HOW IS ASCCI WORKING FOR

MANUFACTURERS?

SOUTH AFRICAN AUTOMOTIVE INDUSTRY SUPPORTThe South African automotive industry has benefited and continues to benefit from strong support from a number of agencies; aligning these benefits to a common ambition is important to delivering maximum value to the industry

Un-aligned support efforts

SOUTH AFRICAN AUTOMOTIVE INDUSTRY SUPPORTThe South African automotive industry has benefited and continues to benefit from strong support from a number of agencies; aligning these benefits to a common ambition is important to delivering maximum value to the industry

Aligned support efforts

Resultant need to:

1 Set the strategic direction for industry support activities

2 Coordinate and align activities in line with the defined strategic direction

WHY ASCCI?Given the realities facing the South African automotive industry, industry stakeholders identified the need to establish a national structure to coordinate automotive supply chain development activities

Industry recommendation to Minister Davies of need to establish a national steering committee to:

1

2

Set the strategic direction for specific practically oriented competitiveness improvement projects

• Formulate a national competitiveness improvement strategy

• Engage with local / provincial authorities on the development of local automotive sectors and clusters

• Prepare budgets for specific investigations and projects

Facilitate, coordinate and oversee supplier competitiveness improvement activities

• Monitor, coordinate and extend support to regional industries

• Initiate, support and fund localisation research projects

• Provide recommendations to the dti on appropriate service providers

HOW ASCCI CAME ABOUTIn response to this need, stakeholders set about developing a business plan and governance framework to provide the structure to delivering meaningful supply chain development activities to advance automotive industry competitiveness

Technical steering committee established to develop a business

plan

• Regional supplier representatives

• NAACAM

• OEM Purchasing Council

• NAAMSA

• NUMSA

• dti

Collaborative initiative with a 3-year business plan to provide the blueprint for

coordinating and aligning automotive supply chain development initiatives

Automotive Supply Chain Competitiveness Initiative (ASCCI)

NUMSA

NAACAM

NAAMSA

dti

WHO LEADS THE INITIATIVEAn Executive Committee comprising key representatives from Suppliers, OEMs, Government and Labour provides strategic direction and oversight to the initiative

Stakeholder category NAACAM & Cluster representative Current members

Suppliers

KZN supplier representative 1. Alex Holmes – MAHLE Behr *

EC supplier representative 2. Andy Dealtry – Ebor

GP supplier representative 3. Andrea Moz – Auto Industrial

WC supplier representative 4. Andrew Turner – Torre Automotive

NAACAM Executive Director 5. Robert Houdet – NAACAM

Industry (OEMs)

NAAMSA OEMPurchasing Council

6. Theunis Rootman – TSAM

7. John Astbury – GMSA

Government DTI8. Mkululi Mlota

9. Renai Moothilal

Labour NUMSA10. Neo Bodibe

11. Tengo Tengela

* Chair

WHAT IT SETS OUT TO DOASCCI sets out to establish and coordinate a strategy to enable competitiveness, growth, employment creation and transformation for the South African automotive industry via three strategic focus areas

Objective

Increase supplier Manufacturing Value Add (MVA) in support of producing 1.2m vehicles by 2020, increasing employment, enabling local supply chain

capabilities, increasing local content & advancing transformation

WHAT IT SETS OUT TO DOASCCI sets out to establish and coordinate a strategy to enable competitiveness, growth, employment creation and transformation for the South African automotive industry via three strategic focus areas

* Chair

Objective: Achieve comparable levels of supplier productivity to leading cost countries (as measured in Rand of MVA per Rand of employee cost)

Projects focus on:• Base operating standards• WCM best practice

implementation• Shop floor skills• Scarce skills

Supplier capability

Objective: Increase levels of localisation as value of vehicle sales ex-factory less all imported content (base condition: avg. 41% local content)

Projects focus on:• Raw materials pricing and

beneficiation• Tier 1 localisation• Tier 2 localisation• Investment in updated process

technology

Localisation

Objective: Increased local content and generation of employment creation opportunities

Projects focus on• Blockages and enablers to

competitive local supply• SA market regulatory review• Africa market regulatory

review• Facilitation of buyer-supplier

linking

Strategic insights

HOW ASCCI IS RESOURCEDASSCI has a budget of R68m for its current 3 year project plan; of this R4.8 million in catalytic funding is provided by the 4 key stakeholders for the executive function, while the remaining R63.2 million to be sourced for projects

* Chair

• dti – 50%

• NAAMSA – 22.5%

• NAACAM – 22.5%

• NUMSA – 5%

Catalytic funding R 4.8m

Directly leveraged resourcesR63.2m

Indirectly leveraged resources

Outputs R68.0m

Impact

Catalytic funding

Directly / indirectly leveraged resources

Figures in Rand million

Year 1 Year 2 Year 3

Budget Secure Budget Secure Budget Secure

Supplier capability

9.73 7.45 11.72 12.77

From UNIDO, MERSETA, self funding service providers

Localisation9.59 4.00 8.17 8.17

From dti

Strategic insights

1.31 0.82 1.15 0.60

From dti

54%

41%

5%

2

1

2

1

WHAT HAS BEEN DONE? SUPPLIER CAPABILITYThe supplier capability focus area has recently launched a number of projects, the most substantial of which is a programme to roll out WCM interventions at 30 suppliers in priority value chains

Key points

• World class manufacturing interventions currently being launched in identified priority subsectors; interventions will be deployed at 120 suppliers over the 3-year business plan period

• Base operating standards has recently launched a project focusing on establishing TS16949 as a more effective indicator of base standards of operation, particularly amongst lower tier suppliers

• A shop floor skills project is currently undertaking to create the qualification for machine operators in order to ensure it is aligned with the requirements of the role

Key points

Standardisation and integration(suppliers n=68)

1. FMCSA (15)

2. GMSA (17)

3. NSA (14)

4. VWSA (18)

5. TSAM (20)

6. MBSA (11)

7. BMW (3)

Commodity groupings

(suppliers n=98)

Linking of multi-site suppliers

(suppliers = 52)

Phase 1(suppliers n=22)

1.Metal forming/ pressing n=17

2.Components n=163.Plastic moulding

n=94.Autotrim n=115.Tyre / rubber n=36.Drivetrain n=27.Foundry/Forge n=28.Harnesses/

electronics n=59.Catalytic converters

n=110.Other n=2

1

2 3 4Phase 2

(suppliers n=18)Phase 3

(suppliers n=12)

Initial Tier 1 suppliers will be supplemented by Tier 2, aftermarket and export oriented firms over the period

Tier 1

Tier 3

Tier 2, aftermarket and

export

WHAT HAS BEEN DONE? LOCALISATIONThe localisation focus area has identified a list of priority localisation opportunities together with a list of key blockages to localisation, which will be addressed with funding made available by the dti

• Initial focus from a localisation perspective: broadening local content through increased use of existing capability• Workshops hosted with OEMs to determine specific localisation opportunities• 15 priority opportunities identified together with list of key blockages to localisation (including tooling and investment costs,

technology availabilty, cost of testing, and supplier availabilty and capability)• Next step: dti has made available funding to implement projects to address identified blockages

Key points

Broaden through increased use of existing capability(Build on existing local

content)

Deepen through new capability

(New local content to SA)

Retain local content through process upgrading

(separate intervention area)

3 broad areas of localisation opportunity

Focus: path of least resistance

Difference between upper and lower quartiles suggests opportunity for localisation in the sub-sector

COST / BENEFIT ANALYSIS

WHAT HAS BEEN DONE? STRATEGIC INSIGHTSThe strategic insights focus area looks at opportunities for automotive market growth, increasing local content and creating employment within and for the South African automotive industry

• ASCCI commissioned research to identify key lessons for regional economic development support to the automotive sector; findings are currently being shared with provincial and municipal authorities

• Funding is currently being sought to undertake a review of the African market and regulatory environment with the view to defining opportunities and mechanisms to leverage in respect of trade policy and other factors related to growing a viable, sustainable large scale African automotive market

Key points

MEANINGFUL INCENTIVES

DEMAND-SIDE INFLUENCE

GOVERNMENT PARTNERSHIP

JOINT COLLABORATION STRONG INSTITUTIONAL STRUCTURE

CRITICAL MASS IN COLLABORATION

SPECIFIC, TANGIBLE SUPPORT

MUTUALLY BENEFICIAL OUTCOMES

ASCCI is a collaborative initiative driven and funded by NAACAM, NAAMSA, the dti and NUMSA.

The initiative is facilitated by B&M Analysts.

Julia WedgwoodB&M AnalystsT: +27 (0)11 465 6911E: julia.wedgwood@bmanalysts.comA: 3rd Floor, East Wing, 158 Jan Smuts Avenue, Rosebank, Johannesburg