AIDC intervention creates huge cost savings for local manufacturer

Automotive component manufacturers in the Eastern Cape are being forced to innovate in order to remain competitive or to simply survive, according to the Automotive Industry Development Centre (AIDC).
AIDC Eastern Cape Supplier Development manager Lance Schultz said local component manufacturers were still reeling from the global economic crisis.

“The crisis has severely impacted the automotive industry worldwide. It has also forced the industry here to re-examine its operations carefully and to a degree re-invent the way it does business in order to create the lowest possible cost structure for its products.”

“It is clearly not a case of business as usual.”

Several component makers closed doors in 2009, including Kolbenco, South Africa's only automotive piston manufacturer, which eliminated the country's ability to manufacture this product.

Among other closures were RAH Auto, Powdermet, Vinyde, Eaton Aero Quip and Bloxwich. Listed company, Metair closed its plastics business in the Eastern Cape at the end of 2009.

Schultz said the AIDC had intensified efforts to assist individual companies make substantial cost gains to stay afloat and to position themselves for growth.

The AIDC’s programs and interventions on the shop floor, around improving logistics and in the development of skills and productivity, are highly subsidised by Provincial Government.

Despite the economic downturn, some automotive companies have continued to position for growth and persisted in the implementation of continuous improvement initiatives, Schultz said.

Citing a recent case study, Schultz highlighted savings of over R309 000 achieved at Port Elizabeth based Hansens Engineering, producer of precision-machined aluminium components.

Schultz said over 75% of savings were introduced within just 3 weeks by identifying and reducing wastes, adjusting process flows and increasing productivity.

NAACAM president Stewart Jennings said the industry is under even more pressure in 2010 because the strong rand is rendering local exports uncompetitive. Auto industry bodies have estimated that component exports nosedived 40% over the course of 2009.

“Many suppliers have to be assisted to identify wastes, reduce them and improve areas of productivity that they may not have believed even existed within their businesses,” Schultz said.