Few things can be as frustrating for a company as being unable to keep up with demand for the products it manufactures
This is the position Algeria’s National Industrial Vehicle Company (SNVI
) finds itself in. The company’s order book is filled for the next three years, but it knows it could sell many more vehicles if it had the capacity to make them.
And it’s not just a matter of lost potential business. SNVI’s vehicles make an important contribution to the day-to-day running of the national economy and the company is also the main supplier of military vehicles for the armed forces.
The employer of 5,000 workers, SNVI manufactures trucks, buses, trailers and specialised vehicles. It also produces spare parts, and provides repair and maintenance services.
To keep up with demand for its vehicles the company needs to be able to up its output. Fortunately, with the support of the Algerian government the prospects for doing so are looking good.
SNVI’s debt, a major problem until recently, has been erased by the Algerian authorities, who are also investing 12 billion dinars (£98.5 million) in the company, as part of a national drive to expand industrial activity, particularly in mechanics.
“We will use this investment to increase our production capacity, bring our infrastructure up to par, upgrade our industrial tools and gain greater market share,” says Hamoud Tazerouti, CEO of SNVI. “We expect to increase our production gradually year by year. The market is there, there is keen demand for our products and it can only intensify.”
This year, SNVI plans to make 3,642 vehicles, generating business worth 27 billion dinars. Through partnership with other manufacturers, the company aims eventually to increase its production capacities to 15,000 to 20,000 vehicles per annum.
The market is there, there is keen demand for our products and it can only intensify.
CEO of SNVI
The market demands at least five types of vehicles of varying weights. SNVI manufactures vehicles from 6.6 tons to 26 tons. “To fully meet national demand it is necessary to have a varied range,” says Mr Tazerouti.
He is frustrated that Algeria is importing vehicles that it could build itself. “Today we import about 60 per cent of our trucks’ parts from abroad. Our objective is to replace these with parts manufactured locally by an industrial base of subcontractors – to substitute national production for imports.”
SNVI has been building up a network of local subcontractors for a decade. “The goal is to group a number of small to medium-sized industries and small to medium-sized enterprises around the SNVI to create wealth, employment and gain the know-how,” says Mr Tazerouti.
He acknowledges there is some way to go before SNVI can source all its requirements locally. “An industrial base is forming around us, but it is not yet sufficient,” he says. “It is necessary to have many more subcontractors and above all, to bring them up to par so they arrive at the level of quality required by SNVI and by any possible partner of SNVI.”
Human resources play a key part in this, he says: “One can easily buy a modern tool, but you also have to have the person to make it work. By not having invested in human resources, that is where local subcontractors have been lacking.”
SNVI is currently engaged in two partnerships with foreign companies. One is a joint venture with the German automotive supplier group ZF for the construction of gearboxes, which is on SNVI’s site in Rouiba in eastern Algiers. The other is a partnership with the French car body manufacturer Behn Titan Kaiser (BTK), which is located in the industrial area of Ain Bouchekif, 185 miles southwest of Algiers.
Mr Tazerouti says SNVI has several projects currently taking shape – a special vehicles project and a joint venture with a major manufacturer in the vehicle industry. According to the CEO, what SNVI hopes to gain from a partnership is new methods of management and quality control, and human resources management.
“We know industrial vehicles – we have been fabricating them for 30 years. There may be new products, but one can say that we have mastered technology in general,” he says. “In contrast, it is the new methods of management, new management of human resources, and the formation of investment projects that we are missing. To know how to drive forward an investment project – for that there is a need to reach and maintain a level of excellence.”
Algeria’s goal in partnerships is to promote local production, acquire know-how, create jobs and reduce imports.
“The requirement is 30 to 40 per cent local integration over five years,” says Mr Tazerouti. “Today one cannot speak about partnership if there is no local integration.”