UD to splash out R30m on up­grades

The Star Early Edition - - BUSINESS NEWS - Roy Cokayne

UD TRUCKS South­ern Africa, which is part of the Volvo Group, plans to in­vest be­tween R30 mil­lion and R40m to up­grade its semi knocked down (SKD) com­mer­cial ve­hi­cle assem­bly fa­cil­ity in Ross­lyn.

Gert Swanepoel, the act­ing vice-pres­i­dent of UD Trucks South­ern Africa, yes­ter­day also con­firmed it was in­volved in ne­go­ti­a­tions to in­tro­duce a new brand to the assem­bly plant, Eicher, which is part of the Volvo Group and one of the largest play­ers in the main­stream com­mer­cial ve­hi­cle mar­ket in In­dia.

Swanepoel said the de­ci­sion to up­grade the plant was taken dur­ing a visit by Volvo Group chief ex­ec­u­tive Martin Land­st­edt to South Africa and the plant last Fri­day.

He said the up­grade would not in­volve the in­tro­duc­tion of ro­bots to the assem­bly op­er­a­tions, be­cause the vol­umes did not jus­tify it, but new tools and cranes would prob­a­bly be in­tro­duced.

Swanepoel said the plant al­ready had the ca­pac­ity to as­sem­ble 5 000 trucks a year and was only pro­duc­ing 2 500 units a year at present.

“We are look­ing and ne­go­ti­at­ing to as­sem­ble another brand, the Eicher brand from our group. That will in­volve as­sem­bling about another 1 000 trucks and we will def­i­nitely look at in­creas­ing the ca­pac­ity of the plant be­cause we have the space,” he said.

New jobs

Swanepoel said the up­grade and in­tro­duc­tion of another brand into the plant would cre­ate about 30 new jobs.

He added that UD Trucks South­ern Africa pre­vi­ously em­ployed about 140 peo­ple, but had re­trenched about 20 per­cent of its work­force over the past two years be­cause of re­duced vol­umes, largely re­sult­ing from its exit from the light duty truck mar­ket and now had a to­tal head count of less than 100.

Swanepoel said UD Trucks South­ern Africa was re­spon­si­ble for the south-east Africa hub and had changed its SKD con­tract man­u­fac­tur­ing part­ner in Kenya, where sig­nif­i­cant sales growth was an­tic­i­pated.

Flip Kirsten, the sales man­ager re­spon­si­ble for de­vel­op­ing mar­kets at UD Trucks South East Africa, said UD Trucks would be as­sem­bled at the Ava plant in Mom­basa, which was owned by lo­cal Kenyan busi­ness­man Dave Wil­liamson.

Kirsten said the plan in the long term was to as­sem­ble 1 000 UD truck units a year at the fa­cil­ity.

He said SKD assem­bly was im­por­tant in Kenya, be­cause of the 48 per­cent duty on fully built up truck im­ports, com­pris­ing a stan­dard duty of 25 per­cent, ex­cise duty of 20 per­cent and rail duty of 3 per­cent.

Rory Schultz, the mar­ket­ing di­rec­tor of UD Trucks South­ern Africa, said it had also de­cided to pri­ori­tise Kenya with an SKD assem­bly op­er­a­tion, be­cause Kenya, Tan­za­nia and Uganda were listed by the World Bank as be­ing among the top 25 coun­tries with the fastest eco­nomic growth rates out of a list of 180 coun­tries.

“Truck sales are an­tic­i­pated to grow by 75 per­cent to about 7 000 units in a turn­around after the Kenyan mar­ket slumped for a cou­ple of years.

“That is why we are fo­cus­ing on get­ting an SKD op­er­a­tion go­ing in Kenya,” he said.

Truck sales in Kenya last year to­talled 4 002 units.

Schultz said de­spite gross do­mes­tic prod­uct growth in South Africa last year be­ing at its worst level since 2008, the truck mar­ket had not done too badly in achiev­ing to­tal sales, in­clud­ing ex­ports, of 28 144 units.

How­ever, Schultz said sales had de­clined year on year by about 11 per­cent. It was the sec­ond con­sec­u­tive year truck sales had dropped and the low­est to­tal sales in five years.

Schultz said this year was ex­pected to be another dif­fi­cult year for the truck mar­ket in South Africa, but sales were ex­pected to grow year on year by about 3 per­cent.

The up­grade will not in­volve the in­tro­duc­tion of ro­bots to the assem­bly op­er­a­tions.

PHOTO: SUP­PLIED

UD Trucks is in­volved in ne­go­ti­a­tions to in­tro­duce a new brand to its Ross­lyn assem­bly plant, Eicher, which is part of the Volvo Group, Gert Swanepoel, the act­ing vice-pres­i­dent of the com­pany said yes­ter­day.

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