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Railway products maker takes root in regional market

Business Report
Lucchini RS, the Italian manufacturer of forged railway products, has invested R200million in a new production facility in Germiston in Ekurhuleni and anticipates making a further investment of R1.8billion in anticipation of further growth in their line of business in the regional market.

It is the first international forged wheel manufacturer to localise in South Africa.

The group has partnered with black South African investors in the venture, with Kusini Investments currently holding substantial shares in the local company.

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File picture: Adrian de Kock/Independent Media

Based in Lovere in Italy, the Lucchini RS Group specialises in the design, manufacturing and sale of high-end railway products and solutions, castings and forgings plus special steel ingots for various applications.

Augusto Mensi, the chief executive of Lucchini RS, said at the official opening of the new production facility on Friday that it was envisaged that about 45 new jobs would be created through this initial investment, with planned local content of between 30percent to 40percent.

“Having actively traded forged railway wheels and axles in South Africa over the last 13 years, Lucchini RS has now committed to localise wheel machining in the country, and to subsequently create local jobs,” he said.

But Mensi stressed they saw the investment into Lucchini South Africa as the first step in their expansion into Africa.

“A further investment of approximately R1.8billion is envisaged as further growth into the regional market is anticipated,” he said.

Mensi said the localisation involved the establishment of Lucchini SA, which had been created to complete the manufacturing process of blank wheels imported from Italy, which were then machined, inspected and delivered to the end customer.

Lucchini SA is housed in a 10000m² facility. The R200m investment includes the fitment of state-of-the-art technology in plant and machinery that adheres to the manufacturing process standardisation strategy of Lucchini RS Group.

The plant has the capacity to manufacture up to 20000 wheels a year depending on the mix of wheels produced.

As a trading company, Lucchini SA has been operational since 2015 and has been awarded long-term contracts by strategic customers to supply locomotives, freight wagons and passenger coach wheels.

Lucchini SA currently has 38permanent employees.

Yunus Hoosen, the acting head of Investment South Africa (InvestSA), said the R200m investment by Lucchini RS was a vote of confidence in the economy of South Africa, adding it was heartening to see a foreign company investing in the country and contributing to the country’s economic growth and job creation.

Lucchini RS’ investment supports government’s plans for job creation and localised manufacturing of railway products and Lucchini SA is a recipient of R36m through the trade and industry department’s 12i tax allowance incentive and a training allowance of about R1.6m.


BUSINESS REPORT

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