Lucchini RS, the Italian manufacturer of forged railway products, has invested R200 million in a new production facility in Germiston in Ekurhuleni and anticipates making a further investment of R1.8 billion in anticipation of further growth in their line of business in the regional market.
It is the first international forged wheel manufacturer to make some investment in manufacturing facilities in South Africa.
The group has partnered with black South African investors in the venture, with Kusini Investments currently holding substantial shares in the local company.
Based in Lovere in the northern part of Italy, the Lucchini RS Group specialises in the design, manufacturing and sale of high-end railway products and solutions, castings and forgings plus special steel ingots for various applications.
Augusto Mensi, the chief executive of Lucchini RS, said at the official opening of the new production facility that it was envisaged that about 45 new jobs would be created through this initial investment, with planned local content of between 30 per cent to 40 per cent.
“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,” he said.
But Mensi stressed they saw the investment into Lucchini South Africa as the first step in their expansion into Africa.
“A further investment of approximately R1.8 billion is envisaged as further growth into the regional market is anticipated,” he said.
Mensi said the localisation involved the establishment of Lucchini SA, which had been created to complete the manufacturing process of blank wheels imported from Italy, which were then machined, inspected and delivered to the end customer.
Lucchini SA is housed in a 10 000m² facility. The R200 million investment includes the fitment of state-of-the-art technology in plant and machinery that adheres to the manufacturing process standardisation strategy of Lucchini RS Group.
The plant has the capacity to manufacture up to 20 000 wheels a year depending on the mix of wheels produced. Recent projects include the production and supply of 34” and 36” wagon wheels, 15E and 19E locomotive wheels to Transnet Engineering; and TRAXX 23 locomotive wheels to Gautrain (Bombardier South Africa). Other clients include PRASA and Grindrod Locomotives.
On average the carbon steel wheels take about 45 minutes to machine. Italy based SIRMU-MT supplied the two SRE 150-HD vertical turning lathes, a production machine specifically dedicated to machining of railway wheels and operations include roughing, turning, finishing and drilling. There are five variations of wheels being machined and on average Lucchini SA are machining 70 wheels a day.
As a trading company, Lucchini SA has been operational since 2015 and has been awarded long-term contracts by strategic customers to supply locomotives, freight wagons and passenger coach wheels.
Lucchini SA currently has 38 permanent employees.
Yunus Hoosen, the acting head of Investment South Africa (InvestSA), said the R200 million investment by Lucchini RS was a vote of confidence in the economy of South Africa, adding it was heartening to see a foreign company investing in the country and contributing to the country’s economic growth and job creation.
Lucchini RS’ investment supports government’s plans for job creation and localised manufacturing of railway products, and Lucchini SA is a recipient of R36 million through the trade and industry department’s 12i tax allowance incentive and a training allowance of about R1.6 million.