Roy Cokayne
Locomotive manufacturing, refurbishment and maintenance company RRL Grindrod Locomotives is expanding its facilities in Pretoria West at a cost of R40 million to enable it to better serve the demands of the African continent.
It claims the cost of its new locomotives are competitive with Chinese products and is one of the lowest-cost producers of the engines in the world.
The company is 51 percent owned by listed Grindrod. Empowerment group Solethu Investments owns 26 percent with the balance of the shareholding held by its three founding partners.
Robert Spoon, the chief executive of RRL Grindrod Locomotives, said yesterday that the facility had been expanded to 30 000m2 from about 5 000m2 in 2006 and its capacity to build new diesel electric locomotives increased to 100 a year from 24 previously.
He said the company’s market was essentially non-South African, particularly in Africa. It was building the first mainline locomotives for Columbia and also exploring opportunities in the Middle East.
The company employs about 450 people, with the expansion adding about 50 more to the workforce.
Spoon said the first phase of the expansion had not yet been brought into production because it was waiting for the outcome of its application to the Department of Trade and Industry in terms of the manufacturing competitiveness enhancement programme.
“Our total application for the incentive programme is for R40m, of which we have probably spent about half at this time,” he said.
Spoon said the second phase of the programme was to increase the local content in its mainline locomotives from 65 percent to about 80 percent.
“Part of the reason for the localisation drive is to keep the cost of the product at a level where we are the lowest-cost locomotive manufacturer in the world,” he said.
Dave Rennie, the chief executive of Grindrod Freight Services, said the company was not only producing a low-cost locomotive but a robust and fuel-efficient one that could be maintained in remote locations, which was how the company differentiated itself.
Spoon said the company had about eight major suppliers that contributed about 60 percent of their input costs and a further 30 or 40 suppliers.
Some of these suppliers had also submitted applications to the Department of Trade and Industry in terms of the manufacturing competitiveness enhancement programme.
But Spoon said that these applications were not for significant amounts.
He said it did not tender for the supply of locomotives to Transnet because its facility did not have the capacity at the time to produce the full demand and all its other customers in Africa would have been starved of capacity had it been successful.
Trade and Industry Minister Rob Davies said he believed the expansion of the manufacturing operations by RRL Grindrod Locomotives and other companies was in response to the improved climate the government had created in South Africa to support and sustain a growing manufacturing economy.
Davies said the economy had lost 1 million jobs, 200 000 of which were lost in manufacturing, because of the global economic crisis and that the government had responded by rolling out successive iterations of its industrial policy action plan (Ipap).
“We are now at the point… where we are seeing the results of our Ipap. I’m sure that if we had not done what we did, we would now be… lamenting the significant de-industrialisation in our country,” he said.
Grindrod shares fell 0.15 percent to R26.47 yesterday.