South Africa’s automotive sector has undergone fluctuating fortunes over the past four years, reaching its peak in 2007 before the financial meltdown of 2008. Gert Harmse, plant manager for Feltex Fehrer’s Port Elizabeth facility, explains the impact of these challenging times.
The South African automotive market has gone through a real boom and bust period of late and is only now starting to emerge from the other end. One company that has been through a range of emotions, having enjoyed success and then felt the crunch, is Feltex Fehrer.
Feltex Fehrer manufactures moulded polyurethane products for the global automotive market; its product range includes seat pads, armrests, headrests, wire frames, listing wires and suspension aid buffers, as well as in situ headrests, panels and armrests.
The business, headquartered in Durban, has very much evolved over time, as Gert Harmse, plant manager at the Port Elizabeth facility, explains. “The company started in Durban back in 1931 as a textile business, manufacturing ladies’ slippers; that’s where the ‘felt’ part of our name comes from. Toyota came to South Africa in the 1950s and the company started to supply textile products for them—items like carpet and matting—and it was in 1997 that the company switched its focus entirely to the automotive sector.”
Feltex was subsequently bought in 1999 by German Claus Daun, who invested in the business to help preserve its status as a Tier 1 and 2 supplier to the automotive industry. His investment came at a time when the South African Export Programme was finding its feet; and it was the same year that the BMW 3 Series commenced operations in the country. “Today Claus Daun still owns around 70 per cent of the business but we listed on the Johannesburg Stock Exchange in 2004, which made quite a difference,” states Harmse. “The listing has certainly changed our management approach which is now much more aligned to financial principles, but this is good for the company.”
The company today operates four plants across South Africa and holds the distinction of being the main foam supplier to the automotive industry in the country. However, that title came as the reality of the global economic downturn took its toll. “There was another foam supplier in South Africa until 1997. Due to increasing pricing pressures from the OEMs and the low car production volumes of about 200,000 per year in the 1990s, the second company was taken over by Feltex. With the export programme kicking in during early 2000 with the BMW 3 series, A4 Golf and Mercedes C-class, the industry grew to production volumes of over 450,000 in 2007. However, 2008 into 2009 saw things dramatically decline. That production figure dropped to around 370,000. We are now gradually getting our production figures back towards where they previously were.”
The downturn in business also had an impact on the size of Feltex’s South African workforce, with the Port Elizabeth site employing 280 people at its peak, a number that fell to 140 at the lowest ebb. Harmse says that the numbers are now back to 170 and a reconfiguration of work processes has improved efficiency enough for that figure to achieve the same output previously reached during the boom period.
One area that has helped the company to improve performance has been the introduction of lean manufacturing processes. “We started around 2004 and the drive came at all levels, from the senior management team down to the shop floor,” Harmse comments. “Production output has increased by about 15 per cent but the most important change I feel has been how much easier the Port Elizabeth plant has been to manage. We’ve empowered our workforce and tried to make them feel responsible for their own area; they are responsible for output, quality and cost and all of this has enabled our shop floor workers to see what is required within the business.”
Harmse says that each of the plants has implemented its own methodology, with the head plant in Durban adopting the Toyota Lean Manufacturing system. The initiative was very much kick-started by the South African government, which provided funding and resources for the project as it looked to ramp up South Africa’s competitive manufacturing standards on the international stage.
The benefits lean has brought are perhaps best illustrated by employee comments, with operators endorsing the company’s efforts with statements such as: “Makes work simple”, “Tool to develop us” and “The high spirit and competitiveness in the teams are evident throughout the plant”. Areas such as the Cold Cure Team, for example, have seen productivity increase from 820 parts per day to over 1,000; and scrap reduced from 2.5 per cent to 1.1 per cent.
Training also plays an integral part in Feltex’s Black Economic Empowerment efforts, which have so far reached Level 6—and Harmse indicates that the company is very much looking to promote through the ranks via identifying training needs.
One of the more challenging aspects for Feltex of late has been the twin escalation of energy and staff costs. “Here in South Africa we have endured enormous hikes in energy prices, by as much as 25 per cent year-on-year, while labour costs have increased above the rate of inflation,” explains Harmse. “It is a challenge to offset these costs and remain competitive—we may be the only foam supplier in the country, but we have to accept the customer prices as they can always import from elsewhere in the world.”
With an impressive list of clients including Johnson Controls and the Lear Corporation, Feltex can look forward to exciting times as business picks up; however, Harmse sounds a note of caution: “We had to scale down our operations while turnover fell by as much as 50 per cent. We are recovering now and the new Export Programme means we are manufacturing components for the Volkswagen Polo which will be exported to the UK, and for the C-class Mercedes and BMW 3 Series, which is exported to the United States.
“As the only main foam supplier in South Africa, an increase in volume will create its own set of challenges and we have to be mindful to continue to meet customer expectations. There is certainly the opportunity once again for a second supplier and the OEMs much prefer competition in each country, so that if there are any problems they have more choice,” he concludes. www.feltex.co.za
