The agreement with General Electric in terms of which the hundred new class 43 diesel locomotives are to be built is in line with Transnet’s commitment to using its capital investment programme to meet competitive supplier development programme (CSDP) objectives. CSDP is a Department of Public Enterprises initiative intended to encourage localisation of manufacturing, procurement from local suppliers, sustainable employment and skills development. The class 43 project includes a significant localisation and skills development element.
Transnet’s long-term objective is to localise its supply chain of imported manufactured goods and services to a reasonable level whilst promoting local industries and South Africa as an off-shore site of choice for OEMs and multi-nationals. This will increase both shareholder and societal value through sustainable localisation of its supply chain. The GE/Transnet agreement is South Africa’s largest CSDP transaction to date, placing Transnet as the leading state-owned enterprise in localisation with the aim of creating industrialising opportunities.
Commenting on the milestone, Transnet chairman Mafika Mkwanazi said: “Locomotive fleet renewal is central to our drive to improve productivity, safety and efficiency of our assets and people. In addition to the obvious benefits of a significantly reduced average age of Transnet Freight Rail’s fleet, this enables us to showcase our technical ability through our engineering division. It also gives us an opportunity to develop our engineering, technical and manufacturing skills in partnership with a leader in this field – GE.”
Transnet Rail Engineering’s Koedoespoort plant was upgraded to meet the stringent requirements for original equipment manufacturers including training on GE’s methodologies at its facilities throughout the world, focusing on tits renowned Lean and Six Sigma methodologie. Other areas of training covered logistics, assembly of various locomotives parts and components, field maintenance services for locomotives.
Transnet employees have received training at GE facilities in the United States, Mexico and Australia, and as a result of this deal, hundreds of jobs have been preserved.
According to President and CEO of GE Transportation Lorenzo Simonelli: “The agreement with GE is the third major CSDP transaction to be implemented by Transnet Rail Engineering. Already TRE is in partnership with another equipment manufacturer. This agreement is intended to make TRE part of the OEM’s global supply chain for rebuilt traction motors and diesel engines, to accredit TRE’s facilities for loco maintenance and localise supply of parts. We are pleased to partner with Transnet to turn its vision of 21st century rail freight transport into reality. This partnership allows us to bring leading rail technology to South Africa while contributing to world-class skills development in the region”.
Commenting on the achievements, TRE chief executive and member of the Transnet executive committee Richard Vallihu said: “Our ultimate goal is to establish TRE as a centre of excellence, meeting the highest standards set by locomotive original equipment manufacturers and making us a partner of choice in this region, Africa and beyond. This can only be achieved through innovative partnerships and the dedication of our employees.”
Transnet is in the process of finalising an agreement with the United States export credit agency (ECA) – US EXIM – to provide funding for the purchase of these locomotives. Such funding is part of Transnet’s Board-approved strategy of diversifying its funding sources cost effectively.
Transnet Limited’s board of directors comprises: M E Mkwanazi (chairman); B Molefe* (group chief executive); M A Fanucchi; H D Gazendam; N B P Gcaba; M P Malungani; B D Mkhwanazi; T Mnyaka; N Moola; M P Moyo; N R Ntshingila; I M Sharma; Prof J E Schrempp# I B Skosana; E Tshabalala; D L J Tshepe; A Singh* (acting chief financial officer); *executive; #German; Group company secretary: A N C Ceba.