November 17, 2017

Success of local content designation depends on active support by public and private sectors

The implementation and verification of compliance with government’s local designation rules across both public and private sectors is pivotal to the success of the policy, says Peter Thomson, Director, AVK Holding Southern Africa (Pty) Ltd.

AVK Holding Southern Africa is a market-leading manufacturer of valves for the water, waste water, mining, industrial, gas and fire protection markets. The company emerged from Premier Valves Group (PVG) when the Danish valve manufacturer AVK acquired a majority stake in 2014.

Says Thomson: “Local designation rules apply specifically to government and state-owned companies, although compliance does not necessarily flow automatically. However, for private sector organisations that can be quite vocal about the need for supportive industrial policy, voluntary compliance with local content designation should be a priority.

“This is essential because success begins in the specification stage where we need engineers, designers and procurement departments to ensure that they explicitly specify the requirement for local content of 70%. There is already a Local Procurement Accord in place through NEDLAC, and we trust that businesses will adhere to it”

AVK Holding Southern Africa completed the establishment of a new valve manufacturing facility in Alrode in response to government’s drive to support manufacturing development by specifying the percentage of local content required when government entities and state-owned companies procure certain products.

Since July 2014, AVK Southern Africa Holdings has created 114 jobs, 84 of them for artisans, across the company’s value chain.

“Local content designation has already seen a boost in investment and job creation in a number of sectors including clothing and textiles and bus and locomotive manufacture. However, sustainable long-term success of local content designation needs not only public sector compliance but also active private sector support,” says Thomson.

The Valve and Actuator Manufacturers Cluster of South Africa (Vamcosa), announced earlier this year that it is supporting the DTI’s compliance efforts by monitoring tenders to identify those that do not specify 70% local content and tenders that are awarded to companies not compliant with the policy.

AVK Southern Africa Holdings, investment includes a 1 200 m2 training facility, 4 500 m2 of office space and logistics and warehouse space of 2 000 m2.

“This new AVK factory is dedicated to manufacturing AVK products which before had to be imported from Denmark and other countries. We have changed the layout, improved the engineering process have invested in computer numeric controlled machines. AVK also has shot-blasting and coating facilities, right to the back end of the factory, which has been completely overhauled,” says Thomson.

He adds that the investment has enabled AVK to achieve the scale and capacity to meet not only South African requirements but also expand in sub-Saharan market.

“We have recently mobilised an export sales team and they are looking at target markets reaching into Southern Africa.”

AVK hopes to train 1 500 people this year in its Academy. This Academy will offer training to non-AVK employees from across the company’s value chain. The training will include people with varying levels of experience in order to support skills development at all levels.

The core aim of the training programmes is to help employees and industry to understand how to consult and install the range of valves correctly.

“When we are called out for repairs we invariably find that the valves are not installed according to AVK standards. Instructors will replicate real-world conditions in the training programme which should reduce problems relating to incorrect installation. We believe high-quality training and supervision will enable us to deliver solutions rather than products alone,” says Thomson.

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