Coega Autospray, an Eastern Cape manufacturer of plastic trim components and supplier to GMSA, has been provisionally liquidated in the wake of the General Motors South Africa exit strategy.
“There is an exit agreement with GM, which has agreed to keep trading and continue to place orders with Coega Autospray until the 30th of September,” explains Chris van Zyl of accounting firm Mazars.
“We are the provisional liquidators and are executing on those orders. It remains to be seen what will happen; if there are no further orders received after the 30th of September, then presumably the provisional liquidators will have no choice but to close down the premises and proceed with an auction sale,” he explains.
“Somebody may come and try to buy it from us as a going concern in the interim, which would save jobs and everything else.”
Having commenced operations in 2001, Coega Autospray is a small company that provides injection moulding, coating, sub-assembly and logistical solutions.
According to van Zyl, most of the workforce has been retrenched and paid off by GM. About 38 people are left, who are all on short-term contracts.
“We are using those people to finish the remaining orders,” he says.
“We are concerned about the impact on the supplier base caused by the exit of GM from South Africa,” says Renai Moothilal, executive director of the National Association of Automotive Components and Allied Manufacturers (Naacam).
“The loss of a vehicle assembler is detrimental at any time, given the long and often cross-cutting supply chains that follow vehicle production. The associated loss of jobs, technology, skills and business opportunities is an unpleasant occurrence.”
The Eastern Cape is traditionally a province with strong links to the automotive manufacturing sector.
“There is a regional government-led programme available in the Eastern Cape, comprising a rapid response task force in partnership with the Eastern Cape Automotive Industry Forum (a Naacam initiative). The programme will aim to put in place a targeted package of support for manufacturers in distress,” he told FTW.
Companies who find themselves in this position can make use of the online portal to log their situations.
“Naacam has interacted extensively with senior management at GMSA to understand the strategy and mitigate the actions taken with their supply base. Similarly, the GM team has directly engaged with each of its direct suppliers and is managing the process with affected suppliers.
“We are aware of one company (Coega Autospray) that was supplying GM exclusively, and of course that company is dealing with the negative effect of this arrangement.
“The balance of GM component suppliers typically have other OEM or aftermarket supply. This is a strategy that is important – not just for GM suppliers but most component manufacturers in South Africa given that the country produces less than 1% of global vehicles,” he said.
“We have Naacam members who are growing their export business, which can cushion the impact of such withdrawals. The reality is GM has been one of the lower volume assemblers in South Africa in recent years.”
