DUBE TRADEPORT UPBEAT ABOUT 2022
WORDS: SHIRLEY LE GUERN
The Dube TradePort (DTP) will have a lot on its plate over the next two years according to Hamish Erskine, CEO of KwaZulu-Natal’s show case special economic zone (SEZ).
Speaking at the Dube TradePort’s annual stakeholder and tenant achievement awards event on February 11, Erskine outlined hundreds of millions of rands worth of upcoming potential investment, including a mega pharmaceutical investment, the building of a R100-million mega factory, at least three medium sized factories and a partnership with Transnet to transform the old airport site to the south of Durban into an automotive supplier hub.
This 62 hectare first stage of this long awaited development would accommodate tier 1 and tier 2 suppliers and was likely to be operational by 2026, he said.
COMING OUT OF COVID
He acknowledged that Covid had had a significant impact on both the SEZ and its tenants.Hardest hit was air services which literally ground to a halt during hard lockdown. Overall, there has been a major fall off in both cargo and passenger volumes. Lockdown also saw the closure of construction sites and the halting of a number of infrastructure projects that had been underway at the DTP at the time.
He acknowledged that it was difficult to ascertain the extent to which individual tenants had been impacted by the prevailing economic uncertainty that has emanated from both Covid and political unrest during 2021.
The highest profile casualty, however, has been the R492- million Mara Phone facility which was launched by President Cyril Ramaphosa in 2019 and lauded as the country’s very first fully-fledged smart phone manufacturer. It was located within the DTP Special Economic Zone and apparently employed 200.
Erskine said that Dube TradePort would stand behind the Industrial Development Corporation which was the main lender behind the project together with a private bank that had provided a top up loan. He said that although an independent developer rather than the DTP itself had borne the brunt of the financial risk, they had nevertheless worked closely with Mara to find every opportunity to rescue the operation.
He said they would support the IDC as it went to the market to find interested parties who could provide input as to how the business and idle equipment could be “maintained, continued or re-ignited from a different perspective.”
He emphasized that the plant was not up for auction but that an auction company was managing the process. Because this was a government backed process, it had to be resolved via an open tender process.
“From our side, it’s very unfortunate, especially as many of our businesses are doing so well and have seen their way through Covid. It is pity that (Mara) hasn’t been able to survive but we will see what the best option is,” he said.
He said the awards had recognized the resilience of many of the Dube TradePort’s tenants and included job creation during the toughest of economic times.
LOOKING FOR THE GREEN SHOOTS
“Our approach is that even though we do not exactly know where all the green shoots will come from, we will be ready,” Erskine emphasized.
He said that their focus was on redeveloping routes and air services and the creation of a cargo strategy was already underway. DTP’s marketing team is also working with other government agencies to determine how it would work with various airlines going forward.
DTP’s recently completed mini-factories in TradeZone 1 (valued at around R90-million), together with at least three R50-million mid-sized factories for which tenders would be announced by the middle of the year and the 10 000 square metre factory (worth more than R100-million) that was already coming out of the ground would provide capacity for the SEZ to quickly respond to investment across the entire economic spectrum.
“It’s a big investment but it pays off absolutely in the long term. We have to accelerate. A lot of what we are doing is trying to reach out and stimulate the private sector in line with what was said during the State of the Nation Address… We will have the ability and the capacity to respond across the economy so that small, medium and large enterprises can get a quick start in a post Covid environment,” Erskine pointed out.
The 18 mini factories vary from 249,63 square metres to 527,26 square metres and include manufacturing / and assembly or warehouse facilities, a reception area, store room, kitchen and ablution facilities as well as mezzanine office space. Each unit has five dedicated parking bays, dedicated loading / delivery bays with easy truck access and a large, shared loading / delivery bay. They are located just 500 metres from the Dube Cargo Terminal at Durban’s King Shaka International Airport.
Erskine pointed out that, in addition to being close to major commuter routes and ports, these new mini factories also provided small businesses with similar benefits to larger businesses that had put down roots in the SEZ.
These include reduced corporate income tax, VAT and customs relief due to operating within a customs controlled area, high end infrastructure and supply chain efficiencies and competitive advantages associated with being located within the airport precinct.
He said these would appeal to start up or micro enterprises that either wished to supply existing larger businesses in the zone or new businesses with expansion plans.
“Start-up companies don’t have the money to build their own factories and there are not a lot of places around Durban that offer good rentals, especially in a very secure, well connected environment like we have. We want to accommodate small companies as well as mid-size companies like LM Diapers which started out in a small factory in TradeZone 1 and is now moving to a much larger factory in TradeZone 2. These businesses don’t often have the capital to build, so we build and lease them to them.
“Then, because the big investments do come, we have one 10 000 square metre factory that we are building in TradeZone 2 that would appeal to another Samsung, someone who would need a big building. What often happens and will happen after Covid, is that companies will make quick decisions and forget that they need 18 to 24 months to build a factory,” he said.
With a readymade factory, a new investor would be free to focus is on is on equipment and manufacturing.
The new 10 000 square metre facility would be available in January 2023, he said.
LOOKING TO THE FUTURE
Another plus highlighted by both Erskine and a number of tenants was the high level of security due to the fact that both the airport and DTP are a national key point. This meant no businesses were damaged during the July looting. Erskine said that further discussions with the security cluster in the region were aimed at further ramping up security.
Other areas of weakness which were currently under scrutiny included sustainability and the provision of both eco-friendly and reliable water and electricity infrastructure to minimize disruptions for tenants, he added.
Erskine also welcomed the evolution of the African Continental Free Trade agreement, saying that this provided invaluable opportunities for facilities such as the DTP to forge strong relationships in other countries. Africa was one of the largest trade zones and had strong international trade linages but very poor internal ones. He said the DTP had an important role to play in building relationships and opening up important trade channels.
He said that the DTP was also looking to investing in another building within the business and hospitality precinct known as Dube City as well as in laboratories that were needed by tenants.