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Pharmaceutical and automotive manufacturers are investing in new capacity

Of the established companies in the region, Volkswagen, Mercedes-Benz, Ford, South African Breweries and Aspen Pharmacare are all either upgrading facilities or adding new production lines.

Established players and new entrants are putting money into new and expanded facilities in pharmaceuticals and the automotive industry, two of the strongest manufacturing sectors in the Eastern Cape.

Of the established companies, Volkswagen, Mercedes-Benz, Ford, South African Breweries and Aspen Pharmacare are all either upgrading facilities or adding new production lines.

New entrants include MSQ Health, which will build a R100-million factory in the Coega Special Economic Zone, which is partnering with the company. The focus will be on active pharmaceutical ingredients (API).

Phase 1 in the construction process of the vehicle assembly plant of Beijing Automotive Group South Africa (BAIC SA) was completed in 2018. The total project involves an investment of R11-billion. BAIC expects to be building 50 000 vehicles per year at its site at Coega SEZ by 2022.

The Eastern Cape manufactures half of the country’s passenger vehicles and provides 51% of South Africa’s vehicle exports. The sector accounts for over 40 000 formal sector jobs in the province.

Volkswagen’s two new types of Polos started rolling off the production line in Uitenhage in 2018. Volkswagen’s R6.1-billion investment will take production up to full capacity of 160 000 vehicles in 2019, from 110 000 in 2017.

About 150 automotive suppliers of various types operate in the Eastern Cape. Sectors include leather works, batteries, automotive tooling, catalytic converters, glass, lamps, radiators and alloy wheels.

Several cluster development programmes in the Eastern Cape aim to develop specific industries by bringing together expertise and logistical support. Marine manufacturing is the focus of the Mandela Bay Composites Cluster (MBCC). A Non-Automotive Manufacturing (NAM) Cluster concentrates on training, supplier development, energy efficiencies and developing new markets.

The provincial government wants to see more diversification in manufacturing and is targeting sectors where the province already has a competitive advantage (such as wool and mohair), is labour intensive, will have a broad impact and has low barriers for SMME entry. Sectors targeted include: agri-processing and food; timber; tourism; construction; chemicals; energy and mariculture.

There is great potential to create more value from the excellent wool, leather and mohair that the province’s livestock produce. A fibre-processing plant to spin wool and mohair fibre into yarn is planned, as is a textile mill to focus on cotton, poly-cotton and acrylic fabric. The latter is planned for the IDZ in East London, which is already home to Da Gama Textiles, whose factory has the capacity to produce 45-million square metres of fabric per annum.

The opening in May 2018 of a R1-billion specialised product facility at the Port Elizabeth plant of Aspen Pharmacare will add 500 jobs to the existing complement of 2 000 staff members. The new plant will make products for chronic conditions, a new departure for the company which until now has focussed on generics. Annual production is planned of about 3.6-billion tablets.

A new production line came on line at the Ibhayi Brewery of South African Breweries (AB InBev) at Perseverance in the Eastern Cape in 2018. The new line, costing R438-million, will add 500 000-hectolitres to the brewery’s capacity

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Article source: Manufacturing sector overview in 2019 edition of Eastern Cape Business, the guide to business and investment in the Eastern Cape Province.

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