The past few years have been tough for those involved in the automotive industry. From peak highs in 2006, demand has tailed off, made worse, of course, by the recession and subsequent drop in consumer spending.

South Africa exported R44 billion of components in 2008, according to the National Association of Automotive Component and Allied Manufacturers (Naacam). That dropped to R28 billion in 2009 as the global recession hurt vehicle sales.

The level hasn’t improved much in 2010, so far, despite a clear upturn in the industry.

The result is that many component manufacturers, especially those that had relied on export to counter the effects of a decline from OEMs, have cancelled contracts and are struggling to make ends meet. It has made it tough for companies like Shatterprufe to survive. Tough, but not impossible.

So what is at play here? Well, there are several factors, as Dr. Dino Petrarolo, Managing Director, explains: “The drop in demand and recession has certainly played a big part,” he says. “But the Rand has had a big say in things.

“The Rand is now very strong. Over the last year it has strengthened about 30 percent against our major trading destinations, the U.S. and Europe. It makes competing difficult.”

What has Shatterprufe done to remain competitive? Aside from the typical cost cutting and efficiency measures, it has been “reviewing” prices and products, concentrating on running a profitable business that gives customers “added value”.

It also took the difficult decision to close its warehousing facility in Charleston, in the U.S. — a tough, but necessary business move. “We did,” Dr. Petrarolo says. “We had a warehouse and we basically took that out of the chain to help us cut costs. We are still selling into the U.S., but we have pulled back quite a lot.

“That move does mean we are exporting much less to the U.S.”

Dr. Petrarolo says the Rand had a big part to play in the decision and stressed that a stronger Rand is endangering the nation’s export earnings; it could even mean South African manufacturing will become uncompetitive in the world market. “The consensus is that the Rand is overvalued, but more importantly its volatility is what has hurt us in the last 18 months,” he explains. “What we want is a stable and competitive Rand.”

Fortunately, Dr. Petrarolo sits on the executive committee of Naacam and says “positive” things will happen soon in this respect. “Something will come. I hope it won’t be too drastic, as we don’t want it swinging the other way. But we have to do something about competitiveness.”

Significantly, Shatterprufe is still selling into Europe, where 70 percent of all South African components are sold. “We are now focusing on the European market but, of course, the rand-euro exchange rate is hurting our opportunities there too,” Dr. Petrarolo adds. “The strong Rand is putting South Africa’s recovery at risk.”

Mainstream currency economics in South Africa are largely geared towards the consumer, and not manufacturers, he stresses. “A weak rand also makes local manufacturing vulnerable to cheap imported substitutes, and endangers exports as South African manufacturers become uncompetitive in the world market.”

An African leader
However, we are forgetting just how good Shatterprufe is. A division of PG Glass, it is the leading manufacturer and distributor of Shatterprufe laminated and Armourplate toughened automotive safety glass in Southern Africa, as well as a major exporter of automotive replacement glass to Europe, Africa and now, to a lesser degree, the U.S.
“We are the only automotive replacement glass supplier in South Africa that supplies glass to the OEM standards,” says Dr. Petrarolo.

And to maintain these standards, the company has invested in the latest technological innovations, and is committed to manufacturing high quality products and providing superior customer service. “Quality is where we stand out,” Dr. Petrarolo says. “We can’t be beaten.

“We also recently invested over R1 billion in a new automotive quality float line,” he adds.

Optimism grows
Despite all that has happened, Dr. Petrarolo is optimistic of gaining new market share, especially as a new technical partnership with a world leading glass manufacturer takes shape. “We have an opportunity to capture more market share locally. We certainly have an opportunity to capture small volume on the export front and that on the back of our large range, which is one of our big advantages.

“The recently signed technical partnership with one of the big glass players has aligned us to enhance our capability in manufacturing and that, for us, is quite a positive development,” he continues. “It will allow us to produce more efficiently moving forward, improve our yields and therefore make us more competitive. That is one important development.”

Shatterprufe has three manufacturing plants which produce around four million pieces of safety glass per annum. The Struandale plant, in Port Elizabeth, is the exclusive producer of original equipment toughened rear lights and door glasses for South African motor manufacturers. The plant supplies replacement glass locally and exports to international markets. The Neave factory, also in Port Elizabeth, manufactures laminated windscreens for the same markets. The plant also manufactures large glass required for the bus and truck market. The Shatterprufe plant at Ga-Rankuwa, outside Pretoria, produces laminated and toughened automotive glass, primarily for local motor manufacturers.

OEM customers include BMW, Ford, GM, Mercedes Benz, Mitsubishi, Nissan-Renault, Toyota and VW, as well as Noble, EvoBus, MAN, Marcopolo, Optare, and Tata.