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SPn e w g e n e r a t i o n

2013IMPACT REPORTIMPACT REPORT

C NTENTS


Impact at a glance

Message from the dti

Message from UNIDO SPX Chief Te

chnical

Advisor

About UNIDO SPX South Africa

•Introductio

n to SPX SA Programme

•Partners

•Mini SP

X Centres

•Partnering Associations

•UNIDO SPX SA str

ucture

Areas of Impact 2

011-2013

•Profilin

g Impact

•Benchmarking Impact

•Supplier Development Im

pact

•Opportunity I

dentification an Development

Impact

Way forward

3

4

5

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IMPACT AT A GLANCE

IMPACT REPORT 2013 3

The main aim of the UNIDO Subcontractor and Partnership Exchange (SPX)Programme is to provide local industrial manufacturing companies access totools and services that will enhance their performance and enable them tocompete so that they can access local and global procurement opportunities.

Since its inception in 2010/11, UNIDO SPX is pleased to report that its workhas contributed to localisation efforts and that it has been directly responsiblefor compiling an industry database, assisting with supplier development/competitiveness improvement and matchmaking.• 14 Mini-SPX Centres established• Partnerships established with 15 other industry associations and agencies• The UNIDO SPX database contains in excess of 2000 manufacturers linked

to the main government procurement sectors, i.e. rail and utilities• 402 companies across South Africa have been benchmarked• 174 companies have been referred to formal supplier development

interventions• We have engaged in approximately 173 buyer meetings with OEMs and

63 State-Owned Companies• 1459 opportunities were investigated• 1560 suppliers have been introduced to an opportunity• Value of contracts is approximately R115 million

MESSAGEFROM THE DTI

IMPACT REPORT 2013

South Africa is in the midst of a critical phase of recapitalising its nationalinfrastructure to revitalise the country's transportation and energy sectors.The South African government seeks to leverage state investment in thesesectors to derive benefits for the national economy, especially within theindustrial productive sectors. It is therefore important that linkages are createdbetween the national infrastructure build programme and local suppliers toensure access to key projects and to utilise the home-market to improvecompetitiveness, enhance existing manufacturing capabilities, develop newmanufacturing capabilities and create jobs in the associated supply chains.

One of the strategic themes emanating from the National Industrial PolicyFramework and its accompanying Industrial Policy Action Plans is leveragingpublic procurement for industrial development is. In realising this strategicobjective, UNIDO was tasked to implement the Subcontracting PartnershipExchange (SPX) Programme under the guidance of the Department of Tradeand Industry (the dti); Department of Public Enterprise (DPE); and Departmentof Science and Technology (DST), supported by Eskom and Transnet.

The main purpose of the SPX programme is to profile and benchmark localsuppliers and assist in upgrading their capacity, competitiveness and performanceto maximise localisation opportunities presented by the public procurementprogramme. The SPX programme also facilitates match-making processesbetween the local suppliers and foreign OEMs that have been awarded majorcontracts and has also provided input in developing targeted governmentsupport to assist local industries in closing the competitiveness gaps identifiedfrom the benchmarking processes.

Although from the inception the key focus of the programme was on leveragingpublic procurement, the learnings and the tools developed are also being usedby key buyers within private procurement. This has been possible due to thepartnership between the SPX programme, the Technology Assistance Programmeof the DST and the Supplier Development & Localisation programme drivenby DPE - which has enabled us to deliver a coordinated initiative for the localsupplier community.

As we come to the end of our three-year agreement, we would like to thankUNIDO for the good work that the organisation has done in implementing thisSPX programme, both administratively and embedding the programme inGovernment's localisation drive. The programme has built the base for us tobetter understand our industrial capabilities. We look forward to taking theprogramme to new heights through its integration with the technologylocalisation programme of the DST.

Thandi PheleChief Director: Metals Fabrication, Capital and Rail Transport EquipmentIndustrial Development Divisionthe dti

4

MESSAGE FROM UNIDO SPXCHIEF TECHNICAL ADVISOR

IMPACT REPORT 2013

I am pleased to present this Impact Report, which highlights the impact andvalue that this programme has added in terms of its main objectives duringthe period 2011 - 2013.

The UNIDO SPX programme was started as a result of an agreement betweenthe South African government and UNIDO with the aim of supporting thelocalisation strategies of government. Under the auspices of the Departmentof Enterprises, the pre-programme in 2009 laid the foundation for the threeyear programme, which was subsequently funded and coordinated by theDepartment of Trade and Industry (dti). In 2010, during the first year of thisproject, a separate provincial benchmarking project was also funded by theDepartment of Science and Technology (DST).

The main aim of the Subcontractor and Partnership Exchange programme isto provide local industrial manufacturing companies access to tools and servicesthat will enhance their performance and enable them to compete so that theycan access local and global procurement opportunities.

A project such as this is only as strong as its key partners. In this regard,I would like to thank the dti, which provided project funding and administration;and the Steering Committee, which provided strategic guidance and directionto the programme over the past three years. The Steering Committee comprisedthe dti (Chair), DST, DPE, Eskom and Transnet. The Steering Committee'scommitment to the programme has been laudable in all respects.

I thank the 14 industry associations which were contracted as mini-SPX centres.This formed the foundation of the roll out of the various SPX programmes tothe members of each of these industry associations, the subject of which thetestimonials detail in this report.

I would also like to acknowledge the contribution of the provincial coordinatingagencies under the DST project who contributed significantly to our effortsto build a national network of bench markers.

A number of consultants played an integral role in support of the associationsand we express our appreciation for their contributions. In terms of operationalsupport, we would like to thank all the Supplier Development agencies andsupport organisations for their contributions, which made the outcomes ofthe benchmark reports a reality.

I recognise the role of the SPX team in positioning this programme as animportant support mechanism to support localisation.

Finally, we express our gratitude to UNIDO who supported the programmeboth technically and administratively. Their support, as with many other globalprogrammes, has ensured that South Africa's SPX programme has emerged asone of the most highly rated programme of its kind internationally.

Richard BeanChief Technical Advisor: UNIDO SPX SOUTH AFRICA

5

ABOUT UNIDO SPX SOUTH AFRICA

IMPACT REPORT 2013

The UNIDO Subcontracting and Partnership Exchange (SPX) is a technicalcooperation programme that links domestic enterprises in developing countriesto the supply chains of large domestic or international companies. The aimof the UNIDO SPX programme is to develop local SME capacity to meet buyerneeds and to identify profitable business opportunities for them.

Since 2010, the SPX programme has been implemented within the frameworkof the UNIDO Programme for investment promotion and its main objective hasbeen to establish a network of national SPX Centres, to be hosted withinprivate sector associations. Working with major buyers and deploying a rangeof tools and expertise, the SPX centre assists local small and medium sizedenterprises to develop their technical and managerial capabilities so that theycan become competitive suppliers and sub-contractors to major buyers operatingin their respective economies.

The SPX Programme comprises three main components: matchmaking,benchmarking and supplier capacity building and development.

SPX Matchmaking: In the SPX Centre a local team, works to link buyers toboth current and potential suppliers and subcontractors. The team developsprofiles of the skills and capacities of local companies to be promoted amongbuyers, and provides customized support to buyers looking for competitivelocal suppliers. Its services include building a database of local enterprisecapacity, developing a technical support team, collating requests for quotations(RFQs), providing a gateway to international benchmarking and information

resources and providing advisory services to local companies committed toimprovement and upgrading.

SPX Benchmarking: SPX Benchmarking compares the operational performanceof a company (its results) and practices (how it does things) against those ofother companies of a similar size and type. This enables companies to objectivelyassess their businesses, to see clearly where they stand in relation to internationalpractices within their sector, and where they need to upgrade to meet buyerrequirements. The UNIDO SPX programme works with leading internationalpartners to ensure that domestic companies have access to the best systemsand the best plant-level data when they undertake this process.

Supplier Capacity-building and development: Whereas SPX Matchmakinghelps identify new buyers for its supplier clients, and SPX Benchmarkingprovides a diagnosis of where they need to upgrade to meet buyer requirements,SPX Capacity-building supports local suppliers who wish to upgrade to meetthese requirements. It assists them with formulating investment proposals,mobilising financing and identifying technology partners. The local SPX teamcan mobilise locally-available support organisations for enterprise developmentand finance to respond to the needs identified by the benchmarking diagnosis.

6

INTRODUCTION TO SPX SA PROGRAMME

• PEMA - Pressure Equipment Manufacturers Association• RRA - Rail Road Association• SAIF - South African Institute of Foundrymen• NFTN - National Foundry Technology Network• SASSDA - South African Stainless Steel Development Association• SAOGA - South African Oil and Gas Alliance• SACEEC - South African Capital Equipment Export Council• CDAA - Copper Development Association Africa• EEAIA - Electrical Engineering and Allied Industries Association• SAISC - South African Institute of Steel Construction• AFSA - Aluminium Federation of South Africa• NAACAM - National Association of Automotive Component and Allied

Manufacturers• PCA - Plastic Convertors Association• NTIP - National Tooling Initiative

• TASA - Tooling Association of South Africa• AIDC - Automotive Industry Development Centre• Productivity SA• SAIEE - South African Institute of Electrical Engineers• ASTPM - Steel Tube and Pipe Manufacturers• SAEEC - South African Electrotechnical Export Council• AMD - Aerospace Maritime and Defence Association• SEIFSA - Steel and Engineering Industries Federation of South Africa• ISF - International Steel Fabricators of South Africa• SAIW - Southern African Institute of Welding• ECSECC - Eastern Cape Socio Economic Consultative Council• LTI - Limpopo Tooling Intitiative• KZNTI - Kwazulu Natal Tooling Initiative• WCTI - Western Cape Tooling Initiative


PARTNERS PARTNERING ASSOCIATIONS

MINI -SPX CENTRES

IMPACT REPORT 2013

Kobus (J C) de Beer, Industry Development Executive: Southern AfricanInstitute for Steel Construction (SAISC)The SAISC SPX Centre has been in operation for about three years. During thistime, our members have benefitted greatly by their participation in theBenchmarking exercise and a number of them are now using the format fortheir annual strategic reviews and budgets.

We also actively support the various UNIDO Rhythm and other meetings andfind these very useful for keeping up to date with developments and to meetkey people in the various industries.

Thank you for your continued interest and support - we look forward to moreof the same!

Mark Modena, Winning Moves, UKThe benchmarking component of the UNIDO SPX activities undertaken in SouthAfrica has been extremely successful. The team has been a model of proactivity,training a strong team of advisers to deliver the service right across thecountry. They have also engaged with numerous sector organisations to workwith them by complementing their existing activities.

In a relatively short period, well over 380 enterprises have been benchmarked,each receiving a personalised report comparing their performance against theglobal performance and practice standards in their industries. They have also

8

TESTIMONIALS

“I have found the SPX programme to

be a value add to PRASA. It allowed

PRASA to interact more closely with

South African industry players and

most importantly facilitated a

process where we now understand

the South African industry's

capability and capacity, especially

in areas where we are targeting high

local content.”Piet Sebola, PRASA

IMPACT REPORT 2013

received bespoke strategic improvement plans to help focus their developmentactivities, designed to lead to increased competitiveness and sustainability.

Businesses are now seeing the impact of this work and many organisations areproactively approaching the SPX team for benchmarking. We have no doubtthat the support provides a great foundation for providing a long term servicefor the benefit of South African businesses and the wider economy.

Henk Langenhoven, Eskom - SD&LThe UNIDO SPX program is an ideal vehicle for Eskom for a number of reasons.First, our main suppliers (OEMs) can draw from the programme for localsuppliers - both capable (benchmarked) as well as potential (listed for self-evaluation). This allows Eskom to remain independent from the process as faras the contractual relationship is concerned.

Second, local suppliers have the opportunity to expose their capability andcapacity to OEMs. In addition, the platforms for discussion allow for localindustry and state-owned companies (SOCs) to engage on a non-commerciallevel in the drive to find early alignment to future demand. From an Eskombuy-in and support point of view, the programme is gaining momentum interms of identifying interest from industry to partake in upcoming commercialevents. The input gained allows Eskom to develop appropriate sourcingstrategies, including local content targets.

Mark Krieg, MD: AFSAThe UNIDO SPX has proven to be a very valuable forum. The regular Rhythmmeetings for Trade Associations have a common objective, particularly in

terms of localisation. The programme serves as a valuable information platformon relevant projects, mainly infrastructure development projects. The abilityto locate member company profiles provides exposure and marketingopportunities.

The service of benchmarking has provided valuable insights to companies andthe focus on companies' abilities to supply products/services to the infrastructureprojects is valuable. Of course, the ultimate culmination of the project is thematchmaking aspect.

It has been a pleasure to work with the SPX staff. They have been very activein developing opportunities as well as introducing interesting speakers/presentations at monthly meetings. They have to be commended for theirenthusiasm, interest and assistance with every request from AFSA.

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IMPACT REPORT 201310

UNIDO, ViennaMonica Carco

Chief: Investment and Technology Unit,Vienna

SPX South AfricaRichard Beän

Chief Technical Advisor

Ntombi NkabindeProject Administration

Assistant

Refiloe PhahlaProject Assistant -

Profiling

Henning ViljoenOpportunity Development

Specialist

Felix WeberSupplier Development

Specialist

UNIDO SPX SA STRUCTURE

SPX SteercomThandi Phele (dti)

Chairperson

AREAS OF IMPACT 2011-2013

IMPACT REPORT 2013

The UNIDO SPX Profiling Tool is one of the primary tools put at the disposalof SPX Centres and officers. It enables the profiling of companies as prospectivesuppliers to participate in the SPX programme and potentially benefit frombeing matched with prospective buyers. The UNIDO SPX Profiling Tool underpinsthe development of company profiles, which are then uploaded on the SPXCentre database. SPX Profiling is a prerequisite component for further SPXservices and has been designed to collect information from suppliers/subcontractors as part of an information system which comprises:• a standard list of questions which seeks to identify companies and provide

further information on company's set-up, structure and potential capabilities;• a set of standard nomenclatures as the basis for profiling analysis; and• computer software called SPX MIS, which at the outset serves to host the

SPX Profile database.

The UNIDO SPX Profiling Tool comprises three main parts. The first sectionincludes general company identification details such as company references,location and representatives and contact details. The second section refersto specific company details ranging from information on human resources,financial information, turnover as well as company sectors, products andproduction processes. The final section covers supplier partnership details,areas of requested cooperation, details for further assistance and finalobservations.

Profiling also assists industry and Government to obtain a more realisticsnapshot of the country's industrial landscape in terms of size, scope, capabilityand inadequacies. In turn, this enables an expedient, effective and synergisticapproach to development and support.

The SPX Profiling Specialist is entrusted to oversee the profiling of the skillsand capacities of local companies to be promoted among buyers. She overseesthe expansion of a database of local enterprise capacity. The SPX countrydatabase is therefore strengthened by the effective and efficient utilisationof the UNIDO SPX Profiling Tool.

The SPX Profiling Specialist is also responsible for marketing the SPX Programmeto relevant suppliers, meeting the suppliers and capturing company detailswhilst ensuring that the information is accurately entered into the SPXManagement Information System. On-going oversight and quality assuranceof the information captured by the Profiling Tool are an important elementof her responsibilities. The information contained in the Profiling Tool is usedto identify and market the programme to relevant buyers in the country.

Ultimately, the Profiling Tool enables the Profiling Specialist to build up acomprehensive SPX database for matchmaking purposes from which shortlistscan be extracted. Confidentiality of supplier enterprises, which needs to besafeguarded at all times before, during and after the process, is a keyconsideration for potential matchmaking with buyers in the utilisation of theUNIDO SPX Profiling Tool.

11

PROFILING IMPACT


South Africa SPX Profile distribution by main sector 2011-2013 South Africa SPX Profile distribution by size 2011-2013

The UNIDO SPX database contains in excess of 2000 manufacturers linked tothe main government procurement sectors, i.e. rail and utilities.

UNIDO SPX realised the need for a database of emerging manufacturers andhas therefore included this, enabling more effective search capability forbuyers seeking these manufacturers with subsequent referrals.

Manufacturing75%

Mining and quarrying11%

Electricity, gas andwater supply

3%

0%Agriculture, hunting and forestry

3%

Services8%

Small Medium Large

78%

8%14%

Construction


South Africa Benchmarking distribution by region 2011-2013

Gaute

ng

0

10%

20%

30%

40%

50%

Kwaz

ulu-N

atal

Weste

rn C

ape

Easte

rn C

ape

Limpo

poFr

ee St

ate

North

ern C

ape

Mpumala

nga

North

Wes

t

The key benefits of the UNIDO SPX benchmarking exercises include:• The ability to compare the performance of a cluster against one of the

world's largest benchmarking databases;• The development of benchmarking capability that will enhance the

competitiveness of a sector, cluster or network;• Enhancing the support provided to the cluster through the development

of a branded tool with customised measures to suit the sector, cluster ornetwork;

• The ability to share best practice and collaborate through an internationalnetwork of business improvement agencies;

• Enhancing the customer experience by equipping advisers or change agentswith an objective tool that helps them inspire, change and innovate;

• The power to track performance trends within the cluster through apowerful longitudinal view of performance; and

• Tangible demonstration of the economic impact that the strategy has hadand ability to fulfil contractual reporting commitments.

The graphics below indicate that most companies benchmarked are small andmedium companies in the manufacturing sector. The greatest number ofcompanies benchmarked is in Gauteng, where 44% of our targeted companiesparticipated in the exercise.

BENCHMARKING IMPACT

5%

15%

25%

35%

45%


South Africa Benchmarking distribution by main sector 2011-2013

Manufacturing97%

Services3%

South Africa Benchmarking distribution by size 2011-2013

0

10%

20%

30%

40%

50%

5%

15%

25%

35%

45%

Small Medium Large

42%

14%

44%


Gary Colegate, DCD DorbylDCD Dorbyl has been in the heavy manufacturing game since 1946 and currentlysupplies 90% of its annual turnover into international mining markets in theform of grinding mills and associated equipment.

We participated in the UNIDO SPX Benchmarking exercise after recognisingthe potential benefits, despite being initially reluctant to participate.

The report was a real eye opener! We had been compared with 30 similarsized companies operating in similar product and market environments globally,in numerous areas of performance. The findings and recommendations providedguidance to address some of the areas for improvement.

To compete successfully in an international market, it is imperative to remainahead of the curve. In our experience, the UNIDO SPX Benchmarking exerciseis a beneficial tool to ensure that complacency does not set in. We haveincorporated many of the recommendations into our strategy and are seeingthe benefits of doing so in the current financial year.

Derek Howitt, Alba Precision ManufacturingAlba Precision Manufacturing was introduced to UNIDO SPX as a member of theTooling Association of South Africa (TASA). We are a small CNC productioncompany, which was established in 2009. The field that was initially chosento be benchmarked against was too small for a company this size, given it's arelatively small turnover, so the field was expanded to find comparable companies.

The findings contained in the report were mainly as expected, as we wereaware of the company's weaknesses in certain areas. The report has helpedmanagement to focus its attention on particular focus areas for the comingmonths and years. An action plan will be devised to identify and hopefullycorrect the weaknesses. I was surprised at how well we performed in certainareas, and if we keep improving in areas of weakness, Alba Precision Manufacturingis on its way to becoming a world class organisation.

UNIDO acted in a most professional manner in facilitating this report. I believeit is a valuable tool in assisting management to improve the running of AlbaPrecision Manufacturing and the exercise has solidified our goal to be classedas a world class organisation in the future.

Gerald Stark, Owner/Manager: Cape Metal PressingsI was happy for Cape Metal Pressings to take part in the UNIDO SPX benchmarkingexercise offered by Western Cape Tooling Initiative (WCTI) and Productivity

It is not often that you get a chance to compare your company with similarcompanies in Europe and USA, and I was interested in seeing how we wouldfare. The results were pleasing - we were seen to be serious contenders fora "World Class" company, although there were two areas where we could improve.

There is much information to digest from the findings and we have drawn upan action list to address the two main areas for improvement. It was also veryinteresting to hear my management team's input, it gave me much to consider.I found the benchmarking a very worthwhile exercise and wish to thank WesternCape Tooling Initiative (WCTI) and Productivity SA for the opportunity to takepart.

TESTIMONIALS

SA.

Andre Visser, FabrinoxFabrinox can testify that this process has assisted Fabrinox not only to benchmarkourselves internationally, but it has also had a positive on-going impact.

We received our UNIDO SPX Supplier Benchmarking Results from UNIDO inOctober 2010. The benchmark not only rated companies in terms of hardoutput, but also evaluated the internal processes and people managementwithin the company.

According to the report, Fabrinox has proven itself to be a truly globalcompetitor. Since then, we have applied to the Technology Assistance Packagewith the Technology localisation Implementation Unit (TLIU) of the DST. Ourrequest for technology assistance was approved in February 2012 in the areasof business processes, skills development and access to expertise.

Karien Terblanche, Hansing EngineeringWe initially participated in a benchmarking exercise during 2011 when it wasrecommended by the South African Oil and Gas Alliance. The results provedeasy to understand and very useful in various key processes and decision-makingexercises. Since then, the company has made a few structural changes andgiven our commitment to continuous improvement, we approached UNIDO toassist us in a re-benchmark to track improvements and identify areas of concern.

We regard the benchmarking exercise as a very positive experience. For example,our annual ISO 9001:2008 internal audit is now also based on the informationgathered from the benchmark results. I can testify that these results are atrue and measurable reflection of our company's performance, making it easyfor us to take decisions.



SUPPLIER DEVELOPMENT IMPACT

The SPX programme's overall goal is to link local subcontractors to procurementopportunities from buyers. For this purpose the SPX aims to leverage theopportunities to make local suppliers more efficient and thus enable goodsto be offered at globally competitive prices at the same levels of quality.

In this respect, the mandate of the SPX programme's development componentis to enable the local supplier base to acquire skills and capabilities to ensurethat the companies meet the buyers' requirements.

The SPX supplier development and capacity building initiative supports localcompanies to address specific problems relating to their performance andworking practices. The SPX's benchmarking tool is a suitable instrument tohelp companies to develop a SWOT analysis and identify the priority needs interms of enterprise development assistance. UNIDO facilitates the referral ofbenchmarked companies and SMEs, which require support to satisfy the buyers'needs, to supplier development service providers.

So far, 174 companies have been referred to formal supplier developmentinterventions and there are still a number of companies in the pipeline. TheSPX programme's Supplier Development Specialist continues to closely liaisewith the 14 industry associations which are part of the programme and whichhave access to all the SPX tools complementing the institutional supportavailable for the SA industry.

He works with the associations to identify and refer potential local manufacturers

to formal supplier development interventions which will help the companiesto become more competitive and access subcontracting opportunities occurringfrom public infrastructure projects. This process is now formally tracked toestablish the impact of interventions. As the number of identified opportunitiesis growing, the Supplier Development Specialist particularly aims at strengtheningthe performance of subcontracting firms and supporting them to match thebuyers' requirements.

UNIDO is actively interacting with various government departments, financialinstitutions, agencies and other support organisations to facilitate the creationand implementation of institutional support. In this regard, positive supporthas been received from the following interventions:

Technology Assistance Packages (TAP) ProgrammeIn collaboration with the SPX, the Department of Science and Technology (DST)is offering companies Technology Assistance Packages (TAP) which includeaccess to technology infrastructure; technical know-how and expertise; skillsdevelopment and training; technology based services; design and toolingsupport.

The TAP programme is implemented by the newly established TechnologyLocalisation Implementation Unit (TLIU) and its aim is to upscale suppliers'capabilities and capacities to match the buyers' requirements. The beneficiarycompanies have given us excellent feedback and report that the SPX programmewith the benchmark and the referral of the companies to the TAP programmehas helped them to elevate their businesses to the next business level and tobecome more competitive in terms of quality and production efficiency.


Workplace Challenge (WPC) ProgrammeAs part of the partnership between Productivity SA and the UNIDO SPXprogramme, 45 benchmarked companies have been referred to the WorkplaceChallenge (WPC) programme which is offered and implemented by ProductivitySA. WPC is a world-class manufacturing or best operating practice programmeaimed at helping the participating manufacturing companies and other localSMEs to become more competitive from a local as well as global perspective.

The objectives of the WPC are to actively encourage and support change inthe workplace to improve company performance, productivity and job creation.This is achieved through a process of building worker participation whichinclusively empowers them to upgrade their skills and perform better. TheWPC duration is two years and the programme will be followed by a re-benchmark to track the impact of the intervention.

Turnaround Solution ProgrammeIn addition to the referral of companies to the WPC, UNIDO SPX is linkingcompanies which are in distress to Productivity SA for the implementation oftheir Turnaround Solution programme. The Turnaround Solution programmeis a follow-up programme of the benchmark that assists companies in crisisto increase yield, profitability and service, as well as to retain the currentemployees. The Turnaround Solution programme will help the SPX programmeto support emerging manufacturers who struggle to attract business in thefirst years of operation. Two companies have been linked to the interventionand more companies are being assessed.

Industrial Development CorporationUNIDO SPX partners with the Industrial Development Corporation (IDC) in orderto enhance and broaden their assistance to SMEs. The mutual intention of thepartnership is to offer companies, besides the SPX activities of profiling,benchmarking and matchmaking, development finance and related financialsupport. The IDC assists companies with easily accessible funding to becomelocally and internationally more competitive and to comply with the supplystandards of buyers. In this respect, UNIDO SPX refers benchmarked companiesto the IDC if they require funding for their business development and the IDCuses the SPX tools and interventions for industry and corporate assessmentswith the consent of the individual companies involved.

National Cleaner Production Centre (NCPC) and Resource Efficiency andCleaner Production (RECP)In 2011, the NCPC-SA Metals Sector met with UNIDO to discuss the relationshipbetween the SPX Benchmarking programme and the Resource Efficiency andCleaner Production programme. The two programmes were found to complementeach other as both are designed to enhance business competitiveness.

It was agreed that NCPC-SA would offer assistance (RECP audit) to all companieswhich participated in the UNIDO benchmarking project and the same wouldapply to companies that participated in RECP Assessments. As a result, UNIDOrecruited 20 companies which participated in RECP audits: GB Bearings,Silverton Engineering, Fabrinox, Falcon Engineering, Centurion Systems, DaliffPrecision Engineering, SWASAP, WISPECO, Moser, Hansing Engineering, SWASAP,Metal Badge and Buttons, ABB South Africa (Pty) Ltd (Motors).


The project identified resource efficiency opportunities aimed at improvingthe operational processes of companies and saving costs. Whilst a number ofopportunities are identified through the project, it is the responsibility ofcompanies to avail capital for the implementation of these opportunities,given that NCPC-SA does not have funding for implementation under thecurrent budget. The total cost of opportunities identified was R518 236 overa pay back period of 17 months, with savings per year of R751 845 envisaged.The implementation costs are relatively small and once the implementationcosts are paid off, the savings will directly contribute to the bottom lines ofthese companies.

Tirisano Cluster ProgrammeFurthermore, twenty companies have been referred by UNIDO SPX to theTirisano Cluster programme. Tirisano is a joint initiative between UNIDO andthe Automotive Industry Development Centre (AIDC). It is a continuousimprovement programme aimed at raising operating efficiency at plant level.The Tirisano programme specifically addresses the automotive sector as thissector stands under continuous pressure to improve their performance or losebusiness to competitors in other emerging economies like Brazil, China andIndia. The programme has had positive impacts on productivity, quality,delivery, and market access and skills development amongst participatingcompanies.

Broader support servicesIn addition to the aforementioned active partnerships between UNIDO SPXand several supplier development service providers, the SPX has joined otheragreements with new service providers which provide a broader scope of

support services to local companies. The main partners are:• Small Development Agency (SEDA) which develops, supports and promotes

small enterprises to ensure their growth and sustainability in co-ordinationand partnership with various role players, including global partners, whomake international best practices available to local entrepreneurs;

• Small Enterprise Finance Agency who support Survivalist, Micro, Small andMedium businesses with easily accessible finance opportunities;

• South African Institute for Chartered Accountants (SAICA) who provideemployment opportunities for graduates and offer a full suite of businessservices to the SME market. This agreement will allow SMEs the opportunityto access services and advice that they would otherwise be unable toafford and which will ensure the sustainability and enhanced performanceof these businesses which implements the 20 Keys programme;

• Organisation Development International (ODI) implements the 20 keysprogramme. The international 20 Keys programme covers 20 focus areasthat will help organisations to build a holistic, sustainable continuousimprovement culture. Its main aims are quality improvement throughdefect prevention; lead time improvement through lean manufacturingand processing; cost optimisation through productivity improvement andwaste reduction. The SPX programme, together with the PDI, designed anassistance package which addresses the organisation of work, rationalisingof systems and team work and additionally one of the company's priorityneeds. To be able to better identify the most eminent needs and to assessthe impact of the intervention, the participating companies will bebenchmarked before and after implementation of the 20 Keys package.


WispecoWispeco was recruited by UNIDO for the RECP and was satisfied with the audit,indicating that the assessment was done in great detail and allowed them tounderstand how their plants work and what improvements could be made toaddress inefficiencies. For the implementation of the recommendations theyindicted their appreciation for the support and incentives to subsidiseimprovements offered by the dti and NCPC. Wispeco noted that it wouldrecommend the programme to any company, because "the RECP initiative isa good option for companies looking to improve and sustain their operations."

Technology Assistance Package (TAP)The TAP programme showed positive impacts and outcomes at all companiesand some of the companies shared their benefits and improvements with us.

Silverton EngineeringThe TAP programme enabled Silverton Engineering to install a robotic welderfor the assembly of transformer radiators at high standards of precision andconsistency. As a result, they have reduced their costs, increased productivityand improved their quality in the production line of both welding and the finalproduct.

GB BearingsThe TAP programme helped GB Bearings with the launch of a new range ofindustrial bearings. Furthermore, they used a test rig in cooperation with theDurban University of Technology's Department of Mechanical Engineering to

TESTIMONIALSManufacturing Competitiveness Enhancement Programme (MCEP) applicationsThe SPX programme experienced that companies have had problems with theapplication for incentives and in particular the Manufacturing CompetitivenessEnhancement Programme (MCEP) offered by the Department of Trade andIndustry (dti). Therefore, the SPX's Supplier Development Specialist has beentrained by the dti to assist companies with the application process and claims.The MCEP is one of the key action programmes of the Industrial Policy ActionPlan (IPAP) and will provide enhanced manufacturing support aimed atencouraging manufacturers to upgrade their production facilities in a mannerthat sustains employment and maximises value-addition in the short to mediumterm.

The MCEP comprises two sub-programmes, the Production Incentive and theIndustrial Financing Loan Facilities. The SPX will primarily assist companiesto receive support under the production incentive scheme which entails CapitalInvestment grant; Green Technology and Resource Efficiency Improvementgrant; Enterprise-Level Competitiveness Improvement grant; Feasibility Studiesgrant; and Cluster Interventions grant. The MCEP programme will play a keyrole in the SPX's implementation of supplier development activities as it givesthe SPX and participating companies the opportunity to tailor enterprisedevelopment assistance to the needs and priorities of the SMEs. In this respect,the benchmark is again the catalyst for supplier development programmes,because it outlines the strengths and weaknesses of the manufacturers as wellas their potential and needs.


gather empirical data for the development and validation of a simulationmodel that can be used to facilitate decision making. GB Bearing has alsobeen assisted in developing patterns for bearing housing that is required forcasting of bearings. GB Bearings stated that through the TAP programme theyare "able to utilise new opportunities in the local and export market".

Falcon Engineering (SA)Through the TAP programme, Falcon Engineering acquired modern weldingequipment which has resulted in more optimal material usage. Experts fromthe French company Air Liquide and the South African Institute of Weldingprovided advanced training on this equipment to Falcon Engineering's employees.Falcon Engineering now boasts welding inspectors at level 1 and 2, which hasled to enhanced quality, reduction in lead time, improved productivity.

Calculus ProductsThe TAP provided Calculus Products with assistance from the Institute ofAdvanced Tooling at Stellenbosch University for the design of a lightweight,cost-effective standardised service vehicle toolbox for ESKOM maintenancevehicles, which is currently not available on the market. The toolbox hasretained full functionality and is manufactured faster at reduced cost. As aresult of TAP, Calculus Products increased their market share, accessedassociated job opportunities and enhanced manufacturing skills.

Nova Plant ServicesThree site managers received extensive hot and cold insulation technologytraining at IIG Group in Germany. The training included CAD insulation design,application methods and specifications, planning, site management, andvarious other aspects of energy conservation and acoustic insulation methods.Five safety officers attended effectiveness training which covers also scaffold

safety and an inspection unit. The combined TAP training provided Nova PlantServices with experts in a unique area of insulation, materials and methods.World-best practices can be transferred locally to support the nationalinfrastructure developments.

Powertech TransformersThe TAP, in a collaborative effort by DST, CSIR and the University of Pretoria,provided Powertech Transformers with a sound platform to boost localtransformer engineering design related to short-circuit to withstand capabilityof transformers and manufacturing capabilities . Through the TAP PowertechTransformers is developing knowledge, empirical factors and engineeringmodels representing the short-circuit characteristics of transformers. Whilean in-house state of-the-art integrated design system allows for short-circuitstress calculation, the effects of short-circuits on windings are difficult tocalculate and computer models are necessary. In this project the Universityof Pretoria's SASOL Laboratory for structural Mechanics is collaborating withPowertech Transformers to achieve laboratory-verified simulations of theeffects of short-circuits on transformer windings. Transformer design engineeringwill improve dramatically.

Redfab EngineeringRedfab Engineering benefited from TAP by training in management processesin the area of welding inspections. Redfab Engineering has reported improvedplanning, consistent quality and verification of its products. Furthermore, thecompany has been able to diversify into sheet metal fabrication and is currentlyin discussions with ESKOM towards accreditation for the manufacture of linehardware.

IMPACT REPORT 2013

SWASAPThrough TAP, SWASAP acquired accreditation to the European EN 13261 standard.This makes it possible to expand its global sales market. Additionally, a heattreatment process was developed for corrosion protection using molybdenumcoating of axles. These interventions allow SWASAP to contract with OEMs,Transnet and PRASA.

Norman Malinga, Managing Director: Fabor EngineeringOur strengths and weaknesses were outlined In the benchmarking report wereceived from UNIDO SPX and this helped us to review both our strategies andoperations for greater competitiveness.

In 2010, we applied for Technology Assistance Package (TAP) managed by theDepartment of Science and Technology, which was approved in the areas oftechnical support software (systems only), training, as well as compliance andquality management certifications.

Our relationship with UNIDO also enabled us to qualify for the Department ofTrade and Industry's (the dti) Export Marketing & Investment Assistance Scheme.Under the EMIA programme we received international exposure by exhibitingour products at the MIDEST International Subcontracting Fair in November2012 in Paris.

UNIDO's assistance with the benchmarking exercise and supplier developmentsupport has elevated Fabor engineering to a new competitive level where wehave a much greater visibility to local as well as international buyers.

Wim Mentz, Managing Director: Metal Badge and ButtonsThe benchmarking has been extremely helpful in identifying our strengths andweaknesses confirming that we should make use of all the support availableto us to stay competitive in the international market.

We are currently awaiting the outcome of our application for assistance withnew plant and equipment and the energy efficiency audit.

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IMPACT REPORT 2013

The SPX network reaches many thousands of suppliers of goods and offersinternational buyers a one-stop opportunity to quickly narrow down theirsearch for credible local suppliers, to invite and receive RFQ responses, toknow which companies are actively seeking to reach world class standards ofpractice and performance and to know how best to support their businessimprovement activities for mutual advantage.

UNIDO has enriched this approach by enabling the benchmarking of suppliercapabilities and supporting suppliers in achieving the levels required topenetrate world class supply chains. Buyers, many of whom are stronglymotivated to buy locally, have battled to find suitable suppliers who are ableto meet their standards.

The aim is to develop the capacities of small and medium sized enterprises(SMEs) and BBBEEs, firstly to meet specific buyer needs but also to help themto work towards genuine international competitiveness and to identify profitablebusiness and investment opportunities for them.

The Opportunity Identification and Development section of the SPX programmeexecuted the following actions:• Identifying industrial sectors with sub-contracting opportunities (assisted

by the State-Owned Companies (SOCs);• Formulating a work plan and a strategy to analyse the opportunities;• Ensuring that the opportunities provide a feasible business case;• Participating in the selection of subcontractors;

• Providing a pre-qualified shortlist to buyers;• Monitoring subcontracting operations.

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Opportunity Development

INDUSTRYDATABASE

OPPORTUNITYDEVELOPMENT

MATCHMAKING

• Industry database• Expand• Update

• MIS• Industry

Involvement

• Short Listing ofCompanies

• SOC forecasts andintroductions

• OEM opportunitysourcing meetings

• Business Casedevelopment

• Opportunity Tracking

OPPORTUNITY IDENTIFICATION AND DEVELOPMENT IMPACT


Identifying buyersIntroductions to large buyers have been facilitated by the SOCs during andafter the tender processes. UNIDO SPX then meets with the relevant buyerson OEM and other tiers to identify possible localisation opportunities. UNIDOSPX held 173 buyer meetings with OEMs and 63 meetings with SOCs.

Acquiring OpportunitiesWhen firm tenders or opportunities exist, a Non-Disclosure Agreement (NDA)is signed between the SOC/OEM ( the contractor) and UNIDO SPX. An opportunitylist is compiled which includes a brief description of individual items required.Since 2010, a total of 1459 opportunities from various local and internationalbuyers were investigated.

Prioritising itemsThe potential business case of individual items is based on volumes, potentialvalue, cross industry potential and existing capabilities. Opportunities areprioritised in terms of these criteria before a decision is taken to start thesearch for suppliers.

Distribution of opportunity alerts to suppliersOpportunity alerts are distributed to the SPX database, industry associationmembers, additional databases, referrals from buyers. Awareness is alsocreated via advertisements and websites. During the last three years ,a totalnumber of 39 opportunity alerts were distributed to local companies.

Receiving responses and short listing suppliersA UNIDO response spreadsheet is utilised to easily link suppliers to specificopportunities and delete obvious non-starters. All the companies that respondare entered into the SPX database for future reference. The SPX has received1560 responses to alerts distributed from local companies. These responseswere shared with local and international buyers, which enhanced the visibilityof our local suppliers.

Final shortlist and buyer qualificationA final shortlist is generated based on the specific needs of the buyer andthese companies are informed that they have been referred to the buyer.Regular meetings are held with the buyer to share and motivate choices basedon company profiles, benchmarks and additional information. Buyer inputsare obtained on suggested suppliers and the way forward is confirmed. Thebuyer takes responsibility for the further qualification process and subsequentRFQs. Once formal orders are placed, suppliers have the opportunity of possibleinclusion in the buyer's international supply chains.

Based on feedback received from buyers who were involved in the SPXprogramme, the estimated value of contracts awarded is R115 million.

Capability surveysIn addition to identifying suppliers for real opportunities, the SPX conducteda number of capability studies for SOCs. These studies assisted the SOCs toforecast the localisation levels for certain procurement opportunities. TheUNIDO SPX has conducted 12 capability surveys over the past three years.

OPPORTUNITY IDENTIFICATION AND DEVELOPMENT ACTIVITIES CONDUCTED SINCE 2010

IMPACT REPORT 2013

Liaison and relationship building with relevant government departmentsand SOCs regarding localisation goals.Regular meetings were held with the dti, DST, DPE to understand and influencethe localisation landscape. In addition, there have been 10 presentations fromvarious government divisions and 12 from SOCs at the SPX Rhythm meetings.

SOC engagement to identify opportunities for local suppliersUNIDO SPX has made a number of presentations to the Supplier Developmentand Localisation (SD&L) units of the SOCs as well as to Commodity Managers.Terms of engagement were designed with a number of major buyers whichgovern the relationship between buyers and UNIDO.

Engagement with OEMs/contractors to assist in finding and developing localsuppliersThe various testimonials in this impact report attest to the value of the serviceprovided in this regard.

Establishing and facilitating or coordinating industry clusters for localisationThree clusters were established - Rolling Stock, Valve & Actuators and Pumps- in which a total of 70 manufacturers are involved. The SPX was instrumentalin the formation of these clusters and is continuing to build capacity amongstthe cluster members through the roll-out of its activities.

Coordinating international events and inward buying missions formatchmaking with local industryUNIDO SPX has attended the Midest Subcontracting Fair in Paris three times.Three inward buying missions were hosted with a total of 20 potential buyersfrom other countries. SPX also attended the Hannover Messe as a result of theSwiss Import Promotion Programme. UNIDO facilitated the attendance of 46South African companies to these fairs, which led to contracts valued atR20 million.

Establishing and maintaining public/private dialogue forums for buyingopportunity developmentUNIDO SPX hosted Rhythm meetings, industry association meetings and buyerbreakfasts, which are attended by an average of 25 people on a monthly basis.These forums created a powerful platform to debate localisation issues.

25

SPX OPPORTUNITY IDENTIFICATION AND DEVELOPMENT ENGAGEMENTS


Chris Brand, Sales and Marketing Manager: SabertekDuring our first meeting last year at the South African Electrotechnical ExportCouncil, the value that the UNIDO SPX programme could add to Sabertekbecame immediately evident.

We exhibited at the Hannover Messe this year, leading up to which both UNIDOand SIPPO did a tremendous amount of work in terms of media, promotionaladvertising and setting up contacts with possible clients. During the exhibition,we experienced the same commitment.

We received a number of very promising leads on which I am currently followingup, and we trust that we will receive some benefit from this.

We view the SPX programme as a vital connection for our business, and wecan see real benefit from leads received. As a result, we are ready to takethe next step and conduct the benchmarking exercise.

Deon Slabbert, Sales Manager: Siyanda EngineeringSiyanda Engineering was approached by SIPPO and UNIDO at the Midest tradefair in November 2012 whereby they assessed our capabilities and the possibilityof being an exhibitor at Hannover Messe 2013.

UNIDO facilitated as the communication medium between SIPPO and SiyandaEngineering, linking us up with all the relevant contacts in Switzerland.

As a company wanting to export mechanical components from South Africa,Hannover Messe 2013 gave us the opportunity to assess the markets in whichwe would be competing. It gave us an opportunity to conduct a competitiveanalysis and determine what the key success factors there are in the mechanicalengineering environment in Europe. We were able to determine the productoffering of firms in Europe versus the product offering of Siyanda Engineering.

Dennis Mlambo, Group Supply Chain Executive: DenelThere have been a number of positive spin-offs as a result of our involvementwith UNIDO SPX. These include gaining a better insight into the dti programmes,identification of and engagement with potential suppliers and introductionsto a number of small black-owned companies. In addition, it has been toDenel's benefit to make use of the screening of potential suppliers and/orpotential beneficiaries of Enterprise Development.

Based on these benefits above, I have no doubt that UNIDO is playing a criticalrole in helping South African business achieve its numerous objectives.

Koji Tanaka, Representative Executive Officer, Executive Vice Presidentand Executive Officer: Hitachi, LtdHitachi is committed to partnering with local enterprises in the infrastructuredevelopment plans of South Africa. We find a value in having an organisation

such as UNIDO to facilitate a structural engagement process betweenmultinational conglomerates and local enterprises. We look forward tocommunicating with you continuously.

TESTIMONIALS


Francois Kapp, Senior Project Manager MeerKat: Square Kilometre ArrayThe SKA South Africa project aims to procure as much as possible from SouthAfrica within the constraints imposed by the relevant legislation. UNIDO SPXis invaluable in this endeavour in terms of the assistance provided to us inreaching a wider audience more quickly. The existing profiling programmecaptures key information on local companies which helps to understandpotential partners' business quickly.

UNIDO SPX plans to build upon the successes of the past three years as outlinedin this Impact Report.

The SPX Programme will continue its support of the South African government'slocalisation strategies through its activities, though it will be funded by theDST and hosted at the CSIR. The dti and DPE will remain involved in theprogramme.

We plan to assess other international practices and add these best practicesto the UNIDO SPX Programme's portfolio, whilst increasing our focus on emergingmanufacturers and their positioning as potential suppliers.

The SPX programme also plans to strengthen its relationship with the TechnologyLocalisation Implementation Unit at the CSIR and to assess the viability ofremaining part of UNIDO's international SPX network.

The impact of the UNIDO SPX Programme since its inception will form a fittingfoundation for its future work.

WAYFORWARD


UNIDO SPX Address: 77 Robert S

obukwe, Sunnyside, Pretoria, 0132

Tel: +27 12 394 5750 • Email: in

[email protected]

Website: www.unido-spx.co.za

CONTACT

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