Nurturing small business and practical skills development for growth in Gauteng economy

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The Gauteng Provincial Government, together with Ford Motor Company of Southern Africa (FMCSA) today officially opened an incubation centre to establish and nurture black-owned component manufacturing for the South African automotive industry.

A Production Simulator Facility adjacent to the FMCSA assembly plant in Silverton, Pretoria was also officially opened. The newly operational facility is helping FMCSA prepare for the production launch of the next-generation Ford Ranger. In less than a year, the facility will be available to engineering students in the province.

The Gauteng Provincial Government (GPG) committed R50 million for the construction of the Broad Based Black Economic Empowerment (BB-BEE) Supplier Incubation Facility and an additional R15 million for start-up costs for Broad-Based Black Economic Empowerment (BB-BEE) companies. A further R32 million was allocated for training and development programmes for FMCSA employees.

“The provincial government has demonstrated its commitment to growth in the automotive industry by including this sector in its industrial policies and future strategies which include the Gauteng Economic Growth and Development Strategy adopted by the Province in 2010,” says MEC for Economic Development in Gauteng, Ms Qedani Mahlangu. “FMCSA provided the land adjacent to the Ford facility for the 7 200 m2 facility and we anticipate that five new BB-BEE businesses will be established to perform value adding sub-assembly work to main suppliers on the vehicle assembly line.”

Prohibitively large setup and investment costs have, in the past, limited opportunities for smaller enterprises to participate in this industry. “Government is addressing the obstacles and constraints that SMMEs face in launching and reaching sustainability. They need to survive the first crucial years and then be geared for enterprise growth,” says Mahlangu. Businesses in the Incubator will need to become self-sufficient by the end of the fifth year of incubation.

The production simulation facility is attached to the FMCSA’s production plant following its R3 billion investment to produce the next-generation Ford Ranger. According to an economic impact report, Ford’s investment program will contribute R79 billion to the Gauteng economy over the next 15 years and create almost 700 000 direct and indirect employment opportunities.

Blue IQ and its subsidiary in the automotive sector, the Automotive Industry Development Centre (AIDC) took the project from conception to implementation, and will provide business training and mentoring. The Supplier Park Development Company (SPDC), another BIue IQ subsidiary, is responsible for the building and maintenance of the Incubation facility. Ford, its suppliers and the AIDC will be responsible for the technical training, quality control and the monitoring of safety standards.

Amanda Nair, CEO of Blue IQ, says the projects confirm the value of Blue IQ as a facilitator of strategic infrastructure that supports economic growth and job creation.

 “The ongoing collaboration between FMCSA and the AIDC and the management role that SPDC executed over the construction of the Supplier Incubation Facility highlights the strong level of confidence FMCSA has in the Province and our work,” she says.

According to FMCSA president and CEO Jeff Nemeth, the BB-BEE initiative and training program is another example of Ford’s commitment to strengthen South Africa’s position as a world class manufacturer and exporter of vehicles and engine components.

“As part of the One Ford plan, and to maintain a viable and strategic presence in Southern Africa, we require a globally integrated automotive supply chain and a highly trained workforce,’’ comments Nemeth “We are pleased to have the government’s support to achieve that goal in South Africa. Ford is transforming its manufacturing operations in South African and we are pleased that the supply chain is as well.”

The One Ford plan is Ford’s shared and common goal of working together to produce a full line-up of world-class Ford vehicles that would be class-leaders in quality, safety, fuel efficiency, design and smart technology. The Ford investment program forms part of this plan.

Barlow Manilal, AIDC’s CEO, says that the projects go to the root of the AIDC’s mandate: to assist the automotive industry in becoming globally competitive. “We saw an opportunity to work with FMCSA and other partners to ensure long-term benefits. The Production Simulator Facility is currently being used to train employees in new production techniques and processes before moving to the assembly line. Once this happens, the facility will be available to Engineering students to test their process designs and gain practical experience in a world-class production line, significantly boosting skills development,” he says.

Manilal believes that the BB-BEE Supplier Incubation Centre is the opportunity of a lifetime for the entrepreneurs involved. “The Gauteng Provincial Government has ensured that all the usual risks associated with start-ups have been addressed. The programme sees the fledgling businesses being subcontracted by multi-national suppliers, who will mentor the team and provide strict quality control in line with their global standards. They really have been given the best chance to succeed,” comments Manilal.

Ford

Motor Company, a global automotive industry leader with its Head Offices in Dearborn, Michigan, USA, manufactures and distributes automobiles across six continents. With about 176,000 employees and about 80 plants worldwide, the company’s automotive brands include Ford, Lincoln and Mercury, production of which has been announced by the company to be ending in the fourth quarter of 2010, and, until its sale, Volvo.

Blue IQ is a Gauteng Provincial Government-owned agency responsible for flagship projects such as the Gautrain, Newtown and the Nelson Mandela Bridge. It aims to deliver strategic economic infrastructure to catalyse sustainable economic growth and to indirectly contribute to job creation; to influence the composition of exports, and influence the diversification of Gauteng’s GGP.  The organisation is committed to unlocking the potential of key growth and development areas to
benefit the organisation, the various projects in which it invests as well as its investment partners and the broader Gauteng economy.