The East London IDZ has developed a model which it believes will provide a platform for the development and improvement of the automotive industry in South Africa and further contribute to the competitive positioning of the South Africa automotive industry globally.
The multi-OEM model, which is centred on the employment of a common facility to assemble a number of different products for different OEMS, was launched by the East London IDZ at the South African Automotive Week as part of the organisation’s response to its mandate to attract export oriented investment into the country.
Speaking on this new innovative investment opportunity, East London IDZ Executive Manager for Business Development , Tembela Zweni said it is no secret that the automotive industry worldwide is heavily impacted by the economic downturn and that combined with outdated practices and increased competition, these factors have placed and continue to place enormous pressure on OEMs across the globe.
Difficult to motivate for monolithic facilities in auto sector
“Where the cost of production continues to increase, it is becoming more and more difficult to motivate for the monolithic facilities that have become the norm in the industry. The capital outlays required to establish such facilities remains enormous and prohibitive and in an environment that is both under constant pressure and is in a state of continuous flux, this investment falls into the high risk category,” he said.
The multi-OEM model revisits the historical success of many of the established European, American and even Japanese brands, where a common facility was employed to produce a number of different products for different OEMs. The fundamental principle behind the model is shared facilities, the use of common infrastructure and collective efficiencies. The model presents a significant value alternative to the single OEM production that has become the norm.
Goal is for achieve leaner operations, greater efficiencies, cost savings
“It is our belief that in order for the industry to survive the current conditions and to be sustainable in the new economic landscape, it is necessary to revise conventional models of production to achieve leaner operations, greater efficiencies and cost savings.
The multi-OEM model has evolved as a result of this belief. The model represents an opportunity not only for the South African automotive industry and economy as a whole, but for the wider global automotive industry,” said Zweni.
The model requires the collaborative efforts of a number of role players to achieve the desired production outcomes. The East London IDZ its self would have the responsibility of providing a facility that offers a shared infrastructure and development platform for the model. The organisation would also have the responsibility of providing a framework for the integration of multiple partners that are required for the model, as well as offering support and facilitation mechanisms for funding and development.
Other key partners include OEMs
Other key partners would include the OEM partners which would bring with them the investment and technical resources required in the specification of the assembly requirements.
“Another key partner that is required to make this model work is an outsource assembly company to provide the umbrella structure necessary for the overall management of the solution.
The Assembly Company functions as the model operator, running the full facility on behalf of the OEM companies and coordinating the efforts of both the production service providers as well as the logistics service providers & suppliers,” Zweni said.
Zweni said that the ELIDZ was well positioned to be the ideal location for this facility as it had already established key components of the automotive value proposition within the East London IDZ. The East London IDZ boasts a 16 hectare Automotive Supplier Park which houses world renowned suppliers who currently manufacture components for the local and export market. These component manufacturers have the ability to produce high spec, quality components at the right time and within a competitive price range for OEMs.
Innovative logistics solutions for efficient global access include the IDZ’s tugger route, a centralised service that transports materials and components between suppliers and OEM’s within the Zone. This, coupled with a truck staging area, container facility management, and inbound and outbound logistics services, make the East London IDZ automotive facility one of streamlined operation and best practice efficiency.
The East London IDZ is situated 6 kms from the city’s river port, strategically located to service markets to the East and West through scheduled shipments to Australia, Africa, Asia and Europe. The port, which has an award from the most efficient port in the country under its belt, boosts a car terminal with a storage capacity of up to 5000 vehicles. The port has 2 dedicated bays for car carriers and has the ability to process a motor vehicle every 30 seconds.
The East London IDZ has already presented this model to a number of OEMs and automotive role-players who would be ideal partners for this model and continues to interact with a number of stakeholders to market this model.