UD to splash out R30m on upgrades
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.
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.
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.