Automotive localisation aidc

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Presented at the UNIDO-SPX Rhythm meeting on 29 September.

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Automotive localisation aidc

  1. 1. UNIDO Rhythm Meeting<br />Lance Schultz<br />29 September 2011<br />
  2. 2. Index<br />Feedback on benchmarks<br />Current Local Content Levels in SA Automotive Industry<br />Strategic Challenges in SA Local Content<br />Challenges in Expanding and Deepening Local Content<br />A strategic model for competiveness<br />Competiveness in the SA Automotive Industry <br />
  3. 3. Current Status<br />NAACAM UNIDO benchmarking has resulted in 8 benchmarks including 2 benchmarks in WC region. The balance of the 2 for the EC region should be completed, October 2011, which will make the target of 10.<br />The GP benchmarks (10)-outsourced to H.Viljoen, and is still WIP.<br />An opportunity remains to do at least 4 benchmarks in the KZN area, which is being pursued by the EC .<br />On average, it takes 3 months from the time the first contact is made until the benchmark is complete at a company. <br />Many NAACAM members have been reluctant or disinterested in participating, largely citing lack of time to participate.<br />
  4. 4. Way Forward<br />Should the program be extended - include non NAACAM members as well?<br />At the moment, the NAACAM pool of opportunity is exhausted and not much more members to market toward, hence the above suggestion. Perhaps - like Agri?<br />If the AIDC EC is contracted to do another 10 - 15 benchmarks, would strongly suggest that other industries in the EC be considered. At least in this way, we can achieve the desired targets.<br />Alternatively, NAACAM provides list indicating who is willing to participate - this being based on some intervention on their part where they nominate their members who want a benchmark.<br />
  5. 5. 65%: % of total material cost 35%: true local material plus value add as % of total material cost<br />Note: %’s indicative only, still being verified & vary by model and by OEM<br />Exterior<br /><ul><li> Glass
  6. 6. Paint
  7. 7. Bumpers
  8. 8. Mirrors</li></ul>10%<br />Electrical / Electronic <br /><ul><li> Harnesses
  9. 9. Starter motors
  10. 10. Alternators
  11. 11. Wiper systems
  12. 12. HVAC</li></ul>19%<br />3%<br />5%<br /> Interior<br />23%<br /><ul><li> Cockpit
  13. 13. Seats
  14. 14. Door panels
  15. 15. Carpets</li></ul>Body <br />9%<br />15%<br /><ul><li> Bonnets
  16. 16. Bootlids
  17. 17. Sideframes
  18. 18. Doors
  19. 19. Axles
  20. 20. Differentials
  21. 21. Drive shafts
  22. 22. Brakes</li></ul>6%<br />Chassis and Drive-train<br />Source: Toyota SA: Dr J.van Zyl<br />33%<br />14%<br />
  23. 23. Have to potentially have a SA Car to increase sustainability <br />AFRICAR<br />
  24. 24. Electrical / Electronic <br />Exterior<br /><ul><li> Lack of common </li></ul> specifications across OEMs<br /><ul><li> Lack of competitive suppliers
  25. 25. Volumes / economies of scale
  26. 26. Frequently changing technology
  27. 27. Distance from design centres
  28. 28. Low R&D spend and dev.</li></ul>Interior<br /><ul><li> Differing raw materials </li></ul> specs (resins, carpets)<br /><ul><li> Differing technologies</li></ul>Body<br /><ul><li> Local steel quality
  29. 29. Local steel specifications
  30. 30. Investment costs
  31. 31. Differing OEM </li></ul> specifications<br /><ul><li> Local steel quality
  32. 32. Local steel specifications</li></ul>Chassis and Drive-train<br />
  33. 33. Localisation of the Automotive Industry <br />Competitiveness within the automotive sector are linked to a set of internal/external factors.<br />EC Localisation achievements - 2009/10<br />OEM 1 = 70%<br />OEM 2 = 59%<br />EC OEM’s Future targets – 2014<br />OEM 1 = 80%<br />OEM 2 = 64%<br />Barriers to increasing localisation;<br /><ul><li>Limited supply base
  34. 34. Supplier competitiveness
  35. 35. Economies of scale
  36. 36. Small, independent suppliers - risky
  37. 37. Macro environment</li></ul>Supplier development challenges;<br /><ul><li>Resistance to change
  38. 38. Global quality standards
  39. 39. Lean manufacturing
  40. 40. Lack of technical skills
  41. 41. 2nd / 3rd tier suppliers not competitive</li></li></ul><li>Competiveness in the SA Automotive Industry <br />Factors affecting our supplier competitiveness<br />Competitiveness within the automotive sector are linked to a set of internal/external factors.<br />External Factors include;<br /><ul><li>Government Policy
  42. 42. Exchange Rate Regime
  43. 43. Import parity Pricing
  44. 44. Socio-economic
  45. 45. Access to funds</li></ul>Internal Factors include;<br /><ul><li>Productivity
  46. 46. Quality Standards
  47. 47. Internal Processes
  48. 48. Cost
  49. 49. Leadership & Change Management
  50. 50. Adherence to international standards
  51. 51. Labour Skills
  52. 52. Equipment</li></ul>There are many factors that could directly or indirectly affect the competitiveness of sector. The question is which factors contribute the most to competitiveness within the internal environment of manufacturers. This is the space with which various initiatives could impact.<br />(UnidoTirisano Programme SWOT analysis 2010, Crafting and executing strategy, Johan Hough, 2010)<br />
  53. 53. THE END<br />Questions?<br />

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