Business

Former spy boss’ initiative to inject R450m into depressed Eastern Cape

2019-11-27 23:31

A multimillion-rand factory investment to supply aluminum and steel blanks to Mercedes-Benz is set to benefit the people of East London.

The R450 million investment by VM Automotive in the town of Berlin near East London has already created 110 jobs during the construction phase.

At least 50 more permanent jobs will be created once operations are up and running in April next year.

The company has a staff complement of 10 in the East London office.

VM Automotive is the brainchild of Gibson Njenje, a former spy boss who was previously the head of domestic intelligence for the State Security Agency.

Njenje, who is chairperson and CEO, told City Press last week that the focus was on the automotive industry where they specialise in laser blanking.

Njenje started the company in 2013.

“We are blanking for Mercedes-Benz and BMW in Rosslyn [in Pretoria]. We have got a plant that we started to run early last year. The company was established in 2013 and our interest has always been in the automotive sector,” Njenje said.

He said they broke into the market when they bought a 100% stake in a plant owned by MA Automotive Tool & Die in Rosslyn and took control of their contracts with BMW.

They added their own contract with Mercedes-Benz doing work on the W205 Series which is the outgoing C Class Series.

He said the Series cycle was seven years and they would start to produce for Mercedes-Benz from 2020/21 to 2028.

Njenje said he was confident they had a sustainable business.

“Early this year we were awarded the W206 contract which we have started to build in Berlin. We are building a superstructure in Berlin. In Europe they are busy building the laser blanking line which we are going to be using. It’s new generation. It’s fast. It’s a high-speed laser machine. Possibly we are the only ones in the world who are running that right now and it’s being built in Germany,” said Njenje.

He said they expect delivery of the high-speed laser blanking machine in April next year and by that time they expect the plant that is being built in Germany to have been completed.

VM Automotive receives high-quality steel or aluminum coils from material suppliers in Europe.

The coils are transported to their plant where the high-speed lasers cut them to the client’s specifications.

Njenje put the cost of the Berlin factory’s construction at R100 million and said it would include offices, workshops, testing areas and cleaning facilities.

John Cerff, VM Automotive’s chief financial officer, said the high-speed laser could cut up to 30 parts or more per minute.

Once the blank was cut it was taken to a press shop owned by MA Automotive Tool & Die next to the plant in Berlin where it would be molded into a car part.

Cerff said the machine they would use was the first of its kind in the southern hemisphere, and the sixth in the world.

The machine alone costs about R200 million and takes about 12 months to be manufactured.

It will be shipped to South Africa from Germany.

Cerff said the machine was 57m long.

The production factory in Berlin is 140m long, 32m wide and is a 5 000m² production building, which means the high-speed laser machine would take up a huge space of the factory.

Cerff said the R450 million investment in the East Cape excluded the Rosslyn facility in Pretoria where they supply to both Mercedes-Benz and BMW.

He said the plant in Berlin would supply only to Mercedes-Benz in the Eastern Cape for now. Mercedes-Benz has a plant in East London, 47km from Berlin.

VM Automotive chose East London because Mercedes-Benz was based there but it wants to add VW, Nissan and Ford to its list of high-profile clients.

Njenje said they were a transformative company and they looked at employing more black people and women.

His daughter, Vuyo Njenje, is a shareholder and executive director responsible for marketing and sales.

“This is the first of its kind in Africa and we are passionate for this continent and if we can see it thrive in any way possible we would like to be a part of that.

“It’s a very exciting project to be part of and to start off at the top and produce for a company like Mercedes-Benz as a first-tier supplier, we are in a very great position,” said Vuyo.

Cerff said they expected to break even in three and a half years.

He said most of the staff employed by the company would work on the line which needs a lot of people to monitor and load the coils.

There will be quality assessors and staff will work on the shipping of the blanks to the factory and into the press machine.

Cerff said most staff would be semi-skilled and skilled.

Cleaners and security guards would be employed. Programmers would be part of the staff complement.

“We have already started advertising and have our first interviews for the programmers next week. We have employed some of the staff but most of the staff will be employed from now going forward,” said Cerff.

The company will operate three shifts a day, five days a week.

VM Automotive had to go through a gruelling process of due diligence from the original equipment manufacturer, Mercedes-Benz, and from the Industrial Development Corporation (IDC) which helped fund the project.

The balance of the funds have come from grants and Gibson’s own pocket.

“We have put in more than 10% of our own cash into the project. So, the project was funded by the shareholders themselves and the IDC,” said Gibson.


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December 8 2019