PE parts maker geared for auto industry growth
30 May 2019 | Web Article Number: ME201914680
Armed with a R70-million investment war chest and strong empowerment credentials, Port Elizabeth-based automotive component manufacturer Formex Industries has signalled its intention to play a leading role in recently announced government plans to transform the industry into a globally competitive powerhouse.
Chief Executive Officer Hennie Venter said the company, wholly owned by Deneb Investments Ltd and a subsidiary of JSE-listed HCI, had invested heavily over the past few years with an eye to capitalising on and creating new opportunities for growth in the local automotive industry.
The most significant of these strategic investments has been the purchase of three new 1000-ton metal presses for body composition. One is already fully installed, while two others are in the process of being commissioned.
The company plans to invest a further R70 million into its business operations during this coming financial year.
“This investment signifies the intent and drive by Formex to retain its position as an industry leader,” Venter said, adding that it was also a sign of parent company, Deneb’s, faith in its vision and in the potential of the South African automotive sector.
Formex currently supplies industry heavyweights including Ford South Africa, Mercedes Benz and Volkswagen South Africa. Venter said that following its investment, the company had already attracted firm interest in the additional capacity from several automakers and other manufactures within the industry across South Africa.
He predicted that this demand would only grow next year when South African Automotive Masterplan (SAAM) which comes into effect.
The major objectives outlined in SAAM are to prepare South Africa by 2035, to produce one percent of the global vehicle manufacturing output, to include 60% local parts in vehicles manufactured in South Africa and to double the number of employees in the industry.
“That’s a bold and positive move and Formex is ready and certified to assist OEMs and second tier automotive businesses to reach compliance, especially around the critical areas of B-BBEE transformation,” Venter said.
He pointed out that many of the big players in the sector don’t meet the strict new B-BBEE and parts localisation requirements laid out in SAAM. “By sourcing components from us, they get to score preferential procurement points and improve their ratings.”
Located in Markman, the Level 2 B-BBEE company is made up of over 80% black ownership, of which more than 40% are women. In anticipation of the growing demand, it’s currently bolstering its workforce of more than 550 by a further 80, most of them drawn from Port Elizabeth and East London.
“Job creation and reducing unemployment are priorities for the South African government. The challenge is set down and clear to all business entities to get this priority right and to measure up quickly in terms of criteria, compliance and expectations,” Venter said.
“At Formex we’re ready to play our part in this worthy endeavour. Thanks to our dual focus on transformation and investment we’re perfectly positioned to realise the immense opportunities inherent in the automotive industry and to assist others to do so by achieving their full compliance and other benefits. This is a powerful message of vision and accountability, both for the Eastern Cape and for the country as a whole.”