South Africa Car-Part Makers Turn to Virus Needs to Combat Slump

(Bloomberg) --

A group of South African car-part makers have switched their focus to the local production of breathing aids, a move to help the country's health system and protect jobs threatened by the Covid-19 crisis.

Shocked by images of virus-ravaged Italian hospitals earlier this year, the collective --- which includes engineers and doctors as well as businessmen -- decided to use South Africa's initial hard lockdown to help address a shortage of ventilators. After studying the country's specific needs, they began developing a non-invasive breathing device that had proved effective in countries such as the U.K. and doesn't require specialist intensive-care beds or staff.

“The idea was to help South Africa and to keep our guys employed,” Graham Ellett, a director at Johannesburg-based Reef Engineering, said at a factory north of Pretoria which is now assembling the Constant Positive Airway Pressure devices, or C-PAPs. “We weren't going to make any serious money out of this but at least we could pay for materials and cover overheads.”

The upshot is a 37.4 million-rand ($2.1 million) contract to supply 2,000 devices to South Africa's virus-response fund, according to project leader Justin Corbett, who also runs a Durban-area firm called Rand York Castings Pty Ltd.

With demand for car parts in Africa's biggest auto producer below pre-virus levels, SAVE-P saved about 350 jobs and created 35 more across its 14 organization members, Ellett said.

SAVE-P is now holding talks with Indian car-component makers about how that country can replicate the plan. India has recorded the second-highest number of confirmed Covid-19 cases in the world.

A report by South Africa's Auditor General published Sept. 2 found there still aren't enough ventilators in the country, with only 58 of the 1,144 ordered for the health sector delivered by July 21. Meanwhile the initial peak of the pandemic came and went, though Health Minister Zweli Mkhize has repeatedly warned of the risks of a renewed surge.

U.S. carmakers including Ford Motor Co. were among international companies to convert manufacturing capacity to health-care initiatives earlier in the pandemic, delivering 50,000 breathing machines to the government before closing the program at the start of the month. Peugeot-maker PSA Group and Air Liquide SA were among French companies to embark on a similar project.

And SAVE-P isn't the only South African group to have switched to producing personal protective and medical equipment from their core business.

The local unit of CGI Creative Graphics International Ltd., which specializes in the design and production of automotive graphics and branding products, has sold more than 250,000 face shields to its customers as well as hospital groups. That allowed the firm to keep about a fifth of staff at work during the strictest lockdown period and it has since shifted to making disposable hospital gowns, fabric face masks and plastic counter screens, Managing Director Shaun Rosenstein said in an interview.

More permanent local production of medical equipment could bolster a manufacturing industry that accounts for 11% of South Africa's gross domestic product and where a sentiment index has flitted between signaling expansion and contraction for most of the past decade.

South Africa's department of trade, industry and competition is looking to formalize a so-called master plan for the local production of medical goods, said Tebogo Makube, its chief director of industrial procurement. It could have a draft strategy ready within four to six months, he said.

©2020 Bloomberg L.P.