Crossing the river Vistula

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Business Report newspaper last week sketched a dire situation for the local automotive industry, saying that its future was at risk “unless steps were taken within the next 18 months to address several major challenges facing the industry”.

The Engineering News subsequently reported Deputy Trade and Industry Minister Thandanani Tobias-Pokolo responded that government “remained committed to providing finance to industry and to ensuring the industry remained a key manufacturing sector.

But funds and resources were too limited to necessarily provide assistance to the vehicle and component manufacturing industry beyond what was currently on the table.

Yet, right now, tender documents for the acquisition of a fleet of military trucks to replace worn-out vehicles are gathering dust on a desk at the Department of Defence (DoD) and an allocated budget of up to R600 million is going unspent.

Business Report, quoting Volkswagen SA MD and National Association of Automobile Manufacturers of SA (Naamsa) president David Powels, said the SA Automotive Week conference heard that these challenges included the uncompetitive nature of the domestic industry, increasing the local content in domestically produced vehicles from about 35% to 70%, addressing uncompetitive logistics costs and addressing automotive policy uncertainty.

Powels told the SA Automotive Week conference these issues had to be addressed in the next 18 months or South Africa might not have have an automotive industry in seven or 10 years.

The VW exec said the cost competitiveness of local suppliers was 20% worse than those in western Europe and 30% to 40% more expensive than India and China.

The Engineering News had Tobias-Pokolo adding that she agreed government incentives were inadequate but said social spending was a higher spending priority.

“With a limited budget, how can government improve its assistance? People expect answers, but these are real challenges. Government’s industrial financing is being challenged by the recession.”

She noted that the Department of Trade and Industry’s budget stood at R6.3-billion for the financial year, or 2.7% of the total budget. (This compares with about 5% for defence and 20% for education.)

Government support in the form of the Motor Industry Development Programme (MIDP) has to date concentrated on light and sedan vehicles. It is not clear yet what the contents of the MIDPs successor, the Automotive Production and Development Programme (APDP) will be.

But SA’s embattled manufacturers and component-makers produce more than sedans and the country’s truck makers and component manufacturers would surely use a multimillion rand infusion.

The current effort to buy new trucks for the South African National Defence Force to replace the Magirus Deutz “SAMIL” fleet – Project Vistula – started in May 2004 but ran off the road in September 2007 after allegations of irregularity and a series of inconclusive probes into those claims.

At the time Armscor wrote to bidders, including MAN and Daimler to say none of the vehicles tested fully met specifications and that it intended to “initiate a new RfO [request for offers] process in due course”.

Officials at the DoD’s Armscor acquisition agency in January told defenceWeb that they were about ready to re-issue the RfO.

Armscor’s acting General Manager Human Resources Francois Potgieter said the agency “is in the process of finalising the documentation to release the RfO relating to [Project] Vistula in February/March 2009 once approved by all authorities.”

That did not happen. defenceWeb wrote in May that the new tender documents were ready and would be published in the 3rd Quarter. (July-September). That did not happen either. Industry sources say they have no idea why.

Potgieter nevertheless added that the “documentation has been updated to make provision for a system on Level 5 which means Armscor will contract the vehicle, superstructures, cranes, cargo handling equipment and training systems. A main contractor thus will be responsible for the complete system.”

While Potgieter says the “specifications have not changed as the requirement remains the same” Jane’s Defence Weekly also in January reported that the “new request for proposals will “now also include five-metric ton (mt) payload 4×4 trucks. The previous requirement was reportedly for 6×6 and 8×8 10mt trucks only.

The size of the SAMIL 20, 50 and 100 fleet peaked somewhere above 12 000 trucks, although many were the somewhat useless SAMIL 20 2mt truck.

This vast fleet was meant to equip all four Services and in the case of the SA Army also provide for the wartime establishment an infantry division as well as an armoured division and a parachute brigade. A retired general officer familiar with military requirements says 5000 trucks – utility as well as specialist – would be a generous replacement.

Beeld in November last year put the number required at 1200 and the budget at R3.2 billion. This has never been officially confirmed. Other sources have, however, suggested the budget is very substantially less.

Be that as it may, the transport requirements of the ten brigades and the divisional troops of the two field divisions contemplated under the SA Army’s Vision 2020 may push up the numbers again, as will Project Sepula – the drive to acquire a new mine protected armour protected personnel carrier to replace the infantry’s now elderly Mamba and Casspir vehicles.

Planners are keen that the Sepula vehicle – of which about 1900 may be required – should be based on the Vistula engine and drive train. As a “family of vehicles” this will push up commonality of parts while driving down costs.

In the end the numbers and amounts do not matter. There is a legitimate and urgent requirement for the vehicles, the project is funded under “SCAMP”, the Strategic Capital Acquisition Master Plan, and they can be built here – generating revenue for struggling companies, income for the taxman and gainful employment for workers.

So, what are we waiting for?

Sir,

Reports in your publication last week sketched a dire situation for the local automotive industry, saying that its future was at risk “unless steps were taken within the next 18 months to address several major challenges facing the industry”.

Also noted were comments by Deputy Trade and Industry Minister Thandanani Tobias-Pokolo that government remained committed to the the industry as a key manufacturing sector, but lacked resources to provide more assistance.

Yet, right now, tender documents for the acquisition of a fleet of military trucks to replace worn-out vehicles are gathering dust on a desk at the Department of Defence (DoD) and an allocated budget of up to R600 million is going unspent.

The current effort to buy new trucks for the South African National Defence Force to replace the Magirus Deutz “SAMIL” fleet – Project Vistula – started in May 2004 but ran off the road in September 2007 after allegations of irregularity and a series of inconclusive probes into those claims.

Officials at the DoD’s Armscor acquisition agency in January told defenceWeb that they were about ready to re-issue the RfO. That did not happen and industry sources say they have no idea why.

The size of the SAMIL fleet, acquired in the 1980s, peaked somewhere above 12 000 trucks. A retired general officer familiar with military requirements says 5000 trucks – utility as well as specialist – would be a generous replacement undercurrent conditions.

Beeld in November last year put the number required at 1200 and the budget at R3.2 billion. This has never been officially confirmed. Other sources have, however, suggested the budget is very substantially less.

Be that as it may, the transport requirements of the ten brigades and the divisional troops of the two field divisions contemplated under the SA Army’s Vision 2020 may push up the numbers again, as will Project Sepula – the drive to acquire a new mine protected armour protected personnel carrier to replace the infantry’s now elderly Mamba and Casspir vehicles.

Planners are keen that the Sepula vehicle – of which about 1900 may be required – should be based on the Vistula engine and drive train. As a “family of vehicles” this will push up commonality of parts while driving down costs.

In the end the numbers and amounts do not matter. There is a legitimate and urgent requirement for the vehicles, the project is funded under “SCAMP”, the Strategic Capital Acquisition Master Plan, and they can be built here – generating revenue for struggling companies, income for the taxman and gainful employment for workers.



So, what are we waiting for?