The East London IDZ and Johnson Controls will be making a joint announcement of a new multi-million rand investment on Tuesday, March 19, 2013 at the ELIDZ Automotive Supplier Park (ASP).

The massive R380 million investments is an expansion of the Johnson Controls current plant situated at the ELIDZ and will create 180 new jobs. The plant currently supplies Mercedes Benz South Africa (MBSA) with cockpits for the W204. The company has now been awarded a contract to further supply the new generation C-Class W205 with overhead systems, instrument panels, headliners, door panels and cockpits.

“The new C-Class is a global programme and will be produced on four continents. The ability to serve our customer, Daimler, on those four continents with the existing teams and infrastructure was part of the decision to award JCI globally with the W205, said JCI South Africa Vice President and General Manager, Marco vom Wege.

He added that the decision to localise with the intended technology depth was very much influenced by the current discussions that the organisation was having with the government on extending the value chain and local content of the South Africa automotive sector.

“If you look at the technology that we will be bringing to South Africa, we are confident that we can localise more components with other customers in the near future. The logistic chain and import costs as well as the risk of exchange rate fluctuations will drive this further localisation,” added vom Wege.

Mercedes Benz South Africa (MBSA) Vice President Manufacturing, Arno van der Merwe has welcomed the expansion of the JCI plant as it will broaden the impact on economy. “Any increase of local content to us is a victory and gives us an opportunity to deepen our economic impact. In 2012, we spent in excess of R25 million on skills and education to develop local capabilities and skills. We want to draw suppliers closer as this will allow us to influence our cost base and leverage the logistic challenge that we are often confronted with”, he said.

Van der Merwe said the welcoming environment to investors provided by the ELIDZ has been central to MBSA’s success in growing its business over the years. Currently, five new factories that will supply components to MBSA are under construction in the zone.

“The upcoming W205 will increase MBSA’s capacity by more than 50 percent which will see the company creating an additional 800 jobs, with 200 of these being highly skilled Technicians and Engineers”, he said.

According to ELIDZ CEO Simphiwe Kondlo the investment will introduce new automotive capability, technology and skills into the South African automotive industry. “The JCI project adds further value to the region’s automotive sector capabilities. It extends the current regional value chain and through the JCI Academy initiative it will extend the competitiveness of the region’s automotive skills base,” he said. Kondlo added that the ELIDZ had various initiatives in the automotive sector that were meant to diversify the region’s automotive offering.

“To date the East London Industrial Development Zone has attracted 14 automotive investors with a shared investment value of just over R1.2 billion. The latest multi-million expansion by internationally renowned Johnson Controls Automotive and the establishment of a Metal Surface Treatment Plant as well as our Multi-Model OEM projects, are further examples of the role of the ELIDZ in strengthening the region’s automotive sector,” he said.

The East London Industrial Development Zone (ELIDZ) recently celebrated ten years since it was designated as one of the first IDZ’s in South Africa. Reflecting on the ten year journey ELIDZ CEO, Simphiwe Kondlo, said this journey had been both challenging and rewarding for the team behind the project.

“We were one of the first IDZs to be designated in South Africa. Key to our mandate was the attraction of strategic investments that would not only leverage existing regional and industrial strengths, but would further upgrade the province’s industrial landscape,” he said. Kondlo added that while there was still a lot to be achieved in this regard, the ELIDZ had made meaningful strides in this regard.

The ELIDZ has attracted R 3.7 billion worth of investment since it secured its first investor in 2005. To date 30 investors have been secured with 22 of these already operational in the zone. Five other investors are either constructing or commissioning their plants in the zone.

“The impact, however, is wider than just the zone. To date we have awarded R928 million worth of contracts to BBBEE enterprises and R281 million worth to qualifying SMMEs. We have transacted with more than 200 local companies with since inception and for us this indicates the extent to which we have extended our reach as a government entity,” said Kondlo.

The ELIDZ has also created various learnership opportunities and through its eMonti Science and Technology Park initiative is currently incubating over 75 small businesses in various sectors.

“In the initial days, our biggest challenge was to diversify the local economy which was dominated by the automotive sector. Today I am proud to say that – this too has been achieved. We currently have a number of sector manufacturing activity including agro-processing, aquaculture, mineral beneficiation, ICT and BPO as well as Transport and Logistics,” said Kondlo.

According to Kondlo, the journey has also had its few challenges. Amongst these has been the inadequate design and delivery of effective and legitimate enabling policy instruments to deliver real incentives for the IDZ programme.

There are currently no IDZ specific incentives and the only incentive which was linked to the IDZs was the Customs Controlled Area (CCA) benefit. Unfortunately this benefit , by last year, had still not been operationalised since inception due to a number of policy and operational issues between the various government stakeholders involved.

“The ELIDZ has played a pivotal role in the redesign and implementation of this incentive in partnership with SARS’s customs and excise unit and in 2011/12, we became the first IDZ to have a CCA pilot status and we are looking to consolidate this incentive and ensure maximum industry benefit from it,” he said.

Kondlo said these challenges made the mandate of South African front-runner IDZs, almost impossible. “There is a lot of criticism on the slow take off of the current IDZ and while the criticism is valid, it becomes important to note that very few IDZs globally have had to operate without incentives and enabling legislative framework,” he said.

According to Kondlo, since the conceptualisation of the South African IDZ programme, the ELIDZ has become somewhat of a pioneer, walking with government in shaping the policy environment based on the practical lessons that have been learnt from interacting with investors.

“This pioneering role, however, has its disadvantages as well, including the inability to observe others’ mistakes or taking note of their precedents for success,” he said.

“We are hopeful that current discussions led by the Department of Trade and Industry, aimed at improving the legislative framework of Special Economic Zones within which the IDZs are categorized , will assist in increasing our competitiveness and as such accelerate our pace of attracting and bedding down investment for the zone,” he said.
He added that the proposed SEZ Bill was the first attempt at establishing a legislative framework that goes beyond the tenuous association with the Manufacturing Development Act. The proposed legislation recognises the need for both export-oriented zones that, like the ELIDZ, are linked to a port, and for inland zones, which are focused on niched outputs.

“By creating the necessary policies, setting in place proper legislative parameters, defining the required resources and garnering the support of parastatals and delivery agencies, government will have established the undiluted legitimacy of IDZs that is required to make us competitive,” Kondlo concluded.

The East London Industrial Development Zone today announced its plans to build a new R50 million metal surface treatment plant as part of its plans to increase the global competitiveness and attract new players into the regional automotive sector.

Speaking at the sod-turning ceremony of a new investor facility for the zone’s automotive sector, ELIDZ CEO, Simphiwe Kondlo, said that the new metal surface treatment plant was already under construction and would be operational by June 2013 and would be ready to support the trial builds for MBSA component suppliers. “The establishment of this facility will have huge spin-offs for the auto –sector in the region. It will attract new suppliers and increase local automotive content for the current OEMs,” said Kondlo. Continue reading →

Mercedes-Benz group of companies in South Africa (MBSA) were proud participants during the sod turning ceremony of the Boysen Group at the East London Industrial Zone (ELIDZ) Automotive Park today. The German-based exhaust technology experts are the second new international company to set up shop locally to supply MBSA’s next generation W205 C-Class production from 2014. Continue reading →