R3m incentive investment pays off handsomely
From a R3m investment incentive to Formex Industries in 2021, the Nelson Mandela Bay municipality has bagged more than R300m in return investment to operations in the city from the steel component producer.
Last year, the company committed to investing R102m to build a 1,600-tonne auto transfer press — the largest in the Eastern Cape — which will help it build components previously made only in Portugal.
And now, recently boosted by a service agreement to provide 33 new parts to VWSA, signed last year, Formex is adding a 1,000-tonne auto transfer presser at its Struandale plant which is expected to be completed next year.
The service agreement with the metro, which includes rental subsidies and rebates, was signed in 2021 after the company announced in 2019 that it would inject R70m at its Markman plant, creating 90 new jobs.
Formex Industries chief executive Hennie Venter said the subsidy allowed them to reinvest in capital operations making them more attractive and competitive.
“Everybody saw that there was good support and we then managed to get more support from OEMs [original equipment manufacturer].
“VW decided to resource the work that they buy at their plant in Portugal and localise that with us,” Venter said.
The expansion will see Formex become a key supplier for around 30,000 cars a year for the next six years.
Venter spoke yesterday during a visit by economic development, tourism and agriculture committee members accompanied by deputy mayor Khusta Jack for a tour of Formex’s Struandale plant.
Municipal trade and investment acting director Jeremy Dobbin said the continued investment by Formex was testament to the incentive scheme meeting its purpose to ease business in the city, promote more investment and create jobs.
“The municipality’s investment incentive policy is worldclass and is attractive compared to other cities in SA,” he said.
“At a cost of R3m, the city expected capital expenditure of R70m and creation of 90 jobs.
“In reality, this has yielded close to a R300m in investment in local operation and 96 additional positions,” Dobbin said.
He said the metro planned to update the policy to target manufacturing, business processing, offshoring and tourism.
Formex Industries forms part of the Hosken Consolidated Investments Group through Deneb and supplies metal products to automotive giants including Volkswagen SA, Ford Motor Company and Mercedes-Benz.
In seven years, the company invested R340m in both the Markman and Struandale operations.
Jack said to support the incentive schemes, the city was focused on making sure its infrastructure was also up to the task.
“We have given much attention to areas where infrastructure and service delivery had been in decline over this period and in the coming years we will ensure that our economy is geared for investment and creating jobs.
“Nelson Mandela Bay is serious about creating a viable and safe environment, which makes good business sense for any investor,” he said.