‘Logistics industry needs to get involved’

Logistics receives scant mention in the Industrial Policy Action Plan (IPAP) released in February this year. One of the only mentions is in the section on plastics converter plants, where an identified constraint is “South Africa's geographic position and resultant logistics costs”. The same constraints hold true for all manufacturers of new vehicles and components. With a focus on boosting local component manufacturing by both government and the original equipment manufacturers, there is a need for the logistics industry to be engaged in the plans. By focusing on joint sourcing in five “key” subsectors such as electronics, body parts, interiors, exteriors, chassis and drivetrain, the Department of Trade and Industry wants to “deepen and raise economies of scale”. Studies into where the opportunities lie are expected to be completed by the first quarter of next year, with manufacturing due to start in the third quarter of 2011. The plans hold both opportunities and threats for the freight industry – opportunities for internal supply of raw materials, parts and components, and threats from reduced import volumes if the plans are successful. There should, however, be some offset through growing exports of components. In order to compete against the likes of China and India, government plans to raise the level of competitiveness of the the component manufacturers through “benchmarking, gap identification and assistance to close competitiveness gaps by engineers/advisers and post intervention assessment”. Small and emerging third and fourth tier manufacturers will be included in the support structure. But, without efficient logistics to get the components from the factory gate to the assembly plant, no amount of technical wizardry will succeed.