BMW South Africa: Setting world class standards, creating legacy

The South African Government has long considered the automotive industry an important cluster group to help kick-start economic growth. For over 40 years the name BMW has been an integral part of the country’s automotive landscape, with a pioneering commitment which continues to develop skills and create jobs.

overviewThe German company first entered the South African market in 1968 when a range of BMW vehicles were assembled and sold under a licence held by Praetor Monteerders. In 1973 the licence had been bought out by the automotive giant, which resulted in South Africa playing host to the first BMW production site outside of Europe.

“At the stage much of the work related to completely knocked down (CKD) production and assembly but in the early 1990s we created a fully-fledged production facility for the export of the BMW Series 3,” recalls Bodo Donauer, Managing Director of BMW South Africa.

The significance of this move is still felt today, with the factory, located in Rosslyn, a few miles west of Pretoria, responsible for 25 per cent of the BMW Group’s 3 Series Sedan production. “In the early Nineties we became a plant focused on one model and we started with the third generation 3 Series. In 1994 we moved from a single to a dual shift operation and we have continued to create opportunities within the ambit of the Government’s support plans for the motor industry (MIDP & APDP),” Donauer affirms.

That same year also saw BMW South Africa become the only local manufacturer to achieve ISO 9002 certification, with quality management at the absolute heart of everything BMW does:

“A BMW vehicle is a BMW vehicle wherever it is made or sold and our quality processes need to be identical. The customer has no tolerance for defects anywhere in the world and each process has to be of world standard quality,” impresses Donauer.

“We are a local export plant for the United States and we are also one of the only BMW facilities exporting 3 Series vehicles to Japan, which illustrates that we are one of the very best. Quality is a given in everything we do at Rosslyn,” he continues.

The Rosslyn plant is quite large in a South African sense, covering some 350,000 metres square and employing approximately 3,000 people – however it’s one of the Group’s smallest fully-fledged production sites. Roughly 2,400 employees are based at the production facility, including 1,800 hourly production workers, who work across three shifts. The remaining staff is located at the company’s head office in Midrand or at various sales offices across the SADC region, with 52 of these based in South Africa.

Donauer says that BMW South Africa has invested around R10 billion in the Rosslyn site since 1994, which has helped to modernise the plant and prepared it for new models. The latest raft of investment has taken place over the last four years and has equipped the plant to build the new BMW 3 Series over three shifts, spanning 24 hours a day.

“We are able to produce around 360 cars a day,” he confirms. “Some of the investment has been in automation and many aspects of production are identical to BMW plants elsewhere in the world. Our paint shop and body shop are highly automated; the latter area operates 147 robots and is 95 per cent automated.

“Because of the long hours we work, there is added pressure on machinery and we carry out lots of preventative maintenance. The factory runs for 24 hours a day from Monday to Friday and we then work a single shift on a Saturday. We then run a maintenance shift from 2pm on Saturday all the way through Sunday. Additionally, we tend to close down the facility from the middle of December through to the middle of January and this affords us more time for maintenance,” he explains.

The automotive industry is renowned for its innovative approach to efficiency and BMW South Africa is no exception, as Donauer describes:

“From a lean manufacturing perspective, BMW has a global concept called BMW CleanProduction, which not only focusses on the inputs and outputs, but also on time and processes. It is a value added production system which streamlines all sorts of waste:

“For example, it will measure the time it takes for a worker to walk from his station to a machine as well as looking at processes and material waste.”

The efficiency ethos has gone a step further at Rosslyn however, and has resulted in significant savings through energy and carbon reductions, as Donauer continues:

“Our energy management system has proved hugely successful. In 2006 (before South Africa realised there was an energy crisis), we started our program and since then of course there have been massive energy price increases – while we have seen a relatively flat bill due to our savings.

“We have reduced our electricity and carbon outputs by 25 per cent each and our water consumption by roughly 50 per cent. Overall we have saved roughly R17 million with various initiatives.

“There is still room for improvement and we have already signed an agreement with a waste-to-energy company which uses a methane digester to produce power. From January next year, we will be using their renewable energy to generate up to 3MW of power (approximately 40 per cent of the Rosslyn plant’s energy requirements). Our efforts locally are in tune with BMW around the world and our Spartanburg plant in the US operates a methane plant, whilst the Leipzig facility in Germany uses wind and solar power.”

Whilst South African conditions may be very different to those at BMW’s global headquarters in Munich, Donauer says that there is little place for autonomy in the modern economic world:

“The days of absolute autonomy are long gone in the automotive industry and we operate in a global village. From a sales and marketing perspective we are tasked with devising strategies that suit the local market but our parent company understandably runs common systems, resources and procedures.

“Whilst our plant may be located in South Africa, we are very much an international company when it comes to best practices.”

As a high volume automotive manufacturer, operating just in time, managing the supply chain is a constant challenge. Donauer says that as much as 50 per cent of the materials are imported from markets outside of South Africa, putting a premium on forecasting.

Donauer’s team uses a combination of market intelligence and global sales targets to predict the volume of vehicles required and therefore the number of parts that need to be ordered. This year, the Rosslyn plant will manufacture 80,000 3 Series cars, of which roughly 80 per cent will be exported.

“The introduction of our third shift was really driven by export volumes; we used to produce 50,000 cars a year with around 37,000 exports but that figure has now increased and as many as 67,000 vehicles are for overseas markets.

“Location is important,” he adds, “and a number of the local suppliers are located very close to our plant. For example, our pressing partners are next door to us, the bumper suppliers are located just down the road and the company that supplies our carpets is just one block away.

“Our big challenge is always managing the logistics of the operation – and this element is always expensive from both a time and cost perspective. There is a huge cost to get parts into the country and the finished cars out.

“A few years ago we had no shipping routes from South Africa to the US and we had to ship cars to Germany before they headed to America. We have now collaborated with Mercedes-Benz (who also have South African operations and supply the US market) and our vehicles are now picked up from Durban and sailed on to Charleston, North Carolina directly.”

The increase in production, which led to the third shift, is of course excellent news for South Africa. Donauer says that the move to increase volumes at Rosslyn has freed-up capacity at other BMW plants, with Leipzig benefitting on this occasion, and scheduled to start production on the BMW i range of electric vehicles in the near future.

The decision to move additional 3 Series production to South Africa created additional jobs for the local market and led to extensive training – something BMW invests a lot of time and resource to, as Donauer explains:

“There is a lot of disparity and inequality in education here and we are very proud that BMW employees are some of the best trained in the industry. Through our corporate governance we concentrate a lot of effort on social investment and we have identified specific areas: there is a shortage of maths and science students in South Africa and that has been a big area of investment focus for us.

“We also run internal training courses and have a dedicated training centre but we also send employees on external MerSETA courses.

“When we launched the third shift we ended up training 1,500 people, providing an automotive production qualification, which gave lots of people a career skill, even if they did not end up working for BMW South Africa.”

Such investment is invaluable as South Africa continues to develop into an economic force on the global scene. The support of companies like BMW is creating a platform to achieve economic parity and Donauer is confident that South Africa will continue to help set the standard for the global automotive industry:

“We are here for the long haul but we are not likely to produce additional models to the BMW 3 Series as the plant is simply not big enough and it would require an enormous investment to change things.

“Production-wise we will continue to export to the rest of the world and maintain our current volumes with 80 per cent export. We see some growth in the local premium market and I believe that this will continue at a modest rate of maybe 5 to 7 per cent per annum.”

With that, Donauer headed for Cape Town, where BMW were about to donate five new vehicles to science centres around the country, to help nurture the next generation of scientists.