KWAZULU-NATAL TOOLING INITIATIVE

Presented by:

Umash RamkalawonRegional Programme ManagerKZNTI

Re-structuring of the South AfricanTool, Die and Mould-making

Industry

Rehabilitation and growing of the Tool, Die & Mould-making Industry in South Africa

History of the TDM Sector in SA

EUGlobal

4,6%

SA

1%

% Annual turnover

Packaging &

consumer goods

35%

25%

Mining & other

Automotive

(7 OEMs)

40%

Sector ratio

BMW

Toyota

Nissan

Volkswagen

General Motors

Mercedes Benz

Ford Motor company

1990 2010

80%

Capacity (increasing imports

from China and others)

Loss In Local Tooling

ManufacturingCapacity

Distress Drivers for the Sector in SA

Economic Impact of the Tooling Sector in SA

• The tooling sector can be classified as a sub-sector under the “Metal Fabrication, capital equipment and transport equipment” sector

• High employment and growth multipliers• Strong backward linkages

National Intervention in the TDM Sector

• The Tooling Initiatives across SA is guided by the intervention programmes set by the National Tooling Initiative(NTI) which has been incorporated into the DTI’s Industrial Policy Action Plan – IPAP(2013- 2016) as a key action programme for Capital Equipment and Allied Services.

Establishment of TDM Cluster Managementstructures in 6 provincial locations

KZNTI Strategic Concept

SUSTAINABLE ECONOMIC GROWTH within the

TDM SECTOR

KZNTI Intervention Projects

Business capacity expansion

Cluster structure development

Competitiveness improvement

Technology recapitalization

TDM sector skills development

Localisation of international tooling companies

TDM Sector Skills Development

• TDM Powered Apprenticeship Programme• Pilot programme developed by industry experts and funded by the DTI• The future tooling qualification

526 students at selected FET Colleges across the country

65 students in KZN

• Level 1

20 students in Pmb

• Level 2

19 Students in Pmb

26 Students in Dbn Additional intake of 500

students for 2014

….continued

Business Capacity Expansion

• Tooling Incentive Scheme• Recommended amendments to the current investment incentive structure

of the Automotive Production and Development Programme (APDP) and

the Automotive Investment Scheme(AIS)

• AISo Current capital investment incentive structure ranges from 20% to 30%o It is proposed that this incentive is offered to automotive tooling at a 50%

standard rate

• APDPo The light vehicle APDP offer's local value addition incentives in the form

of a Production Incentive applied for via a Production Rebate Credit Certificate

o It is proposed that for tooling local value addition, the benefits apply at the vulnerable products level to provide a significant boost to tooling localization.

….continued

Rand value of imported automotive tooling used for calculations

are as follows,• Historic average of R 2, 227 billion per annum• Forecasted value of R 4 billion per annum

Historic average(R2 227 million)

Forecast(R4 000 million)

Additional local value added R 534 000 000 R 960 000 000

Additional AIS for Local tooling (R 107 000 000) (R 192 000 000)

Production incentive (R 75 000 000) (R 128 000 000)

Benefit to SA economy R 353 000 000 R 640 000 000

Benefit as a % of VA 66% 67%

Extra cost to Govt. for VP incentives per annum

(R 25 000 000) ( R 38 000 000)

Competitiveness Improvement

•Business Development and Systems Training

THANK YOU