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Italian group invests R200m in local railway wheel plant

Italian forged railway product manufacturer, Lucchini RS, on Friday officially opened its new manufacturing facility in Germiston, Ekurhuleni.

The R200-million investment sees the company evolve from importer into local manufacturer.

“Having actively traded forged railway wheels and axles in South Africa over the last 13 years, Lucchini RS has now committed to localise wheel machining in the country, and to subsequently create local jobs,” said Lucchini RS CEO Augusto Mensi at a media conference.

“It is envisaged that approximately 45 new jobs will be created through this initial investment, with planned local product content of between 30% and 40%.”

The localisation process will see Lucchini South Africa (SA) complete the manufacturing process of blank wheels imported from Italy. These blank wheels will then be machined, inspected and delivered to the end customer.

Capacity at the 10 000 m²  plant is up to 20 000 passenger and freight rail wheels a year. The factory operates seven days a week, 24 hours a day.

“The first product manufactured in South Africa was produced in October 2016, and the first manufactured product was delivered in March 2017,” said Lucchini SA MD Stephan Nel.

“We are now on the doorstep of our customers. We can deliver within 24 hours, and not wait 12 weeks for an imported product.”

“A further investment of approximately R1.8-billion is envisaged as further growth into the regional market is anticipated,” added Mensi.

“We see the investment into Lucchini SA as a first step of our expansion into Africa.”

To push local content to the intended 100%, the company would also be required to localise the wheel forging process.

The current South African production line has no hot processes.

Prior to setting up the local manufacturing facility, Lucchini SA has sold around 100 000 forged wheels, in total, in the local market.

The forged railway wheel market in South Africa had declined sharply from its boom days of around 60 000 wheels a year, with Lucchini SA holding a significant share of the current market.

Recent projects include the production and supply of 34-inch and 36-inch wagon wheels; 15E and 19E locomotive wheels to Transnet Engineering; as well as TRAXX 23 locomotive wheels to the Gautrain, through Bombardier South Africa.

Other clients include the Passenger Rail Agency of South Africa (PRASA) and Grindrod Locomotives.

Looking ahead, Lucchini SA is targeting a number of local business opportunities, including the Gautrain wheel replacement programme, projected for 2018, when the Gautrain’s rolling stock wheels would have travelled around two-million kilometres.

The company is also targeting the PRASA new rolling stock programme, in which the Gibela consortium is supplying 3 600 new coaches to the rail agency.

This lucrative contract could, potentially, deliver an order for around 29 000 wheels, excluding additional maintenance wheels.

“South Africa is a very important market for us, and the first facility to make forged railway wheels in Africa,” said Mensi.

He explained that forged wheels stand opposed to cast wheels, which he noted as “being cheaper, but with a lower performance level and lower mechanical properties”.

Lucchini RS is receiving R36-million in tax allowances over a four-year period from the South African government.

“We are extremely happy with the support we have received from government,” says Nel.

Lucchini SA is 30% black-owned, with Kusini Investments its joint venture partner in South Africa.

Source : Engineering News