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Incubation centre to boost South Africa's car industry

30 March 2015

The Automotive Incubation Centre at Nissan in the Tshwane suburb of Rosslyn is expected to radically transform the economy.

"Established automotive companies are extremely important to our drive to radically transform our economy and foster increased participation by women, youth and black people," Gauteng Premier David Makhura said before the centre was launched on 25 March.

The centre, the second in South Africa, is aimed at establishing and nurturing small- and medium-sized enterprises that can supply components to Nissan South Africa's production line, while they receive training on meeting international standards for automotive parts and components.

"We must view this initiative within the broader context of the need to re- industrialise our economy and increase local production on a grand scale," Makhura said.

Only 35% of the components and parts used to make vehicles in South Africa is produced locally; the balance is imported. Gauteng's car makers spend nearly R8- billion a year on imports for automotive parts, components and accessories.

Job creation

The automotive industry is one of the sectors earmarked by Gauteng government for inclusive growth and job creation. The first Automotive Incubation Centre was launched in 2011 at Ford Motor Company of Southern Africa's manufacturing plant in Silverton, also in Tshwane.

The incubation centre was established by the Automotive Industry Development Centre (AIDC), a subsidiary of the Gauteng Growth and Development Agency (GGDA), itself a unit of the Gauteng department of economic development.

Speaking at the launch, Makhura said the provincial government's partnership with the automotive industry was moving from one level to another. "We are bound together on the hip. It started and it cannot end; it can only grow from strength to strength."

The industry had committed itself to working with the government towards the revitalisation of the township economy. "I want those township mechanics to be trained here; those are the people we want to service our government cars. The new generation of players in the automotive industry are going to come from the township. I always emphasise that black economic empowerment will be more sustainable when it is premised on entrepreneurs," Makhura said.

Mike Whitfield, the managing director of Nissan South Africa, said the launch of the Automotive Incubation Centre proved the true power of public-private partnerships. "The automotive industry is gearing to reach the target of 1.2 million vehicles per year by 2020 – critical to reaching the target is the development of the scarce skills at factory level and throughout the value chain and reliable local suppliers."

Government support

Gauteng's MEC for economic development, environment, agriculture and rural development, Lebogang Maile, said the initiative was part of the provincial government's plans to support the automotive sector in the Northern Development Corridor anchored around Tshwane through the AIDC.

"The 10-pillar programme of radical transformation, modernisation and re- industrialisation is about bringing the National Development Plan to life," Maile said.

According to the AIDC, broad-based black economic empowerment entrepreneurs at the centre are earmarked to supply components directly to the production line for the next generation one-ton pick-up, which will start production in early 2017. The facility at Nissan is intended to replicate the centre at Ford, and will include the lessons learned from the first incubation facility.

One of the major lessons was for a pre-incubation process. This will involve the identification of 20 potential BEE entrepreneurs that will be pre-incubated for a 12- month period, after which a final choice and appointment will be made. The Nissan centre will also operate as a multi-incubation model incubator, namely, a mix of tier one component suppliers linked to the incubatees and original equipment manufacturers linked to the incubatees.

Nissan's engineers will support the incubation process by providing their technical expertise to the incubatees during the incubation process. Construction of the AIDC's 10 000m² Automotive Incubation Centre (Nissan) is under way and scheduled for completion in June.

SAinfo reporter