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Send  Share  RSS  Twitter  29 Mar 2010

: Nissan Remains Committed to Local Supply Industry


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Nissan South Africa (Nissan SA) continues to partner with the local OEM (original equipment manufacturer) supplier base, says the company's General Manager of purchasing Stefan Haasbroek, who agrees that local suppliers have been hard hit by the recession as well as having to operate in an increasingly competitive global environment.

"It is not simply about sourcing with the lowest cost supplier, but about partnering with suppliers that share our vision of a sustainable and competitive auto industry and OEM supplier base in South Africa," states Haasbroek

But the pressure on local suppliers is likely to increase as global suppliers find innovative ways to reduce costs (including those of logistics) while local raw material suppliers continue to apply 'benchmarked' pricing - not to mention the impact of the electricity hike, argues Haasbroek. However, Nissan SA is partnering with local suppliers to respond to this challenge. The company, as an example, cooperates with suppliers to establish links with global suppliers through the formation of technical or cooperation agreements to ultimately enhance local content levels. In addition to this, benchmarking of cost structures allows for the identification of focus areas to reduce cost. This activity is made possible by the power of the Renault Nissan Purchasing Organisation (RNPO) -- the Alliance partnership between the two automotive manufacturers. "In this way we work with suppliers to become globally competitive with the aim of ensuring sustainability of the local industry, "says Haasbroek.

Another challenge for local suppliers is the advantage that some global suppliers have in countries with a high total industry volume (TIV), which allows for competitive costs structures and improved efficiencies. "So the local supplier base has challenges in terms of model complexities and short production runs due to - comparatively speaking - low volumes in South Africa. However, this can be overcome by being innovative, flexible and resilient," advises Haasbroek.

There is a relationship between the level of local content and the specific vehicle project. "A project with a relatively short model life and / or relatively low volumes will not attract high levels of local content. Conversely, a project with higher volumes and longer remaining model life provides more opportunity to pay back the investment of localising," explains Haasbroek.

For this reason, local content on the Hardbody range (currently around 60%) -- a Nissan SA mainstay - has significantly higher local content than some other vehicles. Haasbroek says that the company's target is to increase local content on the Hardbody by at least an additional 7%. Nissan South Africa's localisation strategy is in alignment with the objectives of the APDP (Automotive Production and Development Programme), effective 2013, which will offer incentives to manufacturers
who produce in excess of 50, 000 vehicles.

"In order to increase production volume -- a Nissan target going forward to meet APDP requirements - we are driving hard to increase local content to above an average of 60% on key models while maintaining globally competitive cost structures," says Haasbroek.

Another area that is targeted is improving the company's overall BBBEE rating, recently achieved with the awarding of Level 5 status. One of the contributing factors is the company's preferential procurement strategy -- contributing 18 points out of a possible 20 score - says a justifiably proud Haasbroek.

Haasbroek took over from Dave Cameron, who was instrumental -- during a three-year secondment - in integrating Nissan SA's purchasing division into the global structure. He returned to Nissan Europe at the end of September 2009.

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