R2 billion investment by Sumitomo Rubber to expand KZN tyre manufacturing plant

Riaz Haffejee – CEO: SRSA, Michael Mabuyakhulu – MEC for Economic Development, Tourism and Environmental Affairs, Dr Rob Davies – Minister: Department of Trade and Industry, Yutaka Kuroda – Executive Director, SRI Ltd.

Sumitomo Rubber South Africa (Pty) Ltd (SRSA) recently announced the commencement of the second phase of its R2 billion investment for the upgrade and expansion of its Tyre manufacturing plant at Ladysmith, in South Africa’s KwaZulu-Natal province.

The company is a leading manufacturer of passenger and commercial tyres in South Africa and is the manufacturer of the iconic Dunlop brand. It currently employs 1180 people, of which 900 are employed at the Ladysmith plant.

The second phase of the investment was launched today at the inland production plant. Key representatives and leaders of National, Provincial and Local Government, customers and suppliers, plant workers, labour unions as well as senior foreign and local members of the company’s board attended the announcement. This included the Minister of Trade and Industry, Dr Rob Davies; the MEC for Economic Development, Tourism and Environmental Affairs, Mr Michael Mabuyakhulu, Japanese Ambassador to South Africa Mr Shigeyuki Hiroki and Sumitomo Rubber Industries Executive Director, Mr Yutaka Kuroda.

In his address, company CEO Mr. Riaz Haffejee outlined the catalytic socio-economic benefits that will be derived from the investment. “Our R2 billion investment consolidates our commitment to the South African and KwaZulu-Natal Provincial economy, as well as the Ladysmith community. As one of the largest employers in Ladysmith, this will deepen our impact on stimulating job creation through increased manufacturing production and industrial development competitiveness.”

According to Haffejee, the direct job creating impact and employment spinoffs as a result of the completion of Phase One are already being realised. “Employment levels are already being increased due to Phase One. The first of nearly 120 new employees needed over the next few years have already been recruited, and Phase Two will attract a further 300 lifting the Ladysmith plant to over 1200 employees on completion of the second investment phase” says Haffejee.

Plans for expansion of the Ladysmith plant commenced in 2014 – with R1.1 billion being allocated by parent company Sumitomo Rubber Industries (SRI) in Japan for the development of Phase One. This initial phase directed investment and deployed resources into the upgrading and modernisation of the plant’s capacity, and focused on introducing new technology and equipment, aimed at increasing manufacturing output of high quality passenger and SUV tyres. With this came the introduction of new SUV tyre models that were not yet being manufactured at the Ladysmith plant, thereby responding to the market trend in demand for these models in both South Africa and other African markets.

The value of the Phase Two expansion stands at an estimated R910 million and focuses on the introduction and manufacture of truck and bus tyres for commercial use. This Dunlop branded product line is currently being imported into South Africa from SRI plants in Japan and China, due to the unavailability of suitable manufacturing capacity locally. The new investment will effectively terminate this current importation arrangement and establish a suitable local manufacturing base.

An investment of this magnitude amidst the current economic environment has been made possible through strong collaboration and partnership between the company and Government at various levels.

In what is an exemplary model of private-public sector partnership, the Department of Trade and Industry (DTI) approved SRSA’s application for a support grant of an estimated R300 million under the Automotive Investment Scheme programme toward this initial phase rollout. In addition, the implementation of the DTI’s Tariff-free Trade Agreement (T-FTA), will enhance foreign trade and is set to strengthen export activity in key African areas.

Further underscoring the investment’s innovative private-public sector partnership approach, the tract of underutilised land adjacent to the existing plant on which the development will take place, was donated to SRSA at no cost by the Emnambithi Ladysmith Municipality. SRSA will explore local onsite resource efficiency improvements in renewable energy generation and water demand management interventions.

Haffejee emphasises that: “Our investment underscores the confidence of our company’s foreign owners in South Africa as a buoyant investment grade destination. It reaffirms what is possible when Government and industry work together in pursuit of mutually beneficial economic and industrial objectives. We will continue to support Government with innovative solutions and constructive engagement to overcome regulatory challenges and impediments crucial to our industry and the pursuit of employment generating, high growth and competitive industrial and manufacturing initiatives.”