JSE listed giant, HCI and Deneb Investments wholly-owned company, Formex Industries, has strategically increased its manufacturing capacity in order to meet the demands of the local and international automotive sectors. This increase in demand is partly brought about by the guidelines set out in the South African Automotive Masterplan (SAAM) 2035 and certainly reinforces the challenge laid down by the Minister of Trade and Industry, Minister Ebrahim Patel in his keynote address at the recent NAAMSA conference, to expand markets for our products.
Formex Industries, a metal forming, and assembly company that supplies a variety of complex products to the local and export automotive industry, has increased its capacity to assist the South African automotive manufacturing sector reach its target of accounting for 1% of global vehicle production by 2035. As such, Formex has recently invested R70-million in three new metal presses that will allow the company to boost its output. The presses, built by Yadon Press in China, have been commissioned to manufacture stainless steel and mild steel components for the automotive industry.
In addition, Formex Industries has expanded its floor space to facilitate this increased capacity. A further 5660 square metres were added to the factory in 2017, followed by 2365 square metres at the end of 2018. This allows for more equipment to be housed inside the manufacturing facility, as well as more storage space for completed components.
Over the past 18 months, Formex Industries manufactured a total of 19 154 170 parts for the local and international automotive sectors. Of significance, during the same period of time, it created an additional 90 jobs in Port Elizabeth and now employs 540 residents from the surrounding Nelson Mandela Bay metropole.
The company has also increased its local suppliers by 25% since April 2018 by offering solutions that speak to the new SAAM Masterplan particularly around transformation and quality. On the other hand, the number of direct customers of Formex has reduced slightly, due to higher volumes of components being sold to original equipment manufacturers (OEMs) around the country and the company’s move away from non-automotive clients as the focus is now clearly on its efforts around vehicle producers and car brands).
South Africa is the 4th largest exporter of cars and exports tally 14.5% of total exports out of the country. During the 2017/2018 financial year, Formex exported R19.65-million worth of products to overseas markets. In the 2018/2019 financial year, this figure increased to R28.0-million. This represents an R8.35-million growth, or 42.5% increase in revenue from exports. Since the beginning of April 2019, Formex is on track to exceed previous sales of components to international customers.
Says Formex Industries CEO, Hennie Venter, “In our opinion, the South African Automotive industry is a true success story. It is supported by our Government and some of the major OEM’s worldwide. Our task as local suppliers is to balance the OEMS’s demands with respect to quality, cost, and delivery. Currently, our country’s biggest challenge is job creation and we believe we have aligned ourselves 100% to satisfy these integrated customers and socio-economic requirements”.
In total, Formex Industries has invested R106.5million into its expansion over the past 18 months. This Capex spend has allowed the company to meet the increased demands of the automotive industry and provide the solutions and support required by the industry. A Level 2 B-BBEE owned company, with over 80% black ownership, of which more than 40% are black women, Formex has established itself as an industry leader in the automotive component and manufacturing sector. Higher capacity is one of the key driving forces of a growing economy and Formex Industries is well-positioned to meet the challenge with its reimagined industrial strategy.
