German firm buys into M&R's wheels factory
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Trade and Industry Editor
PORT ELIZABETH Murray & Roberts' Port Elizabeth alloy wheels plant is expected to double its capacity by the end of next year, following the arrival of German investor Borbet.
Family firm Borbet, which has seven wheel plants in Germany and Austria, has made its first investment outside Europe by acquiring a 50% stake in the once- troubled facility, which has a total net asset value of R120m.
This stake is due to rise to 100% before long .
"The most important thing for the Port Elizabeth plant was to bring in a partner with access to the market. The market is very far away," said Murray & Roberts CE Brian Bruce.
"You need large volumes for a wheel plant, and they will bring these volumes. We are now linked into a business that has critical mass," the CE said.
He said that not only would the Port Elizabeth plant be able to produce large runs , but it would also be able to sell to the aftersales parts market as well, where margins are attractive.
Borbet CE Peter Borbet said his company was impressed with his new acquisition's workforce and management .
The deal was made possible by the Motor Industry Development Programme, which offers rebates in the form of trad able import credits on vehicles and components exported from SA.
"We want to supply both local and European companies. Our customers in Europe wanted us to invest in SA, and this was helped by the programme," Borbet said. "Looking into the future, we see SA as a growing market."
Murray & Roberts finance director Roger Rees said that a major challenge for his management team when it took over at the firm a few years ago was to sort out the loss-making operation.
Rees said that in the late 1990s, the Port Elizabeth operation lost more than R500m, but following the closure of Murray & Roberts' Canadian wheels business, the disposal of its equivalent plant in the UK and the Borbet investment in Port Elizabeth, the corner had been turned.
He said that the Port Elizabeth plant had capacity in the order of 80000 units a year, but this was likely to almost double to 150000 units in the next 18 months.
Feb 13 2004 07:21:06:000AM John Fraser Business Day 1st Edition
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