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

2. 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

3. 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

4. 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

5. 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 units, in 96’ this was
Imports
New vehicle imports rise from 5.6% to 18.7% between
Total imports increased by R7bn between
MIDP is creating and enhancing

6. 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

7. 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

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

9. 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

10. 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

11. 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

12. 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