The AIDC played a key role in establishing South Africa’s first Automotive Incubation Centre at Ford Motor Company of Southern Africa’s (FMCSA) Silverton plant in 2011. Ford acquired the assistance of the AIDC in 2010 to develop and manage an incubation model that could prepare them for the production launch of the T6 Ranger.
The AIDC responded with a programme to establish a Supplier Incubation Centre to nurture black-owned component suppliers into the vehicle manufacturer’s supply chain. The aim of the Incubation Centre was to establish and deliver support to Black-owned businesses during the critical start-up phase which would then perform value-adding sub-assembly work to Tier 1 suppliers on the T6 Ranger assembly line.
FMCSA’s Silverton assembly plant needed to transform from a low-volume, multiple vehicle line, to a single-model, high-volume production facility with an annual capacity of 110 000 vehicles. Due to the nature of many of the components, FMCSA explored opportunities to reduce its overall production costs. The AIDC then responded by establishing five companies which were allocated to BEE entrepreneurs which could supply these components to FMCSA’s production line.
To accelerate and maximise the growth of the BEE companies, the AIDC facilitated the process by establishing partnership agreements with the relevant Tier 1 Suppliers already earmarked to supply FMCSA with components for the T6 Ranger. The five BEE companies within the Incubator are subcontracted to FMCSA’s Tier 1 suppliers.
In this way, the AIDC is able to maintain the highest level of standards and requirements of these mentoring companies, most of whom are well-known, multi-national Tier 1 suppliers. As part of the incubation process, the AIDC provides support services such as human resources, financial and general administration, mentoring, legal, and building maintenance, while the Tier 1 suppliers provided the product related technical mentoring.
The BEE entrepreneurs are housed at the facility, which enables them to supply to Ford’s production line directly. The AIDC’s plan is to provide full support which is gradually reduced until the seventh year, when these companies graduate from the facility to make room for more start-up businesses.
Each incubation programme will run for 5-7 years.
Current status of the project
The 7 200 m² BEE Automotive Incubation Centre has proven to be a success. It is a first in South Africa and significantly expedites the transformation process in the key growth sectors within the province. Currently the facility has created 200 jobs and provides training interventions for 150 operators per year.
The five BEE companies (the sixth being the canteen operator) have been operational for the past five years and are currently supporting Ford in building approximately 300 vehicles per day, on a two shift strategy. One of the BEE companies also produces components for export to a Ford manufacturing facility in Argentina.
Once the initial incubatees have graduated from the facility, the AIDC will continue with the incubation process and introduce a new set of BEE entrepreneurs to the programme.