Localisation The Current Challenge for SA Incorporated

DCD an engineering and manufacturing concern since 1911 with a long history of supplying heavy engineering components to all coal fired & hydro power stations erected in SA and participated in all the nuclear initiatives to date

A balanced approach to the local content for manufacturing Determine local content threshold % No cap on award on assessment for exceeding local content threshold Localization

Scenario Customer identify project that needs to have localization OEM starts tender process OEM awards tender based on standard terms and conditions. Manufacturer accepts tender based on agreed T&C

OEM advised customer of successful manufacturer Customer requires assessment Customer introduces additional requirements Outcome Manufacturer successful in assessment with additional costs OR Assessment unsuccessful and project is put on hold until meets requirements This leads Project delay Penalties Additional costs Even cancellation in some cases This will bankrupt smaller suppliers FAILURE OF LOCALIZATION Scenario - Problem

Scenario – Root Causes OEM Perception is that requirements does not need to be spelled out Nor did they do a proper supplier assessment No supplier development takes place Supplier Looked at the complexity in terms of technical requirements Without focus on the admin requirements and upfront qualifications Customer Did not recognize that a new approval process was requires Did not adopt a developmental mind set once the problem was identified

 Step 1 – Create an SA Inc. approach  Step 2 - Determine administrative requirements for different manufacturing/services  Step 3 – Assess potential suppliers in terms of these requirements  Step 4 – Put a developmental plan in place for each supplier  Step 5 – Then procure Proposed Solution

Determine requirements Pre approve manufacturers Create a stable market for localization Export credits Summary

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