A Volkswagen badge is seen on a vehicle in the parking lot of the VW plant in Wolfsburg, Germany. File picture: Julian Stratenschulte

Johannesburg - Volkswagen South Africa (VWSA) has launched an initiative to expand its black-owned supplier base and comply with the government’s new broad-based black economic empowerment (BBBEE) codes.

The company yesterday hosted its first black-owned supplier day at which 45 manufacturing suppliers exhibited to more than 400 delegates.

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Thomas Schäfer, the chairman and managing director of VWSA, said it was the first black-owned supplier day in the country, but VW had previously done five in the US.

Schäfer said VWSA believed procurement from black-owned suppliers was a moral and legislative compliance imperative. “We understand government’s priority elements of the BBBEE codes and the drive for ownership. However, we have difficulty complying with the enterprise and supplier development element set out in the recently revised… mandate.”

Suppliers

He said: “This is not because we do not want to, but because it is virtually impossible given the scarcity of black-owned suppliers to the local automotive industry.”

Schäfer said VWSA’s content percentage of 70 percent required the firm to get at least 500 new suppliers to achieve the required points under the enterprise and supplier development element of the code.

Schäfer stressed that suppliers had to understand that as a multinational, VWSA was competing with other plants in the group, which left it with no choice but to award business on commercial principles. “We also need to comply with corporate governance and… allow all our business deals to be transparent, competitive and open to scrutiny by our shareholders.”

Initiative

Trade and industry minister Rob Davies congratulated VWSA in taking the lead with this initiative. He said the enterprise and supplier development element in the new codes deliberately set a minimum level companies had to achieve because the government wanted the new codes to act as real instruments to create real industrialists.

Davies agreed with Schäfer and stressed the government also did not want to see high costs, agents or intermediaries. “We want to see empowerment that delivers real industrialists,” he said.

Schäfer said VWSA started its black-owned supplier initiative about six months ago by contacting more than 100 organisations to request assistance in compiling a list of potential suppliers because a database of black-owned suppliers did not exist.

He said VWSA in conjunction with the Nelson Mandela Metropolitan University were creating this database and other original equipment manufacturers would also be able to benefit from it.

Schäfer said 430 firms applied to be part of VWSA’s black-owned suppliers, but most were from the services sector and applications were assessed against a set of criteria, with 45 companies finally approved to be exhibitors.

Nico Vermeulen, the director of the National Association of Automobile Manufacturers of SA, said the initiative was consistent with the transformation requirements in the country and ultimately good for growth and development of the automotive industry.

BUSINESS REPORT