General Motors South Africa (GMSA) has secured two new catalytic converter export contracts since last year, valued at an estimated $US100m dollars a year, while it is also negotiating another contract with a potential value of $240m a year, local publication Engineering News reported on its website.
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Of particular interest should be that one of the two secured contracts includes the production and supply of diesel particulate filters (DPFs), the report said, noting that the National Association of Automotive Component and Allied Manufacturers warned last year that South Africa could lose up to 50% of its more than R8bn-a-year catalytic converter industry should it be unable to attract production of this new emerging type of emission-control technology to the country.
The report added that South Africa produces between 14m and 15m catalytic converters every year – or an approximate 10% of the global market.
According to Engineering News, following its return to South Africa during early 2004, GMSA became fully integrated into General Motors’ global purchasing and supply chain activities, which afforded the local GM business unit access and the right to compete within the automotive giant’s multibillion-dollar global component-sourcing programmes. The sourcing programmes GMSA is currently involved in supply automotive operations in North America and Europe.
The mammoth size and extent of global purchasing is evidenced by the fact that GM has manufacturing operations in 32 countries around the world.
GMSA procurement director Evan Dold told Engineering News the company has played a key role in getting a number of local component manufacturers established “as solid, reputable suppliers of automotive components, and catalytic converters, in particular”.
Dold reportedly noted that GMSA was last year awarded a contract, through local catalytic converter manufacturer and assembler Tenneco, for the supply of 340 000 converters a year to North America. This contract has an annual purchasing value of $23m. “These contracts or supply programmes typically run for three years,” Dold said.
According to Engineering News, GMSA this year has secured another supply contract for 180,000 converters a year, this time with an annual purchase value of $70m. This is an existing contract which GM Europe has agreed to transfer to South Africa with start of production scheduled for March next year and is for the more specialised DPF, to be fitted to Opel’s Astra, Zafira and Vectra ranges. “Production will be effected through Cape Town-based Arvin Meritor,” Dold reportedly said.
He told Engineering News that GMSA is currently in negotiations directed at securing a supply contract for a million converters a year, in a programme which has an annual purchase value of $240m.
According to the report, Dold has some concerns over the future of South Africa’s automotive industry.
“While we, as a country, have the full capacity to compete for and to win major global supply contracts, the automotive component industry is at present being seriously inhibited by uncertainties around the Motor Industry Development Programme for the years ahead,” he told Engineering News.
The MIDP, as government’s support programme to the automotive industry, is currently the subject of a review process, and is due to come to a close in 2012, the report added.
