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South Africa’s Component Manufacturing Landscape: Challenging the Past to improve the future .

South Africa’s Component Manufacturing Landscape: Challenging the Past to improve the future . The OEM Perspective. Theunis Rootman Chairman : OEM Council 2014-10-14. Agenda. Reflection – What has history shown us Our Focus: Create the Base Seek Opportunities Make it Happen Conclusion.

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South Africa’s Component Manufacturing Landscape: Challenging the Past to improve the future .

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  1. South Africa’s Component Manufacturing Landscape: Challenging the Past to improve the future. The OEM Perspective Theunis Rootman Chairman: OEM Council 2014-10-14

  2. Agenda • Reflection – What has history shown us • Our Focus: • Create the Base • Seek Opportunities • Make it Happen • Conclusion

  3. A) Reflection Ideal Performance Delivery instability Poor Quality High Cost PERFORMANCE Current Performance level eroding base for future model sourcing Reduce Risk Improve Stability Time

  4. A) Reflection vs Australia South Africa Many Similarities • Manufacturing cost up to 40% higher than Competing Countries • Industrial Development • High Inflation linked with Unstable and Depreciating Rand • Low levels of Deep Localisation Competitiveness Localisation – Economies of Scale Collaboration

  5. B) Our Focus

  6. 1) Create the Base: Collaboration • OEM Collaboration • Commodity Rationalization/Clustering Analysis of Industry Capacity Review of commodity outlook 1 Study potential projects/Commodities Group/Cluster Commodities 2 Agreement with “Parents” Define & Align Strategies with APDP and Economical viability 3 Industrial Policy Support 4

  7. 2) Seek Opportunities: Competitiveness Manufacturing Improvements

  8. 2) Seek Opportunities: Competitiveness Mind-set Change

  9. 3) Make it Happen: Localization 1. High Forex Exposure Deeper Localisation Sub-tiers - Suppliers Drive 2. Evaluation Risk  Level 1 Parts – OEM Drive Business Case Development

  10. 3) Make it Happen: Localization XX%: % of total material cost YY%: True local material plus value add as % of total material cost Note: %’s indicative only Exterior 10% • Glass • Paint • Bumpers • Mirrors Electrical / Electronic 3% 19% • Harnesses • Starter motors • Alternators • Wiper systems • HVAC 5% Opportunities - especially lower levels Interior 23% • Cockpit • Seats • Door panels • Carpets Body 7% • Bonnets • Bootlids • Side frames • Doors 15% 6% • Axles • Differentials • Drive shafts • Brakes Chassis and Drive-train 33% 14%

  11. 3) Make it Happen: Localization Using Existing Areas as Priority

  12. C) Conclusion • Why should we do it? India SA Thai Competitors 1 Sustainable Business 2 Unemployment: National Average = 24.9% SA Population by Age: 2012 Sustainable Future 3

  13. Thank You

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