York Castings
  • Smiths Plastics
  • Suspension, brakes, axles, steering, tires
  • Foxtec-Ikhwezi

Manufactures and Suppliers of OE to vehicle
assembly plants only
Source National Association of Automotive
Component Allied Manufactures (NAACAM)
20
THE T1 SUPPLIERS ARE LOCATED NEAR THE VEHICLE
OEMs - T1 suppliers positioned in key automotive
provinces
  • Automould
  • Feltex Automotive
  • Hest Harness
  • Rand York Castings
  • Foxtec-Ikhwezi
  • Murray Roberts Foundries
  • Smiths Plastics
  • Stateline Pressed Metal

Senior Automotive SA
  • Visteon SA

The Western Cape is a key economic Province in
South Africa, but no OEM plants are located there
Source NAACAM
21
PURCHASE DECISIONS ARE MADE IN SOUTH AFRICA -
Purchase decisions are made at head offices
T1 Suppliers
Source NAACAM
22
MOST T1 SUPPLIERS HAVE MORE THAN 1 PLANT - Most
suppliers have their head offices in the Gauteng
Province
T1 Suppliers
Source NAACAM
23
THERE ARE ABOUT 150 T2 SUPPLIERS IN SOUTH
AFRICA - large number of international companies
have opened plants locally
Source NAACAM
24
TIER 2 SUPPLIERS ELECTRICAL SYSTEMS
Source STC
25
TIER 2 SUPPLIERS PROPULSION
Source STC
26
TIER 2 SUPPLIERS INTERIOR
Source STC
27
TIER 2 SUPPLIERS RUNNING GEAR
Source STC
28
TIER 2 SUPPLIERS BODY
Source STC
29
TRENDS WITHIN THE AUTOMOTIVE SUPPLIER INDUSTRY -
both T1 and T2
Trends within the South African Automotive
supplier industry
  • Production is moving to developing countries
  • Lower production costs
  • Strengthen market presence on new strategic
    important markets
  • South Africa an attractive developing market

Globalization
  • Pressure on prices, and the increased trend for
    suppliers to operate globally, has led to several
    mergers between component and original equipment
    manufacturers.

Competition and price reductions
  • Motor Industry development program is being
    Phased out by the government

MIDP
Source STC
30
CONTENT
  • Overview South African Manufacturing Industry
  • South African Automotive Industry
  • South African Construction Equipment Industry
  • Manufacturers
  • Suppliers
  • Recommendations
  • References

31
LIMITED PRODUCTION OF CONSTRUCTION EQUIPMENT IN
SOUTH AFRICA
  • The construction equipment sector of the
    automotive industry is not well regulated
  • Construction equipment vehicles sold in South
    Africa are mainly imported
  • South African manufactures are concentrated in
    the production of lower-end equipment
  • More labour intensive
  • Suitable for a low-skilled labour force

Source Construction and Mining Equipment
Suppliers Association (CONMESA)
32
CONSTRUCTION EQUIPMENT INDUSTRY IN SOUTH AFRICA
Source Engineering Industry Study
33
THE CONSTRUCTION LOCATED TWO PROVINCES IN THE
SOUTH AFRICA



Source Internet, STC
34
THE CONSTRUCTION EQUIPMENT INDUSTRY IS
CONCENTRATED IN GAUTENG AND KWAZULU-NATAL
  • Joy Mining Machinery

Bell Equipment
Source STC Analysis
35
HIGH DEMAND FOR CONSTRUCTION EQUIPMENT -
industry highly dependant on imports
Trends within the South African Construction
Equipment industry
  • Relies heavily on imports
  • Domestic sales of construction equipment are
    increasing due to high demand
  • Sales are expected to increase even more due to
    2010 World Cup Preparations

Sales
  • Exchange rate fluctuation result in devaluation
    of foreign assets
  • Local companies are focusing on cost reduction
    because of a weaker local currency

Commodities and foreign exchange markets
  • Extremely limited
  • Concentrated in the production of lower-end
    equipment

Domestic production
Source STC
36
CONTENT
  • Overview South Africa Manufacturing Industry
  • South Africa Automotive Industry
  • South Africa Construction Equipment Industry
  • Recommendations
  • References

37
RECOMMENDATIONS FOR MAKING BUSINESS WITH THE
SOUTH AFRICAN AUTOMOTIVE INDUSTRY
Recommendations for making business with the
South African automotive industry
Country specific
Understanding of the implications of the Black
Economic Empowerment process, where necessary the
choice of the right partner is key to success
1.
2.
Diverse culture (many different cultures,
nationalities, religions, traditions and
languages)
3.
Awareness of the effects of HIV / AIDS and a
company's possible responsibilities towards
affected employees
Industry specific
To take advantage of the Motor Industry
Development Programme (MIDP), companies may need
to invest in the local industry. Importers in the
sector are at a disadvantage
1.
2.
Raw material availability. Historically, South
Africa exported its raw materials. There is now a
move to beneficiate before exporting
3.
Understanding of labour regulations is important.
Source STC
38
CONTENT
  • Overview South Africa Manufacturing Industry
  • South Africa Automotive Industry
  • South Africa Construction Equipment Industry
  • Recommendations
  • References

39
HOW CAN STC IN JOHANNESBURG CAN SUPPORT COMPANIES
TO DO BUSINESS IN SOUTH AFRICA
Country specific
Market research, market study, aiming at
establishing fundamental market conditions and/or
prospects for our clients products or services.
Estimated market size, who are the main players,
the main opinion leaders, the major clients, etc.
Import tariffs or other trade barriers
Market Check
Partner Search
Identification and evaluation of a distributor or
agent (a partner for cooperation) on behalf of
our client
Market Survey
Market research of a much more comprehensive
structure, investigating market conditions and/or
prospects on behalf of our client Compared to the
Market Check the Market Survey is larger and
more detailed
Customer Search
The STC searches for, and identifies potential
customers for and on behalf of our client
Company Evaluation
Evaluation of a potential partner for cooperation
or customer
Multi-market Services
The above services offered in different
Sub-Saharan markets, depending on the clients
needs
Other
Company establishment Trade mark registration
Office to rent Admin support Recruitment
Business support office
40
STC HAS HELPED SWEDISH COMPANIES TO DO BUSINESS
WITH THE SOUTH AFRICAN AUTOMOTIVE INDUSTRY
41
STC CARRIED OUT CUSTOMER MAPPING FOR ECCO
FINISHING
Goal
Outline of project
The main objective of the project was to support
in strengthening the position on the South Africa
market and to accelerate sales

Step1 Mapping of potential customers
Completed
Kick-Off
STC role and contribution
  • Customer analysis
  • identify and select segments and industry
    sectors to target
  • identify and select companies to target within
    each segment,
  • prepare a detailed contacts database
  • prepare and distribute marketing and
    information material to identified companies
  • follow up and evaluate interest amongst the
    most promising companies and set up appointments
    for Client

Step 2 In-depth customer interview
Research
Completed
  • In depth business discussions with selected
    customers from step1
  • Sales and marketing support

Results
  • At the kick- off the team from the Swedish Trade
    Council was educated and the project outline was
    discussed
  • Step 2 entailed marketing the company and
    identifying end customers
  • 5 segments were identified
  • Interest was mainly from the interior segment
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