Friday, January 21

Metair to create 3,000 new jobs in South Africa this year

JSE-listed manufacturer of automotive components and energy storage solutions, Metair Investments, will create more than 3,000 new jobs in South Africa this year through a significant investment in a new project for Ford South Africa.

Metair reported on Thursday that capital expenditures of R1.6 billion had been approved for its current financial year and that another R272 million in capital expenditures had been approved in the first half of 2021.


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Chief Financial Officer Sjoerd Douwenga said Hesto Harness’s land, plant and equipment capex for Ford projects amounts to about R1.1 billion and is split over three years, starting in 2020.


Ford and its suppliers invest R20.13 billion in South Africa

Metair’s turnover to receive a 140-160% boost from Ford contracts

Douwenga said there will be more investment in working capital at Hesto Harness next year of R300-400 million.

He added that there are smaller investments in two or three of Metair’s other businesses, including some R200 million each in its plastics and lighting business.

“We could also locate automotive copper wire at Hesto, but that is not approved yet and it is not in the numbers mentioned,” he said.

Douwenga said the additional capital approved in this financial year is related to Ford’s incremental business that Metair has secured, which is primarily in Metair’s plastics business and involves additional localization by Ford.

Read: Metair may scrap his plans to split in two

“Unfortunately, it comes from a supplier that did not financially survive Covid-19 and we got the business out of it. It’s big business, ”he said.

Metair CEO Riaz Haffejee said they are developing two buildings related to the Ford project, one of which is a 3500m2 installation in Stanger (KwaZulu-Natal) for Hesto Harness because his existing building is full.

He added that this facility, which is nearing completion, will employ 3,000 more people by the end of the year.

Haffejee said that Metair is also developing a building of about 7,500 m2 in the Tshwane Automotive Special Economic Zone (TASEZ) next to Ford SA’s Silverton production plant in Pretoria, which will create fewer than 100 new jobs.

Riaz Haffejee, CEO of Metair, which is listed on JSE. Image: supplied

Read: Automotive Component Suppliers Commit R4.3 Billion to Establish Operations at Tshwane

He said the wiring harnesses will be manufactured for Ford SA at Stanger and shipped to the warehouse facility at TASEZ, where they will be sequenced for line-side delivery to Ford SA.

Hafferjee noted that Metair has also developed another facility at TASEZ for Automould, which is supplying plastic injection molded parts to Ford SA and is already “in service.”

Ford SA’s executive director of government affairs for Africa, Dhiren Vanmali, confirmed in September 2020 that 12 Ford suppliers and related service companies that had committed to establishing operations in the EEZ will invest more than R4.3 billion in TASEZ .

It was later announced in February this year that Ford Motor Company and its suppliers will invest a total of R20.13 billion in South Africa for the production of the new Ranger and a bakkie for Volkswagen at Ford’s Silverton Assembly Plant in Pretoria. and the adjacent TASEZ.

Andrea Cavallaro, director of operations for Ford’s International Markets Group, said at the time that the investment will create 1,200 jobs at the Silverton plant to increase Ford’s workforce to 5,500 at the plant and add another 10,000 jobs. to the already 50,000 jobs. through Ford’s local supply network.

Read: Ford and its suppliers invest R20.13bn in South Africa

Douwenga said that Metair also approved additional investments for Mutlu Akü, its energy storage business in Turkey, to increase production capacity of absorbent glass mat technology for the battery business.

He said that Mutlu Akü is the only local start-stop battery producer in Turkey and has been increasing its market share significantly.

“The Turkish market is focused on Europe, and between 80% and 90% of the vehicles produced in Turkey eventually end up in Europe.

“With European emission standards continuing to rise and carbon footprint reduction initiatives, many vehicles in Turkey now, even smaller vehicles, are equipped with start-stop batteries,” he said.

Douwenga added that Turkey had a good incentive program for investments in new technology and the location of an import and Metair will recoup 55% of its gross investment in this project.

Solid intermediate results

Metair on Thursday reported a sharp change in earnings in the six months to June of this year since the loss in the previous Covid-19 pandemic impacted in the corresponding period in 2020.

Overall earnings per share improved to 170 cents from a loss of 56 cents a share in 2020.

Group revenue increased by 51% to R5.9 billion as operating activities recovered from the impact of strict lockdown measures in South Africa, Turkey and Europe in the first half of last year.

The group’s operating profit increased to R545 million from a loss of R18 million.

Haffejee said the Metair teams have done an excellent job executing the group’s Covid-19 response strategy to ensure the group’s operations recover to benefit from higher levels of demand.

Cash and cash equivalents ended the period at R1.1 billion and net debt increased from R805 million to R1.2 billion, but unused and available financial facilities across the group, including rand currency equivalents foreign, totaled R2.4 billion at the end of the reporting period.

To support the group’s continued expansion, Metair has successfully negotiated the refinancing of R750 million in revolving lines of credit due in August 2021 and a three-year extension to R840 million in preferred stock funds due in December 2021.

Douwenga said that Metair has a very clear vision of what the post-Covid-19 recovery could look like, which for the automotive components business involved delivering to its existing customers and servicing its existing business with existing customers.

“So ahead of us, we have smaller and medium projects and projects like Ford in the pipeline, which is transformative from Metair’s perspective,” he said.

Douwenga said South African auto industry vehicle production totaled just over 600,000 in 2019, was around 420,000 in 2020 and Metair believes it will be close to 90% of 2019 levels this year.

But Douwenga said the high-volume model launches being planned by Ford, Toyota and Mercedes-Benz provide potential structural growth for the industry.

Metair believes that South African auto production could exceed 750,000 by 2023, a new record.

“Metair will participate in that growth, but it has also expanded its participation within that growth, which should result in significant benefits for Metair,” he said.

Shares of Metair fell 3.42% on Thursday to close at R24.55.

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