BUSINESS at the East London Industrial Development Zone (IDZ) is booming with a R15-million investment announced yesterday. The Eastern Cape Development Corporation (ECDC) will finance a joint venture between a European and a South African automotive company, TrelleborgVibracoustic-Ikhwezi (TBVC- Ikhwezi), in manufacturing chassis bushings for suspension systems for Mercedes-Benz South Africa (MBSA).
The latest investment in the EL-IDZ follows a fruitful year during which R640-million has already been invested by other global automotive components manufacturers aimed at increased local content.
The R15-million in funding is asset-based and will be used by TBVC-Ikhwezi, based in the IDZ, to buy equipment.
TBVC-Ikhwezi already supplies several suspension mounts for the C and E classes and has recently been nominated on the next-generation C Class (W205), which is scheduled to start production next year.
The bushings and suspensions are supplied to Mercedes-Benz plants worldwide as well as in East London.
MBSA spokeswoman Lynette Skriker said MBSA remained committed to working with partners from both the corporate and government sectors to bring global supply leaders to the country, in support of the drive for content localisation, skills development and job creation.
"This move by the ECDC to support the component supply sector is a welcome addition to the synergies already being created by stakeholders in the automotive manufacturing sector, creating opportunities for expansion and addressing stumbling blocks," Skriker said.
Late last year, TBVC entered into a majority-owned R36-million joint venture with Ikhwezi Investment Holding and production at the 4000m² plant began this year. Initially employing 22 people, employment will increase to about 55 workers once peak volumes are reached.
ECDC chief executive Sitembele Mase said the R15-million investment into this multimillion-rand automotive operation was well timed.
"This investment will improve skills for the economy and job opportunities in the car manufacturing sector. We have swung the manufacturing philosophy and technology of the plant towards increased local content. We have also leveraged on other export trade opportunities to the European markets," Mase said.
The Automotive Production Development Programme (APDP) had also played a central role in the localisation of content, Mase said.
The aims of the APDP are to increase volumes at vehicle manufacturers to 1.2 million vehicles a year by 2020 and to diversify and deepen the components supply chain.
"The programme includes a local assembly allowance [LAA] which makes it possible for vehicle manufacturers with a plant volume of at least 50000 units a year to import 20% of their components duty-free, reducing to 18% over three years," Mase said.