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BENEFITS OF NEW NATIONAL AUTOMOTIVE POLICY ON COMPONENT MANUFACTURING IN NIGERIA

BENEFITS OF NEW NATIONAL AUTOMOTIVE POLICY ON COMPONENT MANUFACTURING IN NIGERIA.

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BENEFITS OF NEW NATIONAL AUTOMOTIVE POLICY ON COMPONENT MANUFACTURING IN NIGERIA

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  1. BENEFITS OF NEW NATIONAL AUTOMOTIVE POLICY ON COMPONENT MANUFACTURING IN NIGERIA PRESENTED BY THE DIRECTOR GENERAL, NATIONAL AUTOMOTIVE COUNCIL (NAC) ENGR. AMINU JALAL, FNSE, FNIM, FNIMechE.AT THE CAAD/NAC SENSITIZATION WORKSHOP TAGGED “OEM REQUIREMENT FOR AUTOMOTIVE LOCAL COMPONENTS MANUFACTURING” KINGS PALACE HOTEL, NNEWI, ANAMBRA STATE..27TH & 28TH AUGUST, 2014.

  2. IMPORTANCE OF AUTOMOTIVE INDUSTRY In many countries, the automotive industry plays a very important role strategically in economic development with respect to the following: • Small, Medium and Micro-Enterprises (SME) development. • GDP Contribution – In S/Africa, responsible for 7% of GDP & 12% of exports. • Economic Linkages. • Skills development. • Technology and innovation. An automotive industry will create significant good quality employment & a wide range of technological advanced manufacturing, bearing the foundation that leads to industrial development in general and in particular, the manufacture of agricultural , mining and railway equipment, and military hardware etc.

  3. BENEFITS TO THE NIGERIAN ECONOMY • Major vehicle manufacturers concentrate on assembly and produce only about 30% of the over 2,000 parts in a car, while outsourcing the rest to component suppliers. A job in a typical assembly plant generates three others in the component supply and seven others in the raw materials supply industry, thereby creating many SMEs as well as direct & indirect jobs. • Nigeria is well positioned to be a major assembly hub for international auto companies due to our existing installed auto capacity, larger labor force, significant local demand, & strategic geographic location for export.

  4. Benefits to the Nigerian Economy contd. • Data has shown that: • A total of over 400,000 vehicles valued at over N550 Billion (US$3.451 billion) were imported in 2012. • Potential value added if importers were locally assembled today will be N100 billion. • At full capacity, the Nigerian automotive industry has the potential to create 70,000 skilled and semi-skilled jobs alone with 210,000 indirect jobs in the SMEs that will supply the assembly plants. 490,000 other jobs would also be created in the raw materials supply industries. • The manufacture of vehicles would enable us acquire the technologies of mass production, quality control, lean manufacturing , and engineering which we can use to develop other sectors of the economy and industrialize

  5. ELEMENTS OF THE AUTOMOTIVE DEVELOPMENT PLAN • The auto industry is a key component of the Nigerian Industrial Revolution Plan (NIRP). The NIRP is a 5 year programme developed by the Federal Ministry of Industry, trade & investments to diversify Nigeria’s economy and revenues through industrialization. • The response to the policy has exceeded our expectations. 21 companies have expressed interest in investing in vehicle assembly. Nissan, Hyundai and Peugeot have already started assembling vehicles while VW, Honda, Kia, Renault and Toyota will are conducting feasibility studies. The elements of the plan are as itemized below

  6. Elements of the Automotive development Plan cntd. - Industrial infrastructure: Automotive supplier parks and clusters. - Skills development – • Partner with OEMs & their global suppliers. • The industrial Training Fund (ITF). • Development of new curriculum for mechanics’ training and a new syllabus for teaching B.Eng in Auto Engineering - Standards - ISO and SON - Investment Promotion: • Fiscal measures • Checking smuggling • Policy Consistency by Government through legislation. - Market development • Affordable vehicles • Vehicle purchase scheme • Patronage

  7. LOCAL CONTENT DEVELOPMENT • The Auto development plan will facilitate steady increase in the local content of vehicles assembled in Nigeria, specifically in the following vehicle parts: • Welded parts (exhaust system, seat frames) • Electric parts (batteries, trafficators, wiring harnesses) • Plastic and Rubber parts (tyres, tubes, fan blades, seat foam, oil seals, hoses, radiators gills, etc.) • Radiators, Cables, Filters, Brake pads/linings, Windscreens, Side Glasses, Fiber-glass parts, paints etc. • Rubber products (tyres)

  8. REQUIREMENTS FOR THE DEVELOPMENT OF LOCAL CONTENT • An automotive industry with sufficient sales (at east 5,000 units per model) • Availability of raw materials locally. These are Iron and Steel, Plastics, Elastomers, Aluminum and other non-ferrous metals. • Availability of other engineering infrastructure like forge and foundry shops, precision machine shops, heat treatment facilities. • Test centers to test the quality of automotive safety parts, undertake vehicle homologation and assist R & D. • The development of local content development programme with the industry and providing appropriate incentives • Charging import duty of 35% on automotive components that are locally produced at competitive process and of good quality

  9. RESPONSE TO THE AUTO POLICY • NISSAN and Hyundai are assembling vehicles at VON Nigeria ltd. • Peugeot resumed assembling vehicles at PAN. • Dana Motors signed agreements to assemble Kia and Renault vehicles • VW are conducting a feasibility study on assembling vehicles in Nigeria. • Innoson Vehicle Manufacturing is expanding to include car assembly. • Toyota Motor Corporation (TMC) of Japan plans to start with the SKD assembly Hiace buses; • KewalramChanrai Group has initiated discussions with GM and Mitsubishi to assemble light com vehicles.

  10. Response to the Policy • SCOA Nigeria Plc has commenced the redesign of its expansive assembly facilities in Isolo, Lagos to Assemble SKD 1 kits of MAN Diesel trucks and HAMM agricultural tractors. • Leventis Motors has signed an agreement with FOTON-Daimler to produce Buses and trucks in Nigeria; • Other Nigerian companies that signed assembly agreements with OEMs include: • Choscharis Motors Ltd. • Globe Motors Ltd. • LanreShittu Motors Ltd. • Transit Support Services Ltd. • Tilad Ltd. • Peace Mass Transit Ltd. • Nsik Motors Ltd.

  11. Conclusion • The automotive industry creates many SMEs (and hence jobs) to supply it with parts and components. That is why many countries, and states in the USA, provide policies, incentives, etc. to attract vehicle assembly. The companies in Nnewi are in a position to reconfigure their operations so that they could supply the assembly plants. Supplying the assembly plants will not be easy as they can only buy components that meet the following criteria: quality, cost and delivery on time. Hence this workshop, the first of its kind in Nigeria, to detail how you can meet this requirements to supply the assembly plants. • I wish you all fruitful deliberations.

  12. . THANK YOU

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