OPPORTUNITIES FOR LOCALISING AUTOMOTIVE COMPONENTS
1. Opportunities for Localising
Automotive Components
Presentation by Roger Pitot, NAACAM
To SA Institute of Foundrymen
January 2011
2. Profile of NAACAM
• Established 1980
• Over 180 members with 260 plants
• Members comprise 70% of dedicated auto
component manufacturing companies in SA
• Independently elected President and two
Deputy Presidents, and 4 Executive
Committee members
• 5 Regions with Chairmen and Deputy
Chairs – quarterly meetings for members in
each region
3. Low Real Local Value
within Components
Imports
38 Imports
=53%
40%
SA
60% Net
24
Local
Content
=47%
4. Current Breakdown of costs and
Local Content
65%: % of total material cost 35%: true local material plus value add as % of total material cost
Exterior
Electrical / Electronic 10%
•Glass
•Harnesses •Paint
•Starter motors •Bumpers
19% 3%
•Alternators •Mirrors
•Wiper systems
•HVAC
5% Interior
23%
•Cockpit
Body •Seats
•Door panels 7%
15% •Carpets
•Bonnets
6% •Bootlids
•Sideframes •Axles
•Doors •Differentials
Chassis and Drive-train
•Drive shafts
33% 14% •Brakes
5. Challenges
in Expanding and Deepening Local Content
Electrical / Electronic Exterior
• Lack of common
• Low volumes / economies of scale specifications across OEMs
• Frequently changing technology • Lack of competitive suppliers
• Distance from design centres • Low volumes / economies of
scale
Interior
• Differing raw materials
specs (resins, carpets)
Body • Differing technologies
• Local steel quality
• Local steel specifications • Differing OEM
• Investment costs
specifications
• Local steel quality
• Local steel specifications
Chassis and Drive-train
6. Joint OEM Initiative
To Increase Local Content:
• Improve local suppliers’ competitiveness
- Develop local suppliers (including Tier 2/3)
- Consolidate local supplier base
- Consolidate OEMs’ business (increase
commonality of local suppliers)
• Align existing OEM technologies and / or specifications
wherever possible
• Attract new technologies and / or suppliers
7. Approach: 5 Joint OEM
Teams
• Chassis and Drivetrain
• Electrical / Electronic
• Exterior
• Interior
• Body
8. Team Approach
• List all commodities per Commodity Group
• Analyse commodities, e.g.
- Local vs. import
- High value commodities not available in SA
- Local commodities with high import content
- Local commodities available locally but suppliers
not well supported or well developed
• Select high priority projects and assign
project leaders & team members
• Selective engagement of suppliers
• Meet regularly, track progress
9. Opportunities - Body
• Pressed part localisation: hand brake lever and side impact
beams identified as further potential
• Steel: 2010 Imported steel list sent to AMSA to determine
whether some grades can be combined in one local grade.
VW success in localising some steels already
• Press shop JV with international partners: OEMs facilitating
various JV’s with multinational partners
• Localisation of BTR material for hot forming is major
opportunity. Local equivalent hardness found below spec
October 2010. Material composition being verified and next
steps to be determined.
10. Opportunities - Interior
• Localisation of vinyl. Headliner, sunvisor
material lamination trials in progress.
• Plastic injection moulded seat profiles. One
OEM has approved local sourcing, others
investigating.
11. Opportunities - Exterior
• Increase local raw materials (Polypropylene) in local injection
moulded plastic parts. OEMs studying potential for
commonisation of PP specs and in discussions with potential
supplier.
• Automotive paints products: looking to increase local raw
materials in various locally produced paints products.
• Weather strips localisation: phase 1 would be limited to
importation of extrusions with local cutting to size and then
assembly; phase 2 would include local moulding of extrusions.
Several OEMs in RFQ process with potential supplier.
12. Opportunities - Chassis
• Driveshafts: looking to re-establish manufacturing of
driveshafts in SA
• Brake calipers: investigating potential to deepen
localisation by localising castings, machining and
plating.
• Cold Coil Spring Steel Localisation not feasible – local
market too small to justify investment
• Wheel Rim (Band) Commonisation – complexity due
to different materials and thickness
13. Opportunities – Electrical/Electronic
• Instrument clusters: localisation of certain sub-components
plus local assembly.
• Review feasibility to localize hooters & horns – local supplier
identified
• Motors and Alternators: discussions with suitable local Tier 2
& 3 aluminium die castings suppliers.
• Batteries: AGM (absorbed glass mat) battery manufacturing
facility at local supplier being commissioned.
• Vehicle harnesses: investigating opportunity to develop Tier 2
and 3 suppliers to localise Battery & Ring type terminals /
Harness clips / Harness tape / Corrugated sleeving
14. Challenges & Opportunities
• Maintaining local content on new models with higher levels of
new technology
• Global excess capacity of many suppliers
• Supplier development capabilities of local organisations?
• OEM Team member participation
• Fast track introduction of certain new suppliers through
acquisition of existing suppliers