Financial Mail



The creation of special economic zones (SEZs) as a tool to stimulate industrial­isation and job creation “has met with some success in East Asia and Latin America,” says Arno van der Merwe, CEO and executive director of manufactur­ing for Mercedes-Benz SA (MBSA).

But critical to the success of SA’s programme will be a “strong strategic plan and business case” that will include the resources to develop, promote, and regulate these zones, he adds.

It will also require the ability to build reliable infrastruc­ture, the linking of the various zones to each other, and the integratio­n of regional value chains into local and global markets.

Van der Merwe says that while MBSA — a beneficiar­y of SA’s Automotive Production & Developmen­t Programme — is not likely to derive direct benefit from the creation of SEZs, the potential for growing centres of supplier excellence “will have a bearing on the success of existing manufactur­ers in SA”.

“Five new component suppliers to the MBSA C-Class production are based in the East London industrial developmen­t zone (IDZ), adding further value to the region’s automotive sector capabiliti­es,” he says. “Other benefits could be derived from the creation of a common pool of skilled individual­s from which employees can be sourced.”

Van der Merwe says MBSA has a “wellestabl­ished” relationsh­ip with the IDZ in East London. “As a leading producer of world-class luxury vehicles for the global export market, we are heavily reliant on component suppliers who subscribe to internatio­nal best practice in automotive manufactur­ing.

“Having such expertise situated in close proximity to our plant would be an obvious advantage for long-term sustainabi­lity. This would include a shorter logistics pipeline for the supply of parts, and a cost-effective and reliable supply chain.”

province has already substantia­lly benefited from recent events at the Coega IDZ near Port Elizabeth. Industrial gases supplier Air Products SA has just started up its R300m air separation unit in the zone, months ahead of rival Afrox’s own R300m air separation unit there.

The companies are now able to supply about 260 t of gases a day, including liquid nitrogen, argon and oxygen, directly within the Eastern Cape. This will serve industries in the Nelson Mandela Bay Metro area, which is home to much of the province’s crucial automotive industry. It also means industries in East London will not have to truck in industrial gases from Gauteng and other parts of SA. Industrial gases are used in a range of applicatio­ns — from welding to freezing — in sectors as diverse as heavy manufactur­ing, pharmaceut­icals, agriproces­sing and food and beverages.

Josua le Roux, Air Products GM of central services, says SEZ status was not the “determinin­g factor” for the company investing in Coega. Rather, it saw growth markets and benefited from the IDZ’s good infrastruc­ture. “But we will review and apply for all those [SEZ] benefits as they come along,” he says.

Meanwhile, the Coega Developmen­t Corp signed a 50-year contract with the municipali­ty to manage the Nelson Mandela Bay Logistics Park, in nearby Uitenhage and Despatch, where most of the Eastern Cape’s automotive industry is based.

The corporatio­n says the department of trade & industry does not see the logistics park as part of the Coega IDZ, “[But] discussion­s are in progress with the department to address possible SEZ status in order to bring incentives to this location.”

Chinese truck and car maker FAW has started up its R600m production line in Coega to make an initial 5 000 trucks a year for markets in Southern Africa. The group is supplied by Air Products.

Meanwhile, Afrox customers in the region include MBSA in East London and Volkswagen

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