Toyota SA vows to export about 147 000 vehicles this year following a five-year, multibillion rand revamping of its Prospecton plant south of Durban.
Since becoming a full member of Toyota Motor Corporation's global production network earlier this year, the local subsidiary is now perfectly positioned to become a true volume exporter to global markets.
Speaking at a function to celebrate the start of Corolla sedan exports from Prospecton, Johan van Zyl, Toyota South Africa's president and CEO said: "This historic occasion aligns Toyota South Africa closely with a number of other Toyota global production facilities, each with annual manufacturing capacity of 200 000 to 250 000 vehicles.
"This marks the culmination of a programme embarked upon jointly by Toyota South Africa and TMC to transform Toyota South Africa from a purely local supplier into an effective TMC export base to supply vehicles into markets in Europe and Africa.
"This process started in 2002 at a time when Toyota South Africa had a production volume of 100 000 units per year."
The project was implemented in three phases.
"The first phase was the export of Corolla to Australia with volumes of around 10 000 units a year.
"TMC then announced the second phase of the export programme whereby Toyota South Africa would become a global manufacturing hub for the new Hilux.
"This signaled a step-change in export volumes that would increase by four- to five fold. Designated markets for the Hilux were Europe and Africa.
"The third phase came with the announcement by TMC that the new Corolla sedan would join the Hilux as a volume export model from South Africa to European and African destinations. Both models are produced in right- and left-hand drive variants.
"This required a total transformation in the way we do business and in the way we build vehicles. Fundamental to this process was a multi-billion rand investment in new facilities and technologies that overshadowed anything that the local industry had seen before.
"This investment was made not only to increase annual production volumes to a required 220 000 units, but also to ensure that this volume is achieved in accordance with the strictest global quality standards defined by TMC. As a global competitor we also had to address our cost competitiveness and operating efficiencies both in-plant and at our suppliers.
Every area modernised
"In this regard TMC has provided the highest level of support to introduce the world-renowned Toyota Production System methodology, not only into our own facilities, but also into our supplier base.
"This has led to a transformation in efficiencies and logistics across our supplier network and allowed the Prospecton plant to adopt true "Just In Time" manufacturing principles.
"The new Import Parts Centre manages the unpacking and efficient flow of imported components to the assembly line and has allowed, together with improved shipping logistics, a significant reduction in import lead times and component stock levels. Today our in-plant component stock level is measured in hours rather than weeks.
"In terms of our manufacturing capability it was very much a case of out with the old and in with the new. Virtually every area of our manufacturing operation has been modernised - to a point that, aside from older established buildings, the oldest significant manufacturing facility in use today is the A1 transfer press line that was commissioned some six years ago in preparation for the introduction of the IMV.
"The first of the new facilities to be commissioned was the water-based paint plant.
"Next to come on line was the press shop expansion that includes two new-generation press lines that boast the most modern technology available anywhere in the Toyota world.
"We now have the production facilities and systems in place to produce at the volumes and quality levels that justify our inclusion in the Toyota global production network. Our quality inspection processes are continually audited by TMC for compliance with international quality benchmarks.
"As a final quality check we have introduced a series of dynamic tests that are conducted on a new test track within the manufacturing plant area.
"All vehicles are now subjected to a pre-shipping dynamic test that includes a figure-of-eight track, a Belgian Pave section, and in-phase and out-of-phase rope road sections. These unique road surface sections are designed to highlight quality defects, such as loose components, that show up only under dynamic driving conditions.
"All export vehicles, and randomly sampled domestic market vehicles, are subjected to a 140 km/h high-speed test on a closed track. The dynamic tests are completed immediately prior to shipping and where any defect is found the vehicle is returned to the plant for corrective action.
Investment in training
"Obviously the massive investment in the integration of Toyota South Africa into the TMC global production network has been supported by a substantial investment in training.
"To this end we have spent R300 million on training and development of our workforce over the past five years. This includes the cost of sending 174 people, mostly Group Leaders to Japan for training in the Toyota Way.
"Aside from the investment made at Toyota South Africa, the 220K project has provided an environment that has encouraged 12 new international suppliers to invest in South Africa. Eight of these are from Japan and four from Europe. Nine of these suppliers have invested in their own right and three are joint ventures with South African companies.
The impact of the Toyota South Africa 220K project is far-reaching. It has, among other things, resulted in the creation of 4 000 new jobs and should result in the export of 147 000 vehicles to more than 40 global markets for 2008.
In addition, the local value added across Hilux and Corolla models is more than 60%, making both models compliant with the requirements of the European Free Trade Agreement with South Africa. As a result of this agreement, these models are eligible for importation into Europe free of duty - a first for a local vehicle manufacturer.
But Toyota SA is aware of the larger issues its large-scale manufacturing has.
?Obviously this level of expansion in production creates a number of logistics challenges, mainly in the transportation of vehicles on delivery to local destinations, and to and from the port in Durban.
"Mindful of the impact that this will have on the road network it is our intention to transfer the majority of our vehicle deliveries to the rail network in the near future. To this end, we are in an advanced stage of negotiations with Transnet.
Transnet has committed to providing the required infrastructure that will allow us to achieve the efficient movement of vehicles for local and export destinations.
"The period of transformation at Toyota South Africa has been an exciting one that has delivered massive achievements with the support of TMC. Toyota South Africa is now firmly established as the largest vehicle manufacturer on the African continent and as the largest vehicle exporter in South Africa. It is now a true TMC global scale producer of quality vehicles."