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THE NATIONAL INDUSTRIAL PARTICIPATION PROGRAMME

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Exports of mining tools, automotive, power generation equipment with credits of ... Supplies electrical racks to Labinal (Airbus tier 1 supplier) for A319 and A320. ... – PowerPoint PPT presentation

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Title: THE NATIONAL INDUSTRIAL PARTICIPATION PROGRAMME


1
THE NATIONAL INDUSTRIALPARTICIPATION PROGRAMME
  • PRESENTATION TO PORTFOLIO COMMITTTEE ON TRADE AND
    INDUSTRY
  • November 2004

2
History of Industrial Participation
  • Practiced internationally for over 30 years
  • Counter trade Offset
  • In most countries, applies only to defence
    related purchases
  • Commenced in SA in 1996 mainly focusing on
    telecoms, transport and information technology
    purchases.
  • Major increase in 2000 as a result of the
    aerospace and defence related purchases

2
3
Main purpose
  • To raise investment levels
  • and to increase international market access for
    South African value-added goods and services
  • by leveraging off government procurement.

3
4
The NIIP obligation cont.
  • Seven years to fulfill the obligation
  • Credits system used for each of the objectives
  • Performance guarantee required
  • Responsibility lies solely with seller
  • Purchasing decision independent of NIPP
  • NIPP is a precondition but not a factor in the
    adjudication process

4
5
Current Obligations
  • Total Obligations approx US14bn
  • US13 bn arising out of Strategic Defence
    Procurement
  • US800m arising out of purchases by SAA
  • The rest from purchases by
  • Telkom
  • Other government departments
  • Spoornet
  • Eskom
  • Other SOEs

5
6
Current Obligations
  • Obligors have seven years to fulfill obligation
  • BAE/SAAB has 11 due to size (US7.2bn)
  • Defence obligors have specific milestones that
    must be met
  • First milestones due in April 2004 and July 2004
  • Next milestones due in 2007 for BAE/SAAB and in
    2005 for others
  • New contracts for non-defence obligors have
    milestones evaluated in years 3 and 5

6
7
Milestones for Defence Obligors
7
8
Performance of Obligors
  • Since inception over 125 projects approved and
    implemented
  • Projects cover sectors as outlined in the dtis
    IMS
  • These projects have generated
  • Investment Credits in excess of US677m
  • Sales Credits in excess of US1bn
  • Local Sales in excess of US457m
  • Includes technology transfer, BEE and SME
    promotion
  • 7 000 direct jobs

8
9
Performance per first milestones
  • BAE/SAAB in aggregate exceeded their first
    milestone target
  • Achieved more than 100 investment target
  • 95 sales target
  • Agusta exceeded its first milestone targets
  • Achieved more than 100 of its investment and
    sales milestone
  • Thales
  • Achieved 85 of its overall targets(current
    figures indicate 93 achievement)
  • Ferrostaal
  • First milestone July 2004- assessment of final
    claims will be completed Dec 2004
  • Thyssen
  • Achieved more than 100 of sales targets,
    investment milestone due April 2005

9
10
BAE Projects
  • BAE/SAAB carries almost 50 percent of the total
    SDP obligations.
  • Engaged in over 36 investment and export
    promotion projects. These projects are forecast
    to generate investments of USD 300 million and
    exports of USD 2 000 million by 2004. All DIP
    targets have been met.
  • Projects undertaken included facilitating
    investments in Global Forest Products, Swedish
    Match, Ecoplug, Elgin Brown and Hammer and
    Kolbenco Pistons.

10
11
BAE Projects
  • Exports of mining tools, automotive, power
    generation equipment with credits of over USD
    130 million.
  • Investments have also been facilitated in the
    automotive and jewellery industries - a gold
    beneficiation and two jewellery manufacturing
    operation has been established in Virginia.
  • The plants commenced full production in the first
    half of 2002. The construction of the plants has
    been completed and machinery has already been
    installed in one of the plants.

11
12
Thyssen Projects
  • Engaged in 7 projects which are forecast to
    generate exports and investment of USD 1, 6
    billion over period of contract.
  • Has already facilitated the signing of an
    off-take agreement to purchase five years of
    production of a new ferrochrome plant. Exports
    of USD 5OO million to be generated.
  • A greenfield project (manufacture of aluminium
    tubes for the automotive industry) commenced
    operations in KZN in December 2001. Over 50 of
    production will be for exports.

12
13
Thales Projects
  • All four projects submitted by Thales have
    commenced operations.
  • The company needs to attain an investment/export
    target of US 270 million by 2004.
  • The export of solar panels and silicon metal have
    commenced.
  • Evertrade Medical a waste facility and bin
    manufacturing plant commenced operations in
    January 2002. Off-take agreements for exports
    have been signed with Steri Cycle, a Nasdaq
    listed company.

13
14
Ferrostaal Projects
  • Ferrostaal engaged in 2 Stainless Steel
    Beneficiation Projects ( stainless steel
    conveying pipes and tank containers)
  • A Fund valued at Euro 30 million has been
    established to finance new projects and assist
    BEE and SMME groups.
  • Export of engineering services
  • Invested in Atlantis Training Centre

14
15
DEFENCE INDUSTRIAL PARTICIPATION (DIP) STRATEGIC
DEFENCE PACKAGES - STATUS AS AT 31 MARCH 2004 US
DOLLARS (MILLION)
PROJECT     COMMIT-MENT     ACTUAL PERFOR-MANCE   PERF vs COMM   PLANNED PERFOR- MANCE AS AT 31/03/2004 ACTUAL vs PLANNED  
CORVETTE 471 227.2 48.3 219 103.75
SUBMARINES 179 85.1 47.46 90 94.7
LIGHT UTILITY HEL. 191 70.1 36.72 112 62. 74
HAWK 680 333.6 49.03 304 109.63
GRIPEN 808 263.9 32.67 150 175.67
MARITIME HEL 88 3.2 3.59 0 0
TOTAL 2 417 983.2 40.68 875 112.37
16
Performance of Non-Defence Obligors
  • Non defence contracts signed before 2002 do not
    have specific milestones
  • Boeing has fulfilled its obligations three years
    ahead of schedule
  • Airbus still in the early stages of
    implementation
  • Siemens, Ericsson and Alcatel all have credits
    above current obligations
  • Other small obligors performing satisfactory

16
17
Boeing Projects
  • Aerospace Industry Standards require suppliers
    and sub-suppliers to be qualified annually
  • Provides annual qualifications for both Denel
    Aviation and Aerosud
  • Provided Aerosud with technology transfer for
    manufacture of aircraft components
  • Export orders for aircraft interior components
  • Provides lean manufacturing processes
  • Transferred state-of-the-art equipment to Denel
    Aviation to carry out manufacturing work on
    aircraft components
  • Export orders for components
  • Provides lean manufacturing processes

17
18
Airbus Projects
  • Provides Aerosud for annual process approvals
    aircraft components
  • Aerosud qualified as for design and manufacture
    of galleys for A319 and A320 aircraft
  • Supplies electrical racks to Labinal (Airbus tier
    1 supplier) for A319 and A320.
  • Has established a Non-Destructive Testing Centre
    for Aerospace, Oil and Gas industries
  • Partnered with NDT Expert and Bureau Veritas
  • Initial contract for A400M structural design
    could result in Denel participating in one of the
    largest aerospace programmes in the world

18
19
Other Obligors
  • Siemens Telecoms develops and upgrades fixed and
    mobile switching software for Siemens AG
    international customers
  • Ericsson SA subcontracts to local subsidiary RD
    work, construction and maintenance of fixed and
    mobile networks.
  • Subcontracting by Alcatel in France to a local
    subsidiary.
  • Substantial Involvement in GSM roll-out in Africa

19
20
Other Obligors (Cont.)
  • Marpless Consortium involved in exporting
    telecoms equipment and related services
  • Aventis Pasteur established a local company for
    Clinical Trials and has invested in SA Vaccine
    Manufacturing company

20
21
S I Y A B O N G A !
21
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