Local Exporters Thrive in a ‘Challenging’ Market
Present at an Exporters Eastern Cape Discussion chaired by Jane Stevenson on 4 March 2020 were: Thomas Schaefer, MD of Volkwagen Group South Africa; Hannes De Waal, MD of Sundays River Citrus Company; Paul Lynch, Director of South African Wool & Mohair Buyers Association NPC and Lauren Goddard, ZA Regional Country Sales Manager of Expeditors International.
Despite the gloom and doom around COVID-19, the SA Recession, unemployment and infrastructural challenges the panel was bullish about prospects in their industry and the country at large.
On COVID-19 the panel said:
Apple and Grape Exports are suffering.
Italy’s infections were a surprise as it is a big market for SA Fruit with exports down.
Raw Material imports are subject to 2 to 3 week delays coming into SA Ports.
When the Chinese factories come on stream again then we can expect further delays as China rushes to service big traditional markets before Africa and South Africa.
23 Chinese VW Factories (each double the size of VWSA) came to a halt in production. The Chinese market for cars is 4 Million strong.
Wool industry largely not affected as orders have increased.
On Industry specifics:
Over the last decade the fruit industry has grown in leaps and bounds – from 85 Million cases 10 years ago to a predicted 175 Million cases this financial year.
The Sundays River Valley is the best valley in the world to grown lemons in.
Ethiopia has a massive cotton industry.
Foreign money is available for distribution in Africa for development – it is looking for the right PLAN to be used properly.
Our local auto manufacturing market is 0.6% of the global market – a mere blip.
VWSA had the best year ever last year – as Schaefer put it; “When I had to appear before the board to report back on my business I was in and out after 5 minutes – the other guys came out reeling!”
40% Value Added goods can be shipped duty free in Africa.
Challenges and Relationships:
Bio-Security is a big challenge for Mohair and Wool as our border is ‘porous’.
Foot and Mouth Disease was a big stumbling block – combined with politicking on a global scale – but good relationships with clients saved the day.
On Successes:
Iraq is a new big market for Citrus.
2019 was VWSA’s best year ever with 162 000 cars manufactured.
VWSA concentrated on cost savings in Electricity, Water and Logistics which drove the prices per unit to be 3 to 400 Euros cheaper than competing factories in Spain.
No more combustion engines worldwide from 2050.
VWSA looking at being completely energy independent – a massive project from the 15 MW factory as it explores bio-gas and other alternatives to it’s 1 Megawatt of Solar Panels already installed..
On how to succeed:
Face to face business is very important – know your client.
Honesty, Integrity and Service are the cornerstones of any business.
Look after your staff – be engaged.
Get your staff obsessed with managing costs.
On the Recession and possible Downgrade to Junk Status:
Should that happen we could go to R20.00 to the Euro, the big foreign pension fund money will be withdrawn from South Africa and many industries will collapse.
A poor rand is good for Exporters.
Should the rand strengthen to under R12.00 to the Dollar then Fruit Exporters will struggle.
BUT, Schaefer said that he personally does not think that a downgrade to Junk Status will happen as the consequences will be too grave.
Alan Straton
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