Localisation already at 35%, requirement could be as much as 65% for upcoming Transnet tender.PRETORIA – The American locomotives manufacturer GE Transportation, through its subsidiary General Electric South Africa Technologies (GSAT), is looking at increasing the local content in locomotives manufactured in South Africa.

 

In 2009 Transnet placed an order of 100 locomotives with GE, adding another order of 43 earlier this year.

 

According to Tim Schweikert, president and CEO of GE Transportation for Sub-Saharan Africa and China, there was no local content requirement placed on the first order of 100. For the assembly of these locomotives kits were imported from outside South Africa. He said that working in partnership with Transnet Rail Engineering (TRE) they have managed to push the local content of the second order of 43 already up to 35%.

 

Schweikert told Moneyweb that GE Transportation is expecting another large tender to go out soon, which is linked to government’s infrastructure programme rollout, and that he believes that there will be a higher localisation requirement on this coming tender.

 

“It could be up to 65%,” he said.

 

“We’ve come to believe at GE Transportation that localisation is key in our local growth strategy, whether we implement this in China or Kazakhstan. We have learnt from previous experiences in the other countries that we are involved in and the first thing we look at is the capabilities in the country. In South Africa there is good capability in metal producing and fabrication and off the bat we try to leverage things like that to achieve localisation,” Schweikert said.

 

He said that GE Transportation, using its partnership with TRE, is already looking at opportunities to broaden its local supply base and that they are confident that they will meet the higher localisation requirements for the tender.

 

“We have a good understanding of the supply base here in South Africa,” he said.

 

According to Schweikert the two challenges that faces GE Transportation in South Africa is firstly the challenge of finding the right human resources or trade skills and secondly that the second level of localisation will probably require some investment.

 

“We are in dialogue with the government agencies to talk about these challenges so that we can develop the right skills sets and capacity to get to the 65% level,” he said.

 

He said that GE already has a good start with its existing number of South African suppliers and they will expand the supplier base in anticipation.

 

Some of these local suppliers, such as the South African company providing the heating and cooling subsystems, are currently being integrated into GE’s global supply base.

 

GE hopes to leverage its partnership with TRE to get a foothold into expanding in Africa and perhaps exporting from South Africa to these markets.

 

Schweikert told Moneyweb that there is some potential in Angola and Mozambique and that GE is working with TRE to follow up on those opportunities.

 

GE Transportation is also in the feasibility stages of looking at opportunities in Nigeria and Ghana.

 

“Although TRE is not directly involved at this point we will bring them in once the processes start to materialise beyond the feasibility stage to see how Transnet can also enter into those markets,” he said.

Source : moneyweb.co.za