Procter & Gamble to invest in local plant

Procter & Gamble associate director of external relations Adema Sangale yesterday confirmed that the group would invest more than R200m in a plant in Kempton Park.

About 35 South African engineers were trained in Poland and Turkey to head up the plant, which currently employs 75 full-time staff and 40 people indirectly — a figure projected to increase to more than 150 over the next two years.

The investment was in part clinched by a decision by the International Trade Administration Commission (Itac) to grant rebates on the import duties of inputs needed for the manufacture of the nappies.

“The granting of the rebate has clinched the investment and it is obviously positive for our attitude to future investment in the region. We are a fledgling here compared to our operations in the rest of the world,” Sangale said.

The rebate was granted on a variety of textile fabrics coated with plastics and used in the manufacture of disposable nappies, none of which are manufactured in the Southern African Customs Union, Itac confirmed.

Sangale confirmed that production was already in the pilot phase and that commercial manufacture would start soon.

Hinting at the possibility of investing in manufacturing capacity in SA, Procter & Gamble's MD for southern Africa, Andrew Peterson, said last year that any investment plans would hinge on whether the company would be able to secure an attractive enough package of incentives from the government.

With annual turnover in excess of US$83bn, Procter & Gamble is the world's top producer of consumer goods. However, its manufacturing footprint on the African continent is limited to the north and west, with plants in Egypt, Nigeria and Morocco.

The company has no other manufacturing capacity in the southern or east African region and clinching the investment in the Kempton Park plant at a time of global economic distress is a huge psychological victory for SA.

Procter & Gamble's brands include Pampers, Gillette, Pringles and Duracell.

The investment was precipitated by months of negotiations with the department in a bid to secure investment sweeteners from the government.

Sangale said the rebate granted by Itac was a demonstration of how a partnership with the state could spur investment.

“This is making our plans a reality and will make local production possible and help us to cater to local consumers,” she said.

Procter & Gamble is still awaiting an announcement on its possible participation in trade and industry's flagship industrial incentive, the Enterprise Investment Programme.

The availability of a stable electricity supply was also a factor, but Eskom abandoned scheduled load shedding at the end of last year, which meant power stability was not as pressing an issue anymore.

Procter & Gamble was also keen to establish linkages with other markets in the southern African region to expand its consumer base.

Peterson said last year that it was commercially more viable to supply a market of more than 150-million people rather than the 45-million in SA, and that trade facilitation efforts between countries in the Southern African Development Community could encourage expanded investment by the group.

Source: Business Day

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