Key developments and Vision for the sector in the Western Cape auto hub

WC Automotive Component Manufacturers contribution to Industry Representing 11% of total employment 10% of gross value add 15 Automotive component manufactures (Source: Quantec)

WCAC Background 2013 Western Cape Auto motive companies acknowledged, without collaboration the local industry would not be sustainable long-term Pro actively, 6 firms funded the formation of an Automotive cluster in an effort to tackle the various challenges of industry Western Cape government welcomed this move to foster local economic growth and has since provided co-funding for the cluster

Membership

Vision To promote the sustainable growth and competitiveness of the Western Cape automotive manufacturing sector Mission To promote the Western Cape automotive sector’s unique value proposition through establishing mutual competitive advantages Objective Increase supplier MVA in support of increasing employment, enabling local supply chain capabilities, increasing local content & advancing transformation

Strategic Priorities Access to scale & technology Competitive skills Competitive operating efficiencies Competitive supply chains Supply chain competitiveness, enabling increased MVA, localisation & employment Transformation (cross-cutting)

Institutional Structure 8 1.C. Rautenbach, Atlantis Foundries (Chair) 2.S. Ledgerwood, Precision Press (Vice-Chair) 3.T. Mancini, Senior Flexonics 4.T. Du Toit, Qtec Moulding 5.A. Turner, Torre Automotive 6.S. Rosenstein, CGI 7.N. Gwynne Evans, WCPG 8.M. Van Wyk, WCPG 9.D. Comrie, B&M Analysts 10.M. Arde, B&M Analysts WC NAACAM Chair: Andrew Turner, Torre Automotive 1.C. Rautenbach, Atlantis Foundries (Chair) 2.S. Ledgerwood, Precision Press (Vice-Chair) 3.T. Mancini, Senior Flexonics 4.T. Du Toit, Qtec Moulding 5.A. Turner, Torre Automotive 6.S. Rosenstein, CGI 7.N. Gwynne Evans, WCPG 8.M. Van Wyk, WCPG 9.D. Comrie, B&M Analysts 10.M. Arde, B&M Analysts WC NAACAM Chair: Andrew Turner, Torre Automotive Executive Committee Skills Development Operational Capability Infrastructure & Materials Market Access

Highlights since kick off Nov 2013 Institutionalisation of WCAC with governance structures Development of formal Executive Committee comprising key members, stakeholders and government Development of strategy for WCAC and interventions in line with this Roll out of Graduate Development Programme for engineers for all members Regional Best Practice Study tours for industry Initiated WCM programme at five of six member firms Alignment with IPAP, NAACAM, WCPG, ASCCI

So what next? Build on successes to date Explore further potential – Deepen localisation, grow exports and Aftermarket Thus far, foundation has been laid – great deal of progress in short amount of time Next step: reflect on achievements, identify any gaps Take action accordingly to build on success

Thank you and Good Buy

Further Background

Increased scale of production 1.Geographically distant from domestic OEMs therefore reducing appeal as source of supply 2.Sub-optimal levels of benefit derived from APDP & other industry incentives 3.Industry not prioritised in provincial and local Government policy and strategy 4.Capital investment age profile and automation levels 5.Diversification of customer base identified as a key risk mitigation priority. 3. Outcomes required 1.Optimize benefit from APDP & capital investment incentives 2.Enhance links to localisation focus of domestic OEMs 3.Economic development strategy supportive of industry 4.Increased exports of components at Tier 1 & Tier 2 level to African, EU & USA markets 1. Objective - long term 2. Associated challenges Market & Technology Access 13

Skills Development Greater productivity: – Parity versus leading cost countries 1.Lack of competitiveness relative to high income – high skill countries as well as low income-low skill countries 2.Limited availability of specialised skills as well as (less acutely) non-scarce automotive skills 3.Lack of labour flexibility inhibits competitiveness of industry/capital investment 3. Outcomes required 1.Increased availability of management skills and ability of management to drive productivity enhancements 2.Increased availability of industrial engineering skills 3.Elevated performance of team leaders and operators 4.Enhanced labour market flexibility 1. Objective - long term 2. Associated challenges 14

Operational Capabilities Powered by 1.Business management systems not uniformly in place or not optimally effective 2.WCM manufacturing practices not in place or not optimally effective 3.Sustainability of WCM interventions highly variable 3. Outcomes required 1.Objective identification of firm-level requirements 2.Support adoption and development of base business management systems 3.Support adoption of ECM best practices on a sustainable basis 4.Facilitate inter-company learning 2. Associated challenges Supplier productivity: – Parity versus leading cost countries 1. Objective - long term 15

Supply Chain Management Supply chain costs: – Reduced inbound SCM costs – Reduced outbound SCM costs 1.Geographically distant from major domestic OEM & AM markets, reducing cost competitiveness & attractiveness as a source of supply 2.Geographically distant from major domestic sources of raw materials 3.Long international supplier lead times reduce value chain flexibility & therefore negatively affect competitiveness 3. Outcomes required 1.Reduced real cost and perceived lead time of supply to major domestic markets 2.Reduced real cost and lead time of supply from major domestic hubs 3.Reduced logistical cost and/or lead time of imported materials 4.Reduced reliance on imported raw materials 1. Objective - long term 2. Associated challenges 16