Commoditisation’s impact on the economic sustainability of primary automotive suppliers in South Africa: the case of the automotive chemicals industry

Abstract

The re-integration of the domestic automotive industry into the global operating environment has led to increased levels of competition, increased supply chain complexity, escalating input costs, and declining product prices within the automotive industry. Consequently, domestic manufacturers of specialty chemical products for the automotive industry in South Africa face numerous challenges that threaten their profitability and long-term economic sustainability. This study is directed at the concern of the phenomenon of commoditisation and its impact on the future economic sustainability of domestic automotive chemicals businesses supplying specialty process chemicals to the South African automotive industry. The aim of this dissertation was to explore and identify the major challenges facing the South African automotive chemical industry and specifically examine the impact of the cost and price dimensions of commoditisation on business profitability and the economic sustainability of this industry in South Africa. An exploratory qualitative research design using a thematic data analysis approach was adopted for this study. Viewpoints of six key participants, selected by the researcher based on their industry expertise, were collected using one-on-one, in-depth semi-structured interviews to empirically establish the factors present in the industry that could lead to commoditisation. The study established that the results could be categorised according to five themes representing key factors present in the industry that are linked to the price and cost dimensions of commoditisation, namely “competitive environment,” “industry factors,” “operational factors,” “commoditisation,” and “business relationships and power.” The study concluded that the continued presence of the factors identified would progressively lead to diminishing profit margins and adversely impact the long-term economic sustainability of domestic automotive chemical supplier businesses. Focused actions such as improving business relationships with automotive customers, striving to achieve supply chain excellence, and regular scanning of the business environment for signals of encroaching commoditisation were recommended to enable automotive chemical supplier businesses to strategically manage commoditisation and improve profitability.

Die herintegrasie van die binnelandse motorbedryf na die globale bedryfsomgewing het gelei tot ’n toename in mededingingsvlakke, verhoogde voorsieningskettingskompleksiteit, eskalerende insetkoste en dalende kommoditeits produkpryse in die motorbedryf. As gevolg hiervan kom binnelandse vervaardigers van spesialiteits- chemiese produkte vir die motorbedryf in Suid-Afrika voor verskeie uitdagings te staan wat hulle winsgewendheid en langtermyn- ekonomiese volhoubaarheid bedreig. Hierdie studie is gerig op die kommoditering en die invloed daarvan op die toekomstige ekonomiese volhoubaarheid van binnelandse motorchemiese-ondernemings wat spesialiteits- verwerkingschemiesestowwe aan die Suid-Afrikaanse motorbedryf lewer. Die doel was om die grootste uitdagings van die Suid- Afrikaanse motor- chemiese bedryf te verken en te identifiseer en om in die besonder die invloed van die koste- en prysdimensies van kommoditering op sakewinsgewendheid en die ekonomiese volhoubaarheid van hierdie bedryf te ondersoek. ’n Verkennende kwalitatiewe navorsingsontwerp wat ’n tematiese dataontledingsbenadering gebruik, is vir hierdie studie aangepas. Die standpunte van ses sleuteldeelnemers, gebaseer op hulle bedryfskundigheid, is met behulp van aangesig-tot-aangesig-, omvattende, semigestruktureerde onderhoude ingesamel om die faktore teenwoordig in die bedryf wat tot kommoditering kan lei, empiries vas te stel. Die studie het vyf temas bepaal wat die sleutelfaktore tans in die bedryf verteenwoordig en met die prys- en kostedimensies van kommoditering verbind kan word, naamlik “mededingende omgewing”, “bedryfsfaktore”, “operasionele faktore”, “kommoditering” en “sakeverhoudings en mag”. Die studie het tot die gevolgtrekking gekom dat die voortgesette teenwoordigheid van die geïdentifiseerde faktore progressief tot dalende winsgrense sal lei en ongunstig sal inwerk op die langtermyn- ekonomiese volhoubaarheid van binnelandse motorchemieseverskafferondernemings. Gefokusde optrede soos die verbetering van sakeverhoudings met motorkliënte, ’n strewe om voorsieningskettinguitnemendheid te bereik, en die gereelde bestudering van die sake-omgewing vir tekens van dreigende kommoditering word aanbeveel om motor- chemieseverskafferondernemings in staat te stel om kommoditering strategies te bestuur en winsgewendheid te verbeter.

Ukuhlanganiswa kabusha kwemboni yezimoto yasekhaya endaweni yokusebenza emhlabeni wonke kuholele ekwenyukeni kwamazinga okuncintisana, ukwanda kwenkimbinkimbi yochungechunge lokuhlinzeka, ukukhuphuka kwezindleko zokufakwayo, kanye nokwehla kwamanani entengo yemikhiqizo ngaphakathi kwemboni yezimoto. Ngakho-ke, abakhiqizi basekhaya bemikhiqizo yamakhemikhali akhethekile embonini yezimoto eNingizimu Afrika babhekene nezinselelo eziningi ezibeka engcupheni inzuzo yabo kanye nokusimama komnotho wesikhathi eside. Lolu cwaningo luqondiswe kwezohwebo kanye nomthelela walo ekusimameni komnotho wangomuso kumabhizinisi asekhaya amakhemikhali ezimoto ahlinzeka ngamakhemikhali akhethekile embonini yezimoto yaseNingizimu Afrika. Inhloso bekuwukuhlola kanye nokuhlonza izinselelo ezinkulu ezibhekene nemboni yamakhemikhali ezimoto eNingizimu Afrika kanye nokuhlola ngqo umthelela wezindleko namanani entengo yempahla etholakalayo enzuzweni yebhizinisi kanye nokusimama komnotho wale mboni. “Umklamo wocwaningo lwesimo noma lwekhwalithi yokuhlola usebenzisa indlela yokuhlaziya imininingwane yendikimba yamukelwe kulolu cwaningo. Imibono yabahlanganyeli abayisithupha ababalulekile, ngokusekelwe kulwazi lwabo lwemboni, yaqoqwa kusetshenziswa izingxoxiswano ezijulile zomuntu ngamunye ezihlelwe kancane ukuze kutholakale ubufakazi obunamandla obukhona embonini obungaholela ekuthengisweni kwempahla. Ucwaningo lusungule izindikimba ezinhlanu ezimele izinto ezibalulekile ezikhona embonini ezixhunyaniswe nenani nezindleko zobukhulu bempahla, okungukuthi “indawo yokuncintisana,” “izici zemboni,” “izici zokusebenza,” “impahla,” kanye “nobudlelwano bebhizinisi namandla.” Ucwaningo luphethe ngokuthi ukuqhubeka nokuba khona kwezinto ezikhonjiwe kuzoholela kancane kancane ekuncipheni kwezilinganiso zenzuzo futhi kube nomthelela omubi ekusimameni komnotho wesikhathi eside wamabhizinisi asekhaya ahlinzeka ngamakhemikhali ezimoto. Izenzo ezigxilile ezinjengokuthuthukisa ubudlelwano bebhizinisi namakhasimende ezimoto, ukulwela ukuzuza impumelelo kuyichungechunge lokuhlinzekwa, kanye nokuskena okuvamile kwendawo yebhizinisi ukuze kutholakale izimpawu zokungena kwempahla ethengiswayo kwatuswa ukuze amabhizinisi abahlinzeki ngamakhemikhali ezimoto akwazi ukuphatha ngobuchule ukuthengiswa kanye nokuthuthuka ekwenzeni inzuzo.