5 February 2004

SA television manufacturing industry needs rationalisation, manufacturing hubs

In line with modern manufacturing models focused on increasing efficiencies and cutting costs, the South African television manufacturing industry needs a major overhaul.

So says Craig Tyzack, CEO of East London-based electronics contract manufacturer, Vektronix. Purpose-built for television set manufacture in 1984 and still acknowledged today by international specialists as the most advanced plant in the country, Vektronix has manufactured television sets and components for most of the major brands – often handling several competing brands at the same time.

“Because we are vendor independent and we have the capacity and necessary automation facilities, we’ve been able, for instance, to handle the full manufacturing cycle for both JVC and Telefunken while simultaneously building chassis’ for Sony and circuit boards for Tedelex,” says Tyzack.

“So we’ve proved that the concept of a manufacturing hub not only works without detriment to the customer, but actually provides customers with economies of scale and efficiencies that they cannot achieve on their own.”

Tyzack believes that there are too many television set manufacturers in South Africa.

“Between 800 000 and 1 000 000 sets are sold here every year. About 300 000 of those are imported. So, there are probably about half a million sets being manufactured by seven vendor-specific manufacturing plants scattered throughout the country. Those kinds of individual volumes are simply not cost-effective.

“In addition, most of the plants are heavily labour intensive. The capital and skills training costs involved in modernising the plants could never be justified by their volumes.

”It’s a Catch-22 situation that the industry needs to snap out of.”

Manufacturing hubs would solve these and other problems. As is happening in the automotive industry, television set manufacturers in a hub system could bring collective purchasing power to bear on component suppliers. Also, with most suppliers based in the Far East, the logistics of importing stock could be consolidated and streamlined. And, South African distribution could be centralised. The cost savings to all brands would be immense, without impinging on brand differentiation in any way.

“And if those companies currently importing their television sets were, instead, to manufacture through local hubs, they’d save themselves a 25% import duty – significantly boosting their local competitiveness,” Tyzack points out.

But what about the cost and complexity of setting up a hub? Tyzack believes the existence of Vektronix eliminates those issues. “We have all the ingredients.

“We have sophisticated automation and mechanisation. For instance, our storage and stock handling facilities are designed to automatically deliver parts to exactly the right point in the manufacturing process – minimising handling and therefore component damage. It also reduces manufacturing time and therefore our customers’ time to market.

“Also, all parts are tracked by bar code, ensuring world class levels of both quality and productivity.

“ We have access to a large pool of highly skilled freelance staff, whom we ourselves have trained over many years. So, our productivity is high.“

“We can expand and shrink our facilities and our labour force at will, so we can ramp-up very quickly.

“We acquired our equipment at exceptional prices in a management buyout – a price benefit we pass on to customers. And, our management structure is extremely flat, boosting our ramp-up times still further and also minimising our overhead burden”.

“We can land components at Port Elizabeth rather than Durban, cutting freight costs. And we have local logistics companies prepared to give our customers very keen prices on distribution”.

“So, we’re effectively a hub-in-waiting.”

Though the Vektronix plant was purpose-built for television set manufacture, the company’s engineers and manufacturing specialists have adapted the equipment and processes on demand in order to manufacture a broad range of electronic or electro-mechanical products – from radio and home audio equipment to M-Net decoders and pre-paid electricity metres.

Vektronix also helps customers with industrialisation, providing cost- and time-cutting manufacturing innovations.

“Our breadth of experience in electronics and contract manufacture positions us superbly to be the television industry’s first manufacturing hub,” Tyzack says. “We’ve learned the art and science of flexibility.

“All customers need to do is grab the opportunity that Vektronix represents.”

Is Vektronix’s vision a threat to other manufacturers in the industry? Tyzack says not. “There’s room for more than one hub in this country and existing manufacturers could pool their resources to create one or possibly two others. We at Vektronix just happen to be ready to go right now.”

Editor's note:

About Vektronix

Based in East London in the Eastern Cape in South Africa, Vektronix is one of the most flexible, lowest cost electronics contract manufacturers in the Europe, Middle East and Africa market. As a world-class contract manufacturer in an emerging economy, the company blends the advantages of both worlds to achieve that distinction.

The Vektronix pedigree goes back to 1974, when SATV started a subsidiary in South Africa and opened a facility which was one of four manufacturing facilities in South Africa .The company focused on developing own technologies in key niche areas such as private switching communications systems, microwave radio equipment and avionics products and systems. In 2003, management of Tellumat’s East London plant offered to buy it, forming Vektronix.