PARLIAMENTARY HEARINGS : INTEGRATED MANUFACTURING STRATEGY (IMS) APRIL 2002 Sagay Moodliar Enterprise & Industry Development Division

MIDP : Overview The MIDP is an export/import complementation mechanism that seeks to force specialization and economies of scale for global integration Import duties are offset against rebates earned for exports on HS 8704 The objectives are to provide high quality vehicles, at competitive prices to domestic and global markets while being a platform for sustainable employment, & growth Improving the sector’s trade balance

Introduction Objective to illustrate how the IMS functions in reality and lessons for value chain cooperation and efficiency Automotive programme in dti best exemplifies IMS and value chain matrices in SA Acts as confluence of technology, skills, beneficiation, ICT, logistics, financial services, retail, branding & demands efficient networks. The dti has an influential policy lever via the Motor Industry Development Programme, in place since 1996

MIDP : Performance 2000-1 Direct Employment Assembly, component, tyre, & retail saw slight increases by 850 jobs Skilled employment increased faster than less skilled employment Production/productivity measures Capacity has increased in assembly to 65%, with CBU’s rising to 400k in 2001 (13%) 80% of African CBU’s made in SA OEM and Component sectors increase training by 71% and 20%. Increased usage of CF and SPF dti schemes

MIDP : Performance 2000-1 Exports Total exports in 2001 are R25bn (25% increase) Ave annual increase of 37% since MIDP introduced in 1996 CBU exports in 2001 reach 103 000 units, in 96’ this was 10 000. Imports New vehicle imports rise from 5.6% to 18.7% between 95-2000 Total imports increased by R7bn between 99-2000. MIDP is creating and enhancing

Integrative interventions The dti intervenes in this sector via : The Motor Industry Development Council The MIDP itself which acts as the major programme for the sector The Productive Asset Allowance Scheme The Strategic Investment Team Benchmarking Clubs in KZN, E. Cape, and Gauteng The Auto Industry Development Council

Integrative interventions The Motor Industry Development Council Consists of dti as chair, OEMs, component association, Unions, SARS, SABS, AIDC, BTT Policy consultation forum and monitoring of the MIDP, now embarking upon post 2007 review Mechanism to unlock Govt action in critical areas for the sector

Integrative interventions The MIDP Issuing of certificates, monitoring and processing of claims

Integrative interventions The Productive Asset Allowance Scheme Implemented in 2000 to rationalize production by OEM’s Seen 24 investment projects of R7.44bn assessed, 15 approved to value of R4.96bn. Major instrument to force rationalization Model produced for global networks

Integrative interventions The Strategic Investment Team Group of procurement directors of OEMs that dti coordinates around investment mapping and attraction Used to assess how collective action with dti acting as neutral player can attract 1st tier investors Success in metals components, plastics, rubber, exhaust systems, interior trim, glass etc

Integrative interventions Benchmarking Clubs KZN, E. Cape, & GP These initiatives were launched by dti to assist small component firms to assess how they competed against local and global firms 47 small firms benefit from this exercise AIDC Support of shop floor improvement for component firms BEE shop floor mentoring programme Assists dti in MIDC, PAA, SIT

IMS at work in the Auto sector Finance Logistics Branding Retail Jobs Exports Investment Skills transfer SME BEE Metals Chemicals Autos MIDC/MIDP SIT PAA Materials ICT & technology diffusion, skills training