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MBSA, along with its competitors, suffered particular hardship last year owing to the world economic slump. The market returned to the levels of 2003 and 2004 on the passenger car and truck side respectively. Compared with the high market volumes of 2006, the passenger car market was down a significant 50%. Similarly, the truck market also halved between 2007 and last year.
"While it's clear we can't expect to improve to our previous peak within a year - it took us many years to reach the highs of 2006 and 2007 - in two to three years' time, we could possibly be right up there again," says Niefer.
He's quick to point out that, despite these trying times, MBSA didn't cut back on its spend on corporate social investment (CSI). Instead, last year the company continued to invest close to R23m in a number of CSI projects, benefiting not only MBSA employees but also the broader community.
But last year wasn't all doom and gloom. Notwithstanding the economic downturn, MBSA still managed to increase its passenger car production to capture almost 10% of this market. In the combined truck market the company fared even better, with market share increasing to end the year on 27,5%. This means one in every four trucks sold in SA came from MBSA.
"If you take into consideration that on both sides (passenger cars and commercial vehicles) our main competitors are playing 'catch-up' somehow as a team - together with our suppliers and dealers - we managed to weather the most difficult time of the past decade. That doesn't make MBSA arrogant or laid back: instead, we work even harder on our success factors.
"As a premium brand MBSA also realises customers are becoming increasingly more demanding, so we have to meet that challenge in a positive way to satisfy their needs and expectations. That basically centres on product quality," Niefer says.
To this end, MBSA's achievement of being crowned the best manufacturing plant in Europe, the United States and Africa contributes in no small measure. This achievement also proves a world-class car can be built to the highest quality in East London - a huge achievement, Niefer says with pride. The gold award was bestowed by JD Power and Associates from its 2009 US Initial Quality Study, which measures the quality of new vehicles produced for the US market.
One of the biggest challenges for a manufacturing plant is the changeover to a new model. Due to styling and crash requirements, the body of a new car always looks totally different from the previous model. At the same time the level of automation increases dramatically. This means the value-add, particularly in the body shop, is made using robots while employees are mainly in supervisory, logistical and quality control positions, he says.
From a training and education perspective, employees' new roles at MBSA are far more challenging than their previous jobs. As the launch of a new vehicle also brings a new generation of production technology, employees need to be retrained. So with the change from the previous C-Class to the current one, around 100 employees at its East London plant were sent to MB's Bremen plant in Germany to be trained for an extended period. The current challenge is to maintain the skills level so its East London plant can maintain its world-class status, says Niefer. MBSA invests uncompromisingly in SA. Last year it spent more than R23m on employee training and on bursaries.
Over many years MBSA has managed to establish a partnership culture in its plant between management and labour, with a strong emphasis on "leading by example" - irrespective of the work level. Niefer says: "For me, one very important indicator of this kind of culture within a company is the absenteeism rate - which for MBSA is well below 2%. This indicates our efforts are quite successful."
However, SA's turbulent labour environment does pose a challenge, says Niefer. "For various reasons the country faced a number of protests and strikes in 2009. In September 2007 the auto industry faced a two-week strike at component manufacturers. Fortunately, a labour agreement (expiring this year) has created a solid platform for a mature labour agreement in the auto manufacturing industry. Actually, for quite some time there have been no strikes at MBSA - which is quite a positive achievement. We do hope we can conclude a new agreement with a similar basis of co-operation."
As competition in the industry is becoming increasingly tougher much emphasis is also placed on both customer service and sales. Having new products in the pipeline - particularly on the Mercedes side - obviously places the company in a positive position. The E-Class family will soon be extended with an E-Class estate and cabriolet. There will also be some other "facelifts" - with the launch of the SLS in second half 2010 the cherry on top.
"So we're quite optimistic for 2010. But again, it's hard work to convince current customers to buy another vehicle from our stable, as well as lure new customers currently driving competitors' products."
Painful as it may be at times, MBSA thoroughly enjoys the fierce competition in SA's vehicle market, says Niefer with a smile. "It keeps us on our toes. I'd even say it's healthy competition, where sometimes we're ahead and sometimes our competitors are. But you can rest assured we'll try everything possible to stay ahead of the game all the time."
However, of great concern to Niefer were the poor results by maths and science pupils in SA, as that doesn't augur well for the industry.
"With more and more advanced technology in our vehicles - in terms of safety critical areas and environmentally significant engineering - we need very well-trained people in the services areas of our dealers. So we need to ensure young people realise the importance of science and technology for a career, not only in our industry but in business generally.
"Countries such as China and India are almost daily becoming greater competitors. As they're currently leading the world's economic recovery we need to ask ourselves where we position ourselves. The 2009 matric results were alarming for Government, society and business, especially if you bear in mind those young people will be in the labour market in five to six years' time. More so if you look at how the world advances in terms of technology. This skills shortage is therefore of major concern, particularly because there is no 'quick fix'. Given the stiff competition from other companies for those skills we all simply need to work harder - and smarter."
As for MBSA, that's exactly what the company is doing - and will continue doing into the future.
"We'll continue working hard to remain number one in the premium segment for passenger cars and leader in the truck market and render a premium service. Other than that, we'll continue making a meaningful contribution to make SA a better place for all of us. Coming from the southern part of Germany - where we have a very strong middle class - I do hope MBSA can help to build a middle class in SA as a stabilising factor in society."
Sterling results
Despite the most difficult trading conditions this past decade, The Mercedes- Benz Group of Companies in South Africa still managed to post sterling financial results in 2009, with total annualised revenues of R28bn, says CEO Hansgeorg Niefer.
Likewise, the group's total contribution to the SA economy was significant, to say the least, with taxes of R650m topping the bill.
Personnel costs totalled R1 500m, while wharfage to National Ports Authority amounted to R60m.
As part of its ongoing commitment to development and upliftment, the company invested R23m in corporate social investment programmes.
Training and qualification expenses amounted to R23m.
Uncompromising standards
Stresses Niefer: "For Mercedes-Benz, a key facet of our high-performance culture is uncompromising and consistent standards.
"We manage to attract great human capital, to train, empower and nurture our employees. We ensure that our teams and our people are given the best possible foundation from which they can unleash their talent and their passion, but to accept that they are always accountable. Every employee is important and everything each one does adds value to the business.
"We consistently bolster our employees and their performance. We acknow- ledge the small successes as well as the big ones. That's our secret. We look after our customers, provide the best products and services; and ensure that our employees deliver on their potential at their best performance levels. We have created an environment around us that only accepts the best from everyone."
"Hence, our employees have relentlessly pursued the highest manufacturing standards, displaying great passion and an unwavering attitude for achieving the best quality. Over time we have proven - and will continue prove, to ourselves and the world, that we are capable of consistently producing world-class products to the most exacting global standards."
