Dangote Group – Poised to conserve forex and in view of the huge amount spent annually importing thousands of trucks for distributing its products from plants within Nigeria and across the Africa continent, plans are now at advanced stage by the Dangote Group to begin assembly of Chinese heavy duty trucks in Lagos.
The deal for the $100 million, 10,000 per year capacity plant was signed in May 2014, according to China Daily, making it the eighth of Shandong, China-based National Heavy Duty Truck Group Company Limited (Sinotruk), to be built abroad.
The plant will be 60 per cent owned by Dangote Group, trading under Dangote Industries Limited, leaving Sinotruk with the remaining 40 per cent equity stake.
Consequently, Dangote Agro Sacks Limited, which occupied the Ogba premises until recently, has been relocated closer to the group’s major operational hubs, particularly the cement plants in Obajana, Kogi State and Ibeshe, Ogun State.
A source told LEADERSHIP that the assembly plant deal will generate employment for an estimated 3,000 workers.
Nigeria remains one of the most important markets for Sinotruk, with Dangote Group using the product for distribution of its products, like cement, sugar, flour and pasta, among others, even in its plants across the continent.
The deal is also coming ahead of next year’s opening of the $17 billion, 650,000 barrels per day capacity Dangote Refinery located in Lagos expected, to begin operations next year, creating over 300,000 direct and indirect jobs by first quarter of 2019, which would require a lot of long trucks for product distribution.
Still on the refinery, LEADERSHIP also gathered that about 300 engineers have been sent on training abroad to handle sensitive aspects of the multi-billion dollar investment in petroleum products and petrochemical plant.
In 2014, according to reports, Dangote Group imported 12,000 trucks from China. That year alone, and despite shrinking domestic and overseas demand, Sinotruk still secured orders for 176,000 vehicles, up by 9.94 per cent from the previous year.
Of this, Sinotruk sold 34,000 abroad, contributing to almost 20 per cent of its total sales volume and making it the largest exporter of heavy trucks in China for 10 consecutive years. Revenue from overseas sales amounted to nine billion yuan ($1.45 billion), accounting for about 13 per cent of the total.
“We realised we had to become global more than 10 years ago when few China made heavy trucks were being exported,” Cai told China Daily, noting that the company secured good market shares in almost all developing countries.
Other 30 of its 96 export markets are in Africa, where about 15,000 vehicles are sold every year.
Earlier in 2013, the group represented by its President, Alhaji Aliko Dangote signed a contract in Beijing with the Chinese firm, through its chairman, Ma Chunji, for the supply of 1,700 heavy trucks and 1,700 semi-trailers.
Final technicalities on the deal were concluded on the eve of the state visit to China by then President Goodluck Jonathan, in what analysts said, marked a significant milestone trade relations between both countries.
Sinotruck with its headquarters and main manufacturing facility in Jinan, capital of Shandong province, was founded in 1956 as the pioneering enterprise in the development of heavy-duty truck manufacturing in China.
The truck rolled off the company’s assembly line in 1960 and has developed strategic technical partnerships with major international brands such as Steyr in Austria and Mann in Germany. These have helped Sinotruk penetrate key global markets.
The vehicles will be used to expand Dangote’s ground fleet, a critical component of its extensive nationwide distribution network.
The network is crucial to national and regional availability of the wide range of items produced by various companies in the group, including cement, industrial and edible salt, food and other consumer items.
Dangote is a diversified continental conglomerate and Africa’s largest manufacturer and supplier of cement, which contributes greatly to the continent’s construction and infrastructure development. It is also largest corporate employer in Africa, according to the company.
Information from the group referred to Aliko Dangote’s single-minded determination to create a major brand in Africa that would be among the world’s best. This determination has been rewarded with much success and praise worldwide. The same sources have also lauded his visionary emphasis on enhancing the local value-added dimension of African economies.
Analysts said the Sinotruk deal comes at a crucial time as China begins to feel increasing pressure in foreign trade from other Asian countries as well as its traditional rivals in the West.
They said an appreciating Chinese currency and lower-cost labor in emerging Asian exporting countries have affected opportunities for Chinese companies, particularly in Africa.
In addition, the US, EU nations, India and South Korea are competing more aggressively for market share in Africa, now acknowledged to be one of the fastest-growing regions in the world.
The same analysts predict that this vehicle export transaction will create highly desired employment opportunities both for Sinotruk in China and for Dangote Group in its home base of Nigeria.
The focus on local and cross-border employment explains why there has been significant support for the deal from both Chinese and Nigerian agencies and institutions, said the two companies.
Recently, the Director Policy and Planning, National Automotive Design and Development Council (NADDC), Mr. Luqman Mamudu said, “The National Automotive Design and Development Council (NADDC) says the Federal Government is to launch a Vehicle Credit Acquisition Scheme to help Nigerians purchase locally assembled vehicles.”
Mamudu said that Nigeria had the capacity to produce 384,000 units of vehicles annually. Unfortunately, the country only produced 25,000 units in 2015.
“We have been in talks with the Central Bank of Nigeria (CBN) to also source for funds to support the credit scheme being planned by the Federal Government in conjunction with our council.
“We have also been working with Original Equipment manufacturers (OEMs) in their associations to invest in the local automobile assembling, and even industrial assembling clusters.
“Their major demands have been for the government and relevant agencies to work harder to implement ways to reduce the influx of used cars which has been choking the market.
“We are also glad to announce that three testing laboratories for locally-assembled vehicles are also in the works and these are not just for motorcars alone, but for tractors and heavy-duty vehicles.
“We have not reached our potentials as a nation for locally-assembled vehicles, but we have the capacity to do so,” Mamudu said.
He said that all efforts to achieve the Nigerian Automobile Policy had been in place and the council was planning to partner the Nigerian Customs Service to stop the importation of used cars through the borders.
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