KWAZULU-NATAL TOOLING INITIATIVE Re-structuring of the South African Tool, Die and Mould-making Industry Presented by: Umash Ramkalawon Regional Programme Manager KZNTI

A Public-Private Partnership KZNTI A Public-Private Partnership STRATEGIC DRIVER TOOLMAKING ASSOCIATION OF SOUTH AFRICA (TASA) Support the needs of the TDM Industry FUNDER DEPARTMENT OF ECONOMIC DEVELOPMENT & TOURISM (DEDT) Aligned to the sector development projects of the DEDT aligned to the IPAP KEY STAKEHOLDERS TASA DEDT TIKZN eThekwini Municipality merSETA Department of Education Multi-stakeholder support Rehabilitation and growing of the Tool, Die & Mould-making Industry in South Africa

History of the TDM Sector in SA % Annual turnover Capacity (increasing imports from China and others) Sector ratio 1% Automotive (7 OEMs)Automotive (7 OEMs) Mining & other BMW Toyota Nissan Volkswagen General Motors Mercedes Benz Ford Motor company 25% Loss In Local Tooling Manufacturing Capacity 80% 40% 35% 4,6% Packaging & consumer goodsPackaging & consumer goods Global EU SA 1990 2010

Distress Drivers for the Sector in SA Critical shortage of Designers, Artisans, Engineers and Project Managers in the sector. Radical changes in Skills Value Chain. Skills Erosion & Job losses Lack of recapitalization Lack of focused R&D. Technology Stagnation Industry demand growing, Enterprise quantity declining Loss of Capacity China, India, EU increased pressure Loss of Competitiveness Absence of BBBEE transformation in TDM industry BBBEE Increasing imports – decreasing exports Growing trade deficit

Economic Impact of the Tooling Sector in SA The tooling sector can be classified as a sub-sector under the “Metal Fabrication, capital equipment and transport equipment” sector High employment and growth multipliers Strong backward linkages

National Intervention in the TDM Sector The Tooling Initiatives across SA is guided by the intervention programmes set by the National Tooling Initiative(NTI) which has been incorporated into the DTI’s Industrial Policy Action Plan – IPAP(2013- 2016) as a key action programme for Capital Equipment and Allied Services. Establishment of TDM Cluster Management structures in 6 provincial locations Gauteng - Pretoria Western Cape - Cape Town Kwazulu-Natal - Durban Eastern Cape - Port Elizabeth Limpopo - Polokwane Mpuma-langa - Middleburg

KZNTI Strategic Concept MARKET DEVELOPMENT SKILLS GOVT POLICY SUSTAINABLE ECONOMIC GROWTH within the TDM SECTOR

KZNTI Intervention Projects TDM sector skills development Business capacity expansion Technology recapitalization Competitiveness improvement Cluster structure development Localisation of international tooling companies

TDM Sector Skills Development TDM Powered Apprenticeship Programme Pilot programme developed by industry experts and funded by the DTI The future tooling qualification 526 students at selected FET Colleges across the country 65 students in KZN Level 1 20 students in Pmb Level 2 19 Students in Pmb 26 Students in Dbn Additional intake of 500 students for 2014

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Business Capacity Expansion Tooling Incentive Scheme Recommended amendments to the current investment incentive structure of the Automotive Production and Development Programme (APDP) and the Automotive Investment Scheme(AIS) AIS Current capital investment incentive structure ranges from 20% to 30% It is proposed that this incentive is offered to automotive tooling at a 50% standard rate APDP The light vehicle APDP offer's local value addition incentives in the form of a Production Incentive applied for via a Production Rebate Credit Certificate It is proposed that for tooling local value addition, the benefits apply at the vulnerable products level to provide a significant boost to tooling localization.

Rand value of imported automotive tooling used for calculations ….continued Rand value of imported automotive tooling used for calculations are as follows, Historic average of R 2, 227 billion per annum Forecasted value of R 4 billion per annum Historic average (R2 227 million) Forecast (R4 000 million) Additional local value added R 534 000 000 R 960 000 000 Additional AIS for Local tooling (R 107 000 000) (R 192 000 000) Production incentive (R 75 000 000) (R 128 000 000) Benefit to SA economy R 353 000 000 R 640 000 000 Benefit as a % of VA 66% 67% Extra cost to Govt. for VP incentives per annum (R 25 000 000) ( R 38 000 000)

Competitiveness Improvement Business Development and Systems Training

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