The Coega Development Corporation (CDC), operator of the Coega Industrial Development Zone (IDZ), announced today it will establish a Multi Original Equipment Manufacturers (OEM) complex for the automotive assembly and components manufacturing sectors in Zone 2 of its industrial estate in Nelson Mandela Bay, South Africa.
The state-owned entity has earmarked 306 hectares of land for automotive manufacturing industrial activity through its recently unveiled five year strategic plan, which will embrace an OEM industrial clustering approach.
The Multi-OEM complex will house vehicle assembly halls and shared service infrastructures. First, second, and third tier automotive component suppliers will all be brought together in one mega-automotive zone.
The Coega Multi-OEM complex differs from other IDZ’s OEM platforms in South Africa, which comprises a central assembly hall for several vehicle brands.
The CDC believes that its OEM complex has the potential to become “the second economic heart beat of Africa’s automotive manufacturing capitol Port Elizabeth, which is also home to General Motors, Volkswagen and Ford manufacturing plants”
Gustav Meyer, CDC’s business development manager for automotive industries said that in emerging markets OEM industrial clustering is an accepted and prominent form of economic organization.
“Globally, vehicle manufacturers are beginning to embrace the advantages of strategic alliances, cooperation and interdependence in relation to shared services and communal infrastructures for automotive manufacturing and assembly,” he said.
“Currently, we are in discussion with potential investors and projects in excess of R1 billion (US$ 90 million)”
The envisaged Coega Multi-OEM complex will have shared facilities that will include a supplier park (56 hectares), an e-coating plant (3 hectares), a paint shop (3 hectares) and a vehicle distribution centre (3 hectares), amongst other amenities.
It will also offer investors advantages such as lower infrastructure investment costs, increased production flexibility for contract manufacturing opportunities through shared services, and enhanced supply chain management. Another benefit is reduction of inventory holding costs.
Assembly halls under the vehicle manufacturer’s own brand name will be supported by a network of shared services and facilities that will reduce assembly costs.
“The Coega Multi-OEM complex will make the IDZ highly attractive for foreign investors as it unlocks the advantages of dramatic reduction of transportation costs, skilled and common labour pools and many other benefits,” Meyer said.
The proposed complex has recently been demarcated as a Custom’s Controlled Area, offering a duty and value added tax (VAT) suspended production environment.
“This, together with a new suite of incentives from government as part of the Special Economic Zone (SEZ) Act of 2014, and the modern utility infrastructure available to investors will be driving foreign and domestic direct investment and investment interest,” Meyer said.
Under new legislation transforming the Coega IDZ into an SEZ, advantages will also include VAT exemption and customs duty free; and the opportunity to qualify for a 15 percent corporate tax rate and a building tax allowance, and employment tax incentives, among others.
National Association of Automobile Manufacture (NAAMSA) Executive Manager Dr. Norman Lamprecht said “NAAMSA supported the endeavours of Coega to attract automotive and vehicle manufacturing investments to the country which will support the targets of the APDP.”
Lamprecht said recent foreign direct investment at Coega IDZ and the recent launch of First Automotive Works (FAW) assembly plant is illustrating that South Africa’s investment profile remains strong abroad. It is the result of long-term policy certainty, he said.
In July this year, Fortune 500 company, First Automotive Works (FAW) opened a truck assembly plant in the Coega IDZ’s Multi-OEM complex, “A signal that Nelson Mandela Bay remains geo-strategically relevant and attractive for foreign investors,” according to Dr. Ayanda Vilakazi, CDC’s head of marketing and communication.
“The FAW investment has given impetus to the attraction of further vehicle assemblers and allied industries to cluster for synergy and ensure a higher industrial impact with spill over effects into the broader economy,” he said.
Dr Vilakazi said that the Coega IDZ is linked with the deep-water port of Ngqura with a transhipment function, and it provides connectivity to the global east-west trade or ‘pendulum trade’.
“This, in turn, is helping the organisation meet its mandate for socio-economic development and long-term sustainability, he said.
Alan Straton
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