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EC Auto suppliers take pole position

Tier 1, 2 and 3 suppliers in the Eastern Cape have taken the national lead in identifying and supporting black-owned manufacturers.

These breakthroughs by the East Cape Automotive Industry Forum (ECAIF) were outlined on Tuesday, November 1, by project manager Jody Naidoo at the Local Economic Development (LED) summit hosted in East London.

“The auto industry is responding to government’s vision to transform the auto industry. Companies wanting to qualify for industry incentives will have to show that they are transformed,” he said.

Research undertaken on behalf of ECAIF has identified over 30 black-owned manufacturers, about half of which are already supplying the automotive industry, and the rest of which have the potential to supply component manufacturers. ECAIF has already determined the demand available from component manufacturers in specific product categories with the absolute intention of supporting black owned manufacturing companies. 

“The dynamics of the automotive industry are such that new suppliers invariably have to enter into the industry through component manufacturers rather than the vehicle assemblers themselves,” he said.

A database of the suppliers has been drawn up and distributed to the 77 ECAIF members. It is being continuously updated, and black-owned manufacturers can register at www.ecaif.co.za.

For the next phase, a three-year plan for the development of black-owned manufacturers has been drawn up by ECAIF. It is due to be rolled out early in the new year.

“What we have established through our research for ECAIF and our interaction with potential suppliers is that there are no short cuts. It will take at least three years to develop a new manufacturer to the point where they have the necessary quality, reliability and productivity,” says Naidoo.

Three different classes of businesses will be supported – the first being existing manufacturers which need help scaling up or meeting the requirements of the auto industry.

The second is white-owned businesses which want to transform by selling a portion of the company to black partners. “Some owners are approaching retirement and want to exit the business over the next few years. Other companies are also looking at spinning off one or more of their operations as black-owned businesses."

“These developments provides golden opportunities for black entrepreneurs wanting to enter the motor manufacturing industry,” said Naidoo.
The third is start-up businesses. “This is the hardest group of all because of the high failure rate of start-up businesses. This is a global trend and challenge, and not unique to South Africa, he said.

Issued by: ECAIF