Media Releases - South Africa and Australia - Page 2





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  1. #21
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    Default Re: Media Releases - South Africa and Australia

    Is there a price difference between a trailer manufactured in SA and China ?

  2. #22
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    Default Re: Media Releases - South Africa and Australia

    Quote Originally Posted by pfgrobler View Post
    If possible getting visibility of your press release to the Ausie Metalian community would probably be good.
    I tried responding and my posts were deleted. I've since been blocked. I'll allow this to blow over. If it does not, I'll need to think of another way forward.

  3. #23
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    Default Re: Media Releases - South Africa and Australia

    Quote Originally Posted by Greenhorn View Post
    Is there a price difference between a trailer manufactured in SA and China ?
    Technically no, except that I will have higher quality smaller items like cutlery/crockery etc.., more branding and a product produced in a far higher tech facility than I have in SA. Robotic welding, CNC bending, laser cutting, etc., all done in-house. The identical rims, tyres, stove, couplers, axles, etc.. will be purchased for the same sources.
    Last edited by Heinz Modricky; 2019/11/25 at 02:20 PM.

  4. #24
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    Default Re: Media Releases - South Africa and Australia

    Quote Originally Posted by Heinz Modricky View Post
    Technically no, except that I will have higher quality smaller items like cutlery/crockery etc.., more branding and a product produced in a far higher tech facility than I have in SA. Robotic welding, CNC bending, laser cutting, etc., all done in-house. The identical rims, tyres, stove, couplers, axles, etc.. will be purchased for the same sources.
    Then does the cost saving come from transport costs ?

  5. #25
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    Default Re: Media Releases - South Africa and Australia

    Quote Originally Posted by Greenhorn View Post
    Then does the cost saving come from transport costs ?
    I dont know this industry so I dont know if it is usual to Make To Order with a waiting list for products or if manufacturers keep stock of some units. If it is usual for the industry to operate on an MTO basis than the off-shore plant would require additional transport Lead Time time in which case its possible that some stock would need to be held (basic unit) to off-set the additional Lead Time, with only customisation done locally.

    The capital tied up in the need to carry stock to satisfy demand and reduce Lead Times, can easily defray reduced production costs and in some instances, increase the actual cost of the product.

    I would imagine that the consolidation of all production for all markets in one location would allow for larger or longer production runs, allied with the technological benefits described, would reduce manufacturing costs at factory door.

    As I mentioned earlier, I dont have a horse in the race and my interest in this is from the Supply Chain perspective.
    Estee = S T = Sean Towlson

    There is no such thing as inclement weather, only poor selection of clothing.... or Vehicle

    2010 Hummer H3 5.3lt V8, 300 HP, FDL, RDL, CDL, TC and 4:1 Low Range Building for Touring, not Trails

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  6. #26
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    Default Re: Media Releases - South Africa and Australia

    Quote Originally Posted by Greenhorn View Post
    Then does the cost saving come from transport costs ?
    Sorry, I misread your original question as being is there a technical difference and not a price difference. Yes, our savings largely come from lower input costs in China, Duty in Australia and freight costs for now. I trust that an estimated 20% saving landed in Australia, that this will increase sales and that I could start obtaining better economies of scale. A major added value cost in Australia is the Australian made tent. We'd ideally like to keep this tent on offer, but the decision appears out of my hands. If the tent came from China or South Africa, there should be additional savings.
    Last edited by Heinz Modricky; 2019/11/25 at 04:09 PM.

  7. #27
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    Default Re: Media Releases - South Africa and Australia

    Quote Originally Posted by Estee View Post
    I dont know this industry so I dont know if it is usual to Make To Order with a waiting list for products or if manufacturers keep stock of some units. If it is usual for the industry to operate on an MTO basis than the off-shore plant would require additional transport Lead Time time in which case its possible that some stock would need to be held (basic unit) to off-set the additional Lead Time, with only customisation done locally.

    The capital tied up in the need to carry stock to satisfy demand and reduce Lead Times, can easily defray reduced production costs and in some instances, increase the actual cost of the product.

    I would imagine that the consolidation of all production for all markets in one location would allow for larger or longer production runs, allied with the technological benefits described, would reduce manufacturing costs at factory door.

    As I mentioned earlier, I dont have a horse in the race and my interest in this is from the Supply Chain perspective.

    You don't really see imported trailers and caravans in the SA market from China because of high duties and low local sales pricing - as much as it's often read that anything 4x4 is overpriced.It's just not an FMCG type market where you set up distribution channels with order takers. If this were somehow possible, I'm sure someone in this market would have been able to do this by now. We've had some big owners with deep pockets like Imperial, and some large production facilities, like Challenger, Venter and Karet that have stayed out of this market. I think that explains this market.

    The SA facility still stays open for local production and possible custom work as you pointed out. With time I'll work out if it makes sense to bring in pre-manufactured components and do an assembly type operation, but I cannot see this as a possibly now.

    The offshore plant will only manufacture for stock, i.e standard fitout and colour(s) and the intention is that the Australian client can view, sign and drive away the same day. The long lead time loses us sales.

  8. #28
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    Default Re: Media Releases - South Africa and Australia

    A metalian trailer is a dream I hope one day to achieve. It is very interesting to read the reasons of your move. It is quite sad to read that it is difficult to do business in SA at a correct price for so many reasons. I usually try to avoid Made in China even if we know we can found quality products also from there!
    I understand your move

  9. #29
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    Default Re: Media Releases - South Africa and Australia

    Quote Originally Posted by Heinz Modricky View Post
    I tried responding and my posts were deleted. I've since been blocked. I'll allow this to blow over. If it does not, I'll need to think of another way forward.
    Post an article in the local outdoor "wegsleep" or similar magazine. Will be pricey ... but then the non-metalian owner in Oz can see and read it too.

  10. #30
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    Default Re: Media Releases - South Africa and Australia

    Hats off to you Heinz for making the time to personally communicate all the facts to this forum. Everything will work out just fine.

  11. #31
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    Default Re: Media Releases - South Africa and Australia

    Quote Originally Posted by Heinz Modricky View Post
    I had prepared a more detailed media release with more explanation. The following reasons for moving manufacturing offshore were omitted.

    "Most basic materials in South Africa are priced above an import parity price – this means if I can import it for X value – the local price is pegged at X plus 10/15% or whatever the suppliers can leverage out of local manufacturers. Both steel and aluminium is more expensive in SA than in world markets.

    As a further example, even bespoke items that are represented by internationally owned local dealers, don't have the same pricing. A man on the street can walk into an axle dealership in Australia and buy the identical axle at a cheaper price than I pay in South Africa as a manufacturer purchasing monthly repetitive orders, and that's using direct currency conversion.

    On items such as locks, extension slides, etc…, local dealers pay 20% duty which is passed on to South African manufacturers like me. I cannot claim this duty back. If I import this myself in larger quantities it must be done for re-export and I need controls to differentiate between local usage and that which will go into exports. The admin that goes with running a bond store must be a nightmare.

    The downturn in the local economy has numerous local suppliers regularly running out of various items as they reduce stock holding. Stoves that were previously ordered ex stock are now on 3 month delivery ex Europe. Even basic items such as 1.0 mm sheeting runs out for a week or two. With so many different components going into the trailer build, we're always short of something.

    Basic items that are standard in the RV industry, like 12 mm water piping and fittings are not even stocked in SA by the local brand dealer.

    As a client of a local steel supplier for nearly 35 years, it remains a continuous fight to get supplies at the right price. They know we have order departments that just place orders. Internally I can only imagine they have commission deals with order staff to keep pushing the price up. I've had a "man on the street" client that needed a cut and a bend put into mild steel sheet. I said I would do it at material costs and provide a per cut and per bend cost. He calls me back to ask why I've added to the sheet cost. I find out my bloody supplier quoted him a better price on one sheet, than they quoted me on 200 sheets. My stainless steel supplier increases my sheet price by some 60% "because of the nickel price internationally". Forget about being able to get any loyalty out of material suppliers, they'll bleed you for whatever you can when you're not watching.

    Sail times to Brisbane are 38 days. This means that from order date in Australia to client delivery has averaged an unacceptable 4 months. The freight costs are nearly double and ships ex Cape Town no longer call as regularly as before. This adds further delays.

    South Africa does not have a trade agreement with Australia and our Australian dealers pay duties on trailers coming from South Africa, but not from China. To add further challenge, government financial support agencies want 21.5% interest on financing export work that is already manufactured – i.e almost zero risk – the capital value of the goods being financed surpass the credit value sought by more than 50%. But the same government agency lends money out to other lenders at 6%. The government is just growing a base of loan sharks that do nothing for massive profits. They'll charge around 28%. I asked them how they think they're helping local manufacture and small business startups, when they expect me to pay them R215 000 on One Million rand when I don't have anywhere near this percentage as a profit. (For the sharper guys, I'm aware I can turn my money 4 times a year, but compare this with 4% I am now paying.


    I’m not even going to talk about load shedding, in-house theft, absenteeism and the inability to apply standards and discipline without being hauled to a labour tribunal. I don't have poor staff and this is not the reason for moving offshore. It's just that every business has intolerable staff members that spoil the relationship for the majority of hard working staff. They know they have the labour tribunals on their side. I've questioned the DRC (our industry's CCMA) and their response is that they mostly find in favour of the employer (around some 55%), this being their benchmark that they're being more fair to employers than employees. But to place this in more appropriate perspective, consider the rulings by the insurance ombud in complaints against insurers. On average, some 80% of the time the ruling goes in favour of the professional institution - even though it is their entire focus and business model to reduce claims as much as they can. With so much focus on labour fairness and the ease at which businesses can be taken to the CCMA (and with no financial gain being available for disciplining an employer), surely employers do their best not to be hauled off to a labour tribunal. This 55% figure should be around 90%.

    https://www.businessinsider.co.za/mo...nsurers-2019-5
    Heinz - I really appreciate the detail and time you took to provide those insights. One need not wonder why SA has 30%+ unemployment.

    Have you looked into service/volume commitment shipping agreements with whomever will carry the cargo from China? Years back, I worked for a boat manufacturing company, and we negotiated such an agreement for our shipments to Europe from the US. Saved quite a bit. We were able to negotiate an agreement based solely on % of volume, eg, we agreed that we would ship (I'm trying to remember now) 80% of our export volume to Northern Europe via that company, and I think it had similar requirements for AUS/NZ and Japan. There was not an annual volume requirement. This was with a RORO carrier, Walenius Wilhelmsen - and the product was bigger - 8-15m - so well suited for RORO.

    They also serviced China. I'm still friends with the guy at the line, can do a link up if that would be of any value. It may make sense over containerized... No dog in the fight for me.

    Many on this forum run or own or are senior managers in SA businesses. This is a damning indictment of the big challenges facing SA business.
    Last edited by heyyahhey; 2019/11/25 at 08:06 PM.

  12. #32
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    Default Re: Media Releases - South Africa and Australia

    I've missed this saga totally, but as usual, and as I would've expected, Heinz came with the accurate info and the logic leading up to a pure business decision. I can understand the person on the wrong end of a business decision would try and bad mouth you from left to right, but at the end of the day the product talks louder than any other idiot could. The days of "chinese made" equaling bad products is to a big extent something of the past, even more so if your QA criteria are those of Heinz...
    Last edited by George; 2020/01/13 at 03:20 PM.
    Disclaimer - All my posts on this forum is without prejudice, is based on my fair assumptions or perceptions, is in no way intended to cause harm to anyone and is acted upon at your own discretion.

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