The Ford Motor Company of Southern Africa plans to use more locally based component suppliers for its new Ranger bakkie and encourage more foreign suppliers to establish manufacturing operations in South Africa.
Jeff Nemeth, Ford SA’s president and chief executive, said the local content in the Ranger currently ranged between 65 percent and 75 percent, depending on the model derivative, but increasing the local content further would help to reduce logistics costs while increasing the flexibility of its supply chain.
He said it was also looking to localise more components because the logistic costs of its supply base were well above forecast. The increased localisation would involve using South African suppliers it was currently not using and localising components that were not now manufactured in the country, he said.
Nemeth admitted this week its production plant in Silverton in Pretoria had experienced challenges in supplying the new Ranger to about 148 markets globally because of the length of its component supply chain.
Ford SA had installed a system globally to allow it to be very nimble to meet customer demand because its supply chain was so long. Nemeth said this system allowed dealers to amend their orders within a few weeks of production but with components coming from Thailand, China, the UK, Germany and Argentina, Ford SA experienced some disruption to supplies to the plant last month.
This meant the plant was down for a few days last month.
To fix this problem, Ford SA was increasing its inventory of critical parts and limiting the ability of dealers outside of Africa to amend their orders so close to production, which would stabilise their production and allow the plant to build to schedule each day, he said.
Nemeth added that as it built more Rangers, the more economically attractive it became to localise components. He said the Ranger line was currently operating on a one-shift day but would move to a second shift in September and also ramp up the line speed in the second half of this year by 15 percent and increase the line speed again in 2014.
“So we should see more localisation in the next two years,” he said.
Ford SA launched a R3.4 billion investment programme in 2008, with the investment split between its vehicle assembly plant and its Port Elizabeth engine plant, after securing the global contract to produce the new Ranger locally.
Dean Stoneley, Ford SA’s vice-president of marketing, sales and service, said the supply disruptions last month had led to a decline in Ranger sales to fifth among the top-selling light commercial vehicles, after consistently being in second position at the end of last year.
He said last year was a record sales year for Ranger in South Africa, despite it only being on sale for 10 months of the year because it was only launched in March.
Stoneley said the Ranger achieved a market share of 17.3 percent of the new light commercial vehicle market last year, beating its previous record of 12.5 percent set in 2005.
“With a full 12 months of Ranger sales this year, we are confident we will be well in excess of 20 percent of market share in the 1-ton market,” he said.