Pasdec pares back losses after tough debut
Mbongeni Mguni | Friday June 22, 2018 12:36
Pasdec Automotive Technologies Botswana manufactures automotive wiring harnesses for globally leading vehicle brands such as Nissan and Volkswagen. Since commissioning in 2015, however, the company has run at a loss due mainly to high relocation costs, while four strikes, some featuring intimidation and threats, have soured the border town’s joy at wooing an investment away from South Africa.
According to the Malaysian group’s latest financials, the relocation from Brits to Lobatse cost P10.8 million in 2016, declining to P2.3 million last year.
Pasdec Automotive Technologies (PAT), which wholly owns the Pasdec Automotive Technologies Botswana (PAT BW), also witnessed an uptick in turnover driven by higher demand from Nissan/Renault and Volkswagen South Africa, which in turn was a response to strong South African, African and European sales.
PAT’s books were also helped by the reduction in duplication as a result of the finalisation of the relocation to Lobatse.
“The completion of the relocation exercise has resulted in the eventual release of duplicated management and maximisation of productivity including the final closure of the South African manufacturing facility in Brits, South Africa,” directors said in the financials.
The Lobatse firm’s performance was also boosted by the launch of a new contract to manufacture components for the VW Polo which resulted in increased production during the third quarter of 2017.
PAT BW, directors said, had invested P32 million into capital equipment at the end of the second quarter last year to locally produce certain components of the new contract.
“This investment ascends and qualifies PAT BW on par with other global best practice plants supplying into Volkswagen globally.
“The introduction of the said capital expenditure into plant and equipment resulted in PAT BW leading in technology in the cutting and crimping process, assembly lines and testing equipment in the electrical wiring harness sector within southern Africa,” directors said.
The Pasdec deal is a feather in the Botswana Development Corporation’s (BDC) cap, as the state investment agency took the lead in wooing the Malaysians away from South Africa to Botswana.
The BDC has invested P52.1 million equity in the venture, with jobs expected to rise to 800 at the Lobatse plant in the next few years.