Volkswagen South Africa, along with catalytic converter and exhaust systems manufacturer Eberspächer SA, have been awarded a $2 billion contract to supply the Volkswagen Group with diesel particulate filters for the next five years.
"It is a coup for the South African automotive component manufacturing industry," Volkswagen SA managing director David Powels said in a statement this week, adding that the deal was one of the biggest export contracts for a single part ever awarded to the company.
A diesel particulate filter is a device designed to remove diesel particulate matter or soot from the exhaust gas of a diesel engine. The component forms part of the latest common rail engines manufactured by the Volkswagen Group.
Volkswagen SA and Eberspächer SA, who will share the production volume, are to invest approximately R55-million in tooling and equipment to manufacture the parts. In addition, the investment in the national supplier base - 80% of whom are based within the Nelson Mandela Bay region (greater Port Elizabeth) - will be approximately R26-million.
The new contract will secure more than 100 jobs in the region, with intensive training of operators and quality personnel to ensure that strict international standards on diesel particulate filters are met.
The training will include processes involved, particulate filter handling and inspection criteria, quality requirements, important part characteristics, world-class manufacturing, tool change skills, effective problem solving and team work.
"The skills transfer opportunities from this contract are significant," Powels pointed out.
At the forefront
According to the statement, Volkswagen SA and Eberspächer SA are at the forefront of diesel particulate filter manufacture, having secured access to the most modern manufacturing method, known as calibrated stuffing, which encompasses new laser measuring and sizing technologies.
"This is the benchmark in the Volkswagen Group and will benefit the South African catalytic converter industry as a whole," said Powels, adding that production would commence in November this year.
The parts will be shipped to the Volkswagen Group's Kassel plant in Germany, where they will be completed and sent to various user plants in the group's global network.
"The decision to award the contract to Volkswagen SA proves emphatically that South Africa can be globally competitive in terms of pricing and technology, even when measured against the best global players in the diesel particulate filter industry," said Volkswagen SA purchasing division head Karlheinz Hell.
Benchmark for the future
Eberspächer SA managing director Henry Eksteen said the project was unique in its approach of co-operation and utilisation of manufacturing capabilities of two companies.
"This type of parallel project, we believe, will become the benchmark for the future, where an [original equipment manufacturer] can join forces with a specific technology partner to optimise processes and, thereby, be able to gain access to global business for their region and country," he said.
Eksteen added that the diesel particulate filter technology was a rapidly advancing field of expertise, and with global emissions standards becoming more stringent, the company would strive to remain a provider of innovative exhaust gas treatment solutions through their global research and development teams.
"We are very proud to be involved in this joint program with Volkswagen SA and look forward to further enhancing our presence with global platforms such as this one," he said.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
