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Toyota shares 800 localisation opportunities with South African suppliers

The Durban Automotive Cluster (DAC) was pleased to attend the Toyota South Africa Motors (TSAM) International Multipurpose Vehicle (IMV) Imported Parts Exhibition held on 21 June 2018 in Durban.
Over 40 suppliers viewed over 800 components that are open to localisation in what TSAM calls their IMV Localisation drive ‘3 point 5’. Suppliers could see the part, its volume and identify which they wanted to quote on by affixing a sticker with their name onto each part. TSAM will then share the technical drawings, specifications and the quotation template.
TSAM Senior Purchasing Manager Theo Govender explained that at model change in 2016 double the number of parts were localised. The previous IMV (Hilux/Fortuner) had 1307 local components and the new IMV 2673. Since this launch, in phase one of TSAM’s localisation drive 83 parts were localised, then 127 and 88 parts are currently being localised in phase 3. TSAM are approaching midway through the IMV model cycle. As the localisation process can take up to two years this is last window for meaningful localisation for TSAM’s flagship platform as amortisation of tooling and other required investment is unlikely in a time frame of less than five years.
TSAM Vice President of Engineering and Purchasing John Oliver added “While the initial localisation was significant given the sheer volume naturally potential localisation opportunities were missed. When sourcing began in 2012 the Rand was about R8:$1. By the time production started in 2016 it had moved to R16:$1. While it has strengthened the benefits of greater local production are significant, just on a FOREX basis. Looking forward to the next model change it will become more difficult to localise if suppliers do not develop the capabilities required soon. TSAM has a long-term strategy to support the achievement of the SA Automotive Masterplan while remaining focussed on excellent quality and well- priced vehicle supply. This format of having suppliers come to TSAM to touch and feel the parts is more effective for both TSAM and suppliers.”
Themba Mtati, MD of Yenza, who travelled from Port Elizabeth to the event concurred “We get Requests for Quotations that are not aligned with our process capabilities and this must frustrate the buyers when we decline to quote. We do want to quote where we have the capabilities. This format allows us to see ahuge number of parts and identify what we can quote on.” Yenza doesn’t supply TSAM yet but is positive about the opportunities offered. “We have networked with tier 1s who we could also supply into where we might not have all the machinery needed but could supply a sub-component”.
Malusi Shezi, MD of Gamamboh Engineering from iSithebe, north of Durban is new to the autos sector. He viewed a range of pressed parts they will quote on. “We have the presses at our facility that can produce these parts. While we are currently mainly supplying to the white goods sector I am confident we could become a TSAM and automotive supplier too. This is an excellent opportunity for us and must save TSAM resources too.”
Oliver added “The TSAM localisation journey is not stopping and a similar event for tier 2 and tier 3suppliers will be arranged soon with appropriate parts displayed. We’re also encouraging T1s to work closely with their suppliers and develop new Black-owned suppliers as transformation of the supply base is as important as deepening local content. A strong tier 2/3 supplier base is essential. Suppliers must also consider the export opportunities possible. Toyota Argentina for instance produces about 140 000 IMVs and there is no reason we can’t export more components there. I’m also excited about the renewed focus of the OEM Purchasing Council and the work that will be done to identify the collaborative opportunities that may exist to increase local content.”

Michael Waldburger, General Manager Purchasing TSAM was pleased with the support from suppliers and positive engagement with existing and potentially new suppliers.
“The intent of the exhibition today was to support further localisation and allow our tier one suppliers to engage with potential tier 2 and tier 3 supplier to further develop, deepen and transform the automotive supplier chain. We are gaining a database of suppliers though the Automotive Supply Chain Competitiveness Initiative (ASCCI) and intend to replicate this event with a wider audience. Where the supplier base cannot localise we are flexible in how to engage to achieve our objectives – a public-private partnership or engagement with international companies with proprietary design/technology to partner with a local transformed supplier are models we can pursue. We set a challenge for this year at our Annual Business Meeting for each of our tier 1 suppliers to develop a sustainable black-owned manufacturer. Step by step we will deepen and develop our supplier chain and drive the wealth and job creation for our economy. We are also looking forward to the NAACAM Show 2019 where we can engage with other current and potentially new suppliers who will be gathered.”