PARLIAMENTARY HEARINGS : INTEGRATED MANUFACTURING STRATEGY (IMS)

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• PARLIAMENTARY HEARINGS INTEGRATED
  MANUFACTURING STRATEGY (IMS)
• APRIL 2002
• Sagay Moodliar
• Enterprise Industry Development Division

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MIDP Overview

• The MIDP is an export/import complementation
  mechanism that seeks to force specialization and
  economies of scale for global integration
• Import duties are offset against rebates earned
  for exports on HS 8704
• The objectives are to provide high quality
  vehicles, at competitive prices to domestic and
  global markets while being a platform for
  sustainable employment, growth
• Improving the sectors trade balance

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Introduction

• Objective to illustrate how the IMS functions in
  reality and lessons for value chain cooperation
  and efficiency
• Automotive programme in dti best exemplifies IMS
  and value chain matrices in SA
• Acts as confluence of technology, skills,
  beneficiation, ICT, logistics, financial
  services, retail, branding demands efficient
  networks.
• The dti has an influential policy lever via the
  Motor Industry Development Programme, in place
  since 1996

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MIDP Performance 2000-1

• Direct Employment
• Assembly, component, tyre, retail saw slight
  increases by 850 jobs
• Skilled employment increased faster than less
  skilled employment
• Production/productivity measures
• Capacity has increased in assembly to 65, with
  CBUs rising to 400k in 2001 (13)
• 80 of African CBUs made in SA
• OEM and Component sectors increase training by
  71 and 20.
• Increased usage of CF and SPF dti schemes

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MIDP Performance 2000-1

• Exports
• Total exports in 2001 are R25bn (25 increase)
• Ave annual increase of 37 since MIDP introduced
  in 1996
• CBU exports in 2001 reach 103 000 units, in 96
  this was 10 000.
• Imports
• New vehicle imports rise from 5.6 to 18.7
  between 95-2000
• Total imports increased by R7bn between 99-2000.
• MIDP is creating and enhancing

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Integrative interventions

• The dti intervenes in this sector via
• The Motor Industry Development Council
• The MIDP itself which acts as the major programme
  for the sector
• The Productive Asset Allowance Scheme
• The Strategic Investment Team
• Benchmarking Clubs in KZN, E. Cape, and Gauteng
• The Auto Industry Development Council

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Integrative interventions

• The Motor Industry Development Council
• Consists of dti as chair, OEMs, component
  association, Unions, SARS, SABS, AIDC, BTT
• Policy consultation forum and monitoring of the
  MIDP, now embarking upon post 2007 review
• Mechanism to unlock Govt action in critical areas
  for the sector

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Integrative interventions

• The MIDP
• Issuing of certificates, monitoring and
  processing of claims

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Integrative interventions

• The Productive Asset Allowance Scheme
• Implemented in 2000 to rationalize production by
  OEMs
• Seen 24 investment projects of R7.44bn assessed,
  15 approved to value of R4.96bn.
• Major instrument to force rationalization
• Model produced for global networks

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Integrative interventions

• The Strategic Investment Team
• Group of procurement directors of OEMs that dti
  coordinates around investment mapping and
  attraction
• Used to assess how collective action with dti
  acting as neutral player can attract 1st tier
  investors
• Success in metals components, plastics, rubber,
  exhaust systems, interior trim, glass etc

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Integrative interventions

• Benchmarking Clubs KZN, E. Cape, GP
• These initiatives were launched by dti to assist
  small component firms to assess how they
  competed against local and global firms
• 47 small firms benefit from this exercise
• AIDC
• Support of shop floor improvement for component
  firms
• BEE shop floor mentoring programme
• Assists dti in MIDC, PAA, SIT

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IMS at work in the Auto sector
Finance Logistics Branding Retail
Jobs Exports Investment Skills transfer SME BEE
Metals
Autos
Chemicals
MIDC/MIDP SIT PAA
Materials
ICT technology diffusion, skills training