25 May 2018

South Africa: MEC Sihle Zikalala - Mahindra Vehicular Factory Launch

press release

Address by KwaZulu-Natal MEC for Economic Development, Mr Sihle Zikalala, delivered on his behalf by Head of Department, Ms Pumla Ncapayi during the Launch of Mahindra Vehicular Factory in Durban on 25th May 2018

Programme Director, Mr Jeremy Muggs;

Her Worship the Mayor of eThekwini Municipality, Cllr Zandile Gumede;

India's High Commissioner to South Africa; Ms Ruchira Kamboi;

Consular-General to Durban, Dr Shashank Vikram;

Chairperson of Automotive Investment Holdings, Mr Dempsey Naidoo;

Chief Executive Officer of Mahindra South Africa, Mr Rajesh Gupta;

Head of Department, Ms Pumal Ncapayi;

Chairperson of Dube Trade Port, Dr Bridgette Gasa;

Chief Executive Officer for Dube Trade Port, Mr Hamish Erskine;

Chief of Mahindra International Operations, Mr Arvind Matthew;

Members of the Media & Business Community Present;

Ladies and Gentlemen;

All Protocols Observed.

It is our delight and pleasure as the Provincial Government of KwaZulu-Natal to welcome this new milestone that marks an upward trajectory in province's economy. The estimated R95 million worth of investment by Mahindra Group into the establishment of an assembly plant where around 2 500 vehicles would be produced annually whilst targeting almost 4 000 when operating at full capacity, is indicative of KwaZulu-Natal's rising star in terms of investor confidence. The initial 25 employment opportunities to be generated in this enterprise would have a considerable impact on the region's socio-economic profile.

Indeed, those that have become familiar with this industrial precinct which was granted the Special Economic Zone status in 2015 would attest to the fact that gatherings of this nature have become a common experience here. In recent times we have welcomed numerous businesses settling in this industrial site and here we could count YOA Fibre Optics; Shree Property Holdings; SAMSUNG; Reelin Bearings; Ukuphanta Holdings; Retractaline; Namec/Skyworth; Hodari; DB Schenker; Laser Junction; Airchefs; Brenco-Reelin; Gift of the Givers; iDube Cold Storage and GT Logistics. Today we have Mahindra joining this growing family of industries.

We are therefore indebted to the province's collective leadership featuring government and social partners in the private sector and civil society that intensely campaigned for the creation of this industrial hub.

Notwithstanding the incremental foreign direct investments flowing from different parts of the world into this area, we are particularly impressed to see BRICS member states such as India and China showing confidence in the province's economic future. Of course India and South Africa have a long history of political and economic relations based on mutual respect for each other which we strengthened by a common struggles against colonialism and apartheid.

This investment further confirms the province's commitment to the expansion of its automotive industry which we believe has potential to have a butterfly effect on this sector's value chain to unleash more business and job opportunities. Mahindra regards South Africa as a spring-board to expand its export market of its diverse vehicular products across the continent hence the sourcing of local parts and components would certainly spur further growth in the region's economy.

Of the 24 staffers to be hired in the new assembly plant, we have been assured 80% would be locals that had not been employed before and hopefully this would fit the youth profile. We have also acknowledged that the company would be extensively investing in skills development including sending staff to India to gain more capacities which would contribute in the expansion of skills base in the province.

Dube Trade Port had since incorporated automotive manufacturing as a strategic business that would increase investments that would contribute to the acceleration of socio-economic transformation. The province has been seized with the task of establishing an Automotive Supplier Park that would maximize productivity of vehicular products that could reduce costs whilst attracting new production and distribution technologies essential for competitiveness. As we announced at the Budget Speech two weeks ago, the Dube Trade Port has been appointed as the implementing agent for the Auto Supplier Park. This is in line with the national government's Industrial Policy Action Plan that identified the automotive sector as one of the strategic economic drivers, particularly within the Special Economic Zones.

KwaZulu-Natal factored the automotive business in its own socio-economic development blue-print, the Provincial Growth and Development Strategy as reflected in the establishment of the Automotive Cluster directed at facilitating an integrated automotive component manufacturing value chain in the province. Our vision also resonates with the content of the National Development Plan that targets the creation of 11 million jobs by 2030 - with special emphasis on the promotion of small scale industries such as SMMEs and co-operatives.

Once again, we are delighted that this vision is beginning to pay positive dividends. We are confident that through our partnerships with the industry and agencies responsible for marketing the country and province to potential investors we will soon be joining Gauteng and the Eastern Cape with respect to the founding of the Automotive Supplier Parks which had inspired growth in other related local industries including the manufacturing of automotive components.

We are therefore confident that with confidence exhibited by global brands in the vehicular industry such as the Mahindra Group which is worth in excess of $20 billion with foot-print in more than 100 countries, the Dube Trade Port would attract a combination of Tier 1 and 2 automotive suppliers to the province that would generate favourable conditions for further investments. Meanwhile, Mahindra is regarded as one of the foremost manufacturers of tractors, utility and commercial vehicles in the Indian sub-continent and is fast claiming its slice in the world market. Having opened a total of 60 dealership outlets in this country over the past fourteen years, Mahindra South Africa is already ranked sixth in terms of its supply of light commercial vehicles - with a formidable base of more than 40 000 customers.

It is also pleasing to note that this business operation has embraced the country's transformational agenda. This is reflected in the business profile of Mahindra South Africa's holding company, Bokamoso that trades as Automotive Investment Holdings which is a Level 2 B-BBEE enterprise. The Province of KwaZulu-Natal is elated to be associated with this progressive investment partners and we believe this would contribute positively to our efforts to create a more just and inclusive economy that seeks to collapse the legacy of apartheid that had kept the majority of black people on the periphery of the country's economy.

We have every reason to be content and optimistic about the prospect of Mahindra, operating under the business banner, AIH Logistics (Pty) Ltd quickly making an impact on the local economy once it assumes full operations after the installation of an estimated R10 million assortment of specialist production technologies on the modern 5000 square meters site that was built at cost of R85 million by Shree Property Holdings.

Meanwhile, the motor industry seems to be on the growth trajectory in the country as indicated in the recent industry figures by Statistics South Africa that revealed that the sector's trade sale on year on year basis increased by 4.3% by March 2018. Amid slow economic growth new vehicle sales rose by 9.4% which illustrated the resilience of this sector that we are prioritising as the future game changer in our province's economy.

The conceptualisation and establishment of the Auto Supplier Park has a sound foundation in this province with one of the world's leading auto manufacturers, Toyota growing by leaps and bounds. Recently, the organisation increased its production capacity by injecting R6, 1 billion for the production of two car ranges that are destined for both local and international market.

As we launch the Mahindra assembly plant, we are inspired to work even harder to transform this industrial complex into a destination of choice for investors especially in the manufacturing and service industries whilst growing in stature as the world's leading air logistics platform that integrates inter-modal transport facilities such as road, rail, sea and air that guarantee the province and the country's convenient connectivity to the rest of the world.

We therefore call upon the world to take an intense look to KwaZulu-Natal and take a cue from Mahindra Group and many more enterprises that have grabbed the opportunity of investing in this SEZ which offers convenient movement of raw materials into the production plants and as well as out to the target markets - using the combination of transportation modes. We congratulate Mahindra for this bold step and we assure Mahindra of our support as you engage in the establishment and future expansion of your business. Your move has become part of this province's developmental history.

I thank you



Issued by: KwaZulu-Natal Economic Development, Tourism and Environmental Affairs

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