Slide 1

South African Foundry MarketAdrie El Mohamadi

2nd BRICS Foundry ForumBeijing, China

9 May 2012

Slide 2

1. South African overview

2. Foundry industry structure in

South Africa

3. NFTN looking ahead

Presentation Outline

Slide 3

South Africa

1%

11%

8%

30%

14%

10%

9%

11%

6% Province Population (2011 est.)

Gauteng 11,328,203

Kwa-Zulu Natal 10,819,130

Eastern Cape 6,829,958

Limpopo 5,554,657

Western Cape 5,287,863

Mpumalanga 3,657,181

North West 3,253,390

Free State 2,759,644

Northern Cape 1,096,731

59 million

Slide 4

Contribution to the GDP in South Africa

Geographical location of foundries in South Africa

ProvinceNo. of foundries ‘03

No. of foundries ‘07

No. of foundries ’11

% of total foundries ‘11

Gauteng 110 108 97 54%

Kwa-Zulu Natal 20 26 24 13%

Western Cape 26 16 15 8%

Eastern Cape 16 10 10 6%

Free-State 10 7 6 3%

North-West 10 9 5 3%

Northern Cape 6 3 3 2%

Other 15 15 18 10%

Province Contribution to GPD ‘07

Gauteng 33,5%

Kwa-Zulu Natal 16,2%

Western Cape 14,5%

Slide 5

Industry structure by foundry type

Foundry Type

No. of foundries in ‘03

No. of foundries in ‘07

No. of foundries in ‘11

2011 v/s 2007 change in %

Ferrous (Iron and Steel) 110 110 67 -39%

Non-Ferrous (Aluminum, Brass & Zinc) 117 119 70 -49%

High Pressure Die-casters 36 32 32 0%

Mixed Metal 35 35 34 -3%

Investment Casting 7 4 4 0%

Art Foundries 13 12 12 0%

Total number of Foundries 213 211 184 -13%

Significant decline in numbers since 2007• Due to:

• difficult economic conditions• consolidation, mergers & acquisitions

Slide 6

Estimated annual production by metal type

Metal Type

Est. annual production ‘03 (tons)

Est. annual production ‘07 (tons)

Est. annual production ’11 (tons)

Growth 2011 v/s 2007 (%)

Non-Ferrous 84,000 97,800 91,400 -7%

Aluminum 66,000 77,800 74,600 -4%

Brass 9,000 8,200 8,400 2%

Bronze 6,000 7,600 5,700 -25%

Zinc 3,000 4,200 2,700 -36%

Ferrous 422,000 562,600 479,950 -15%

Grey Iron 110,000 147,000 170,200 16%

Ductile Iron 100,000 86,000 123,800 44%

Other cast iron 85,000 145,600 61,250 -58%

Steel 123,000 179,100 118,000 -34%

Stainless steel 4,000 4,900 6,700 37%

Total annual production 506,000 660,400 571,350 -13%

Industry is highly concentrated:• Top 3 non-ferrous foundries = 67% of production• Top 11 ferrous foundries = 62% of production

Slide 7

Markets served by the SA foundry industry

General En-gineering 22%

Mining 33%

Automotive 33%

Construction 5%

Agriculture 5%

• Export and local markets

• Highly Competitive environment

• Competing with the rest of the world

Slide 8

Main casting processes used in foundries

Process TypeNo. of foundries using the process (%)

Sand

Bonded sand 44%

Green sand 34%

Shell 14%

Permanent Mould

Gravity 21%

Low Pressure 5%

High Pressure Die-casting 7%

Other 3%

Foundry Type No. of foundries No. of foundries (%)

Production 23 24%

Jobbing 50 52%

Prod. & Jobbing 24 25%

Gauteng

Slide 9

Employment in the foundry sector

• Estimated no. of direct employees in 2011 – 11,600

- 80% of employees are previously disadvantaged individuals

• Additional 12,400 admin & management staff are employed by foundries

• Estimated no. of indirect employees 4,000

- 180 – 200 supplier companies

30%

55%

15%

Shop-floor analysis

Melters

Moulders

Patternmakers

Total of 24,400

Slide 10

Interactioncreates aneffective

innovationsystem

Education & Training System

Primary EducationTechnology-related Secondary Education

Skills Development for the WorkplaceHigher Education, especially in

Engineering

Innovation Capability at Firm LevelCreativity of Employees at all Levels

Innovation-friendly organizational structureNetworked Research and Development

Technology-related Institutions

Applied Research & DevelopmentResearch & Development Financing

Technology Transfer & Extension Testing, Measuring, Quality Control

& Standards CertificationIntellectual Property Rights Protection`

Political, Legal, Regulatory and Macro-Economic Framework that stimulates learning and innovativeness

Key roles and activities of various stakeholders in the innovation system

Slide 11

Technology-related Institutions

Innovation Capability at Firm Level

FOUNDRIES

Education & Training System

Political, Legal, Regulatory and Macro-Economic Framework

Technological Capabilities

emerges from interaction

SA foundry innovation system

Slide 12

National Foundry Technology Network

NFTN is the culmination of a significant

government and industry association-led

effort to develop a globally competitive South

African Foundry industry through appropriate

skills training, technology transfer and diffusion of

State-of-the-art technologies

Slide 13

NFTN Delivery Model

• Activities that targets the improvement of individual

foundries and their immediate environment (firm level)

• Activities that targets an impact on the foundry industry as

a whole (system level)

Slide 14

Types of South African Foundries

Type 1 companies Type 2 companies Medium- to large size Public companies or

subsidiaries of multinational corporations

Technologically sophisticated processes

Updated equipment

Small to medium size Family-owned business Reliance on experience / tacit

knowledge and trial-and-error Relatively outdated equipment

Slide 15

NFTN Areas of foundry support

Key challenges identified by industry

1.Skills and training (HCD)

2.Environmental and waste management

3.Energy management

4. Raw material input

5.Localisation and market development

6.Capital and investment

7.Technology, Innovation and Competitiveness

NFTN support areas

1. Human Capital Investment

2.Cleaner production

3.Expansion of foundry industry

4. Science, Technology and Innovation

5. Competitive Improvement

Slide 16

Students currently in Germany on a collaborative Masters programme

Technical training courses are offered on specialised areas within the foundry industry

Second national training centre is being planned and will be launched in March 2013

3 x curricula has been developed for Foundry melter, moulder and engineering patternmaker to train artisans

Under graduate degrees are being offered relevant to the foundry industry by a number of our Higher Education

institutions – with specific mention to UJ – Foundry specific

Skills programmes are being presented to foundry employees to improve the skills level within foundries

Human Capital Development

Placements of Interns within the foundries

Slide 17

Waste activity

• The compilation of a guideline document for use by Foundries, discussing requirements in terms of the National Environmental Management Act (Act 107 of 1998) and the National Environmental Management: Waste Act (Act 59 of 2008)

• The compilation of a motivational document for adjustment of environmental legislation pertaining to foundry operations in terms of the National Environmental Management: Waste Act (Act 59 of 2008)

Slide 18

Waste activity

• The compilation of a guideline document for use by Foundries, discussing requirements in terms of the National Environmental Management Act (Act 107 of 1998) and the National Environmental Management: Waste Act (Act 59 of 2008)

• The compilation of a motivational document for adjustment of environmental legislation pertaining to foundry operations in terms of the National Environmental Management: Waste Act (Act 59 of 2008)

Slide 19

Competitive Improvement

• Conducted in 2009

• 103 foundries in total

participated

• Opportunity for foundries to get a comparison

• Took place during 2009/10

• 26 Foundries were selected

• Suppliers to SOEs

• CSIR & Mintek were the

implementing partners

• Conducted in 2011

• Overall positive response

• Lessons learnt incorporated

into the NFTN CII

• First NFTN CII is the Vaal Foundry Initiative

• Also targeting Valve Cluster, M&HV Cluster,

KZN & Automotive

cluster

NFTN Benchmarking DST TAP

Satisfaction survey NFTN CII

Slide 20

Foundry Cluster Support Initiative

Agree on technical assistance &

implementation

Baseline Assessment

Identify the performance gaps

Identify the possible skills development

needs within cluster

Determine market opportunities and

performance specifications

Common foundry problems such as

Energy, Waste management etc.

addressed collectively

ID of longer term R&D opportunities

Access to interns & academic institutions

Mobilise specific public support

Access to mobilisation fund

Hosting institution

such as VUTFor non-routine services such as:

- Problem solving- New product development- Casting simulation trials- Productivity improvement

On going M&E

Specialised, recognised

& subsidisedSAIF skills

development mandate

Demand focused

Hosting institution is required to

appoint a management

committee & use and build on the NFTN supplier

database

Slide 21

Adrie El Mohamadi

National Foundry Technology Network

Tel: +27 12 841 2127

Adrie.elmohamadi@nftn.co.za

www.nftn.co.za

Thank you