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SPECIAL REPORT AUTOMOTIVE


to supply Renault and its suppliers with qualified personnel to interna- tional standards,” says Mr Jaid. Auto part manufacturer Marelli


gained similar assistance when set- ting up production lines for both shock absorbers and automotive lighting within TMZ. Serge Giannitrapani, the general man- ager of Marelli’s manufacturing facility in Tanger Automotive City, says that the company’s “presence in Morocco is aimed to support locally the industrial sites and the business expansion of key automo- tive customers that have made important investments in the region”. He adds: “This is a very dynamic


country, with significant industrial growth over the past few years within the automotive sector and, obviously, one essential condition for a company such as ours is the possibility to rely on important lev- els of business ensured by the pres- ence of customers.”


Export-oriented Other auto component companies have set up to export from TMZ. South Korea-based Hands Corporation, a manufacturer of alu- minium alloy wheels that has oper-


ations in China and Korea, invested €385m to set up a production facil- ity in 2019. Sun Choi, the general manager


of Hand Corporation’s TMZ opera- tions, says that Morocco stood out when the company assessed loca- tions for expansion in 2017 due to its proximity to the European mar- ket, as it has customers in countries such as Czech Republic, Romania, Spain and France. “It takes less than two weeks to


ship to the whole of Europe from Morocco, reducing our logistics costs. Morocco had some of the most competitive labour costs amongst the countries we assessed,” clarifies Mr Choi. On top of Morocco’s economic fundamentals, Mr Choi says that the combination of attractive incentives offered by the Moroccan government, and bilateral free trade agreements with 54 coun- tries, was another draw. However, he concedes that despite this attrac- tiveness there is room for improve- ment.


“Morocco is very well suited to labour-intensive operations, such as cable and wire harness manufac-


turing, but our operations use heavy machinery and it can some- times be difficult to find after-ser- vices agencies to repair our machines,” Mr Choi adds.


Local content While the presence of several multi- national manufacturers has fur- thered the industrial development of northern Morocco, there are con- cerns about spillovers into the broader economy. Of the 170 companies operating


in the automotive industry, just seven are Moroccan-owned, and experts question the extent to which there has been integration of Moroccan companies into the national value chain of the sector. “Learning and the transfer of


knowledge from global players to Moroccan companies — whether technological, managerial, organi- sational or technical — should be at the heart of the country's industrial strategy,” says Mr Jaid. “The government is called upon


to intensify its support to compa- nies with Moroccan capital to pro- mote their learning and the sus- tainability of the sector,” he adds. However, there have been improvements. Since Renault has set up operations in TMZ, the num- ber of Tier 1 automotive suppliers within its ecosystem has more than tripled, rising from 26 to 76, and the French carmaker is on course to reach 65% of locally sourced parts by 2023. Marc Nassif, the head of


Renault’s Moroccan operations, says they have committed to go from about €500m local sourcing of parts to reach €1.5bn by 2023.


Flying to Tangier In line with its established base of automotive companies, TMZ has also developed a value proposition for related industries, such as aero- space and electronics. Several major aeronautics play-


ers have chosen TMZ, including UK-based Boeing and France-based Safran, which set up a joint venture to produce wiring products in 2016, and American–Irish domi- ciled multinational Eaton Corporation. “When you look at engineering


and technically qualified talent, there is crossover between the auto- motive and aeronautics industries. Morocco has leveraged the fact it


December 2020/January 2021 www.fDiIntelligence.com


IT TAKES LESS THAN TWO WEEKS TO SHIP TO THE WHOLE OF EUROPE FROM MOROCCO, REDUCING OUR LOGISTICS COSTS


has an industrial cluster in manu- facturing,” says Mr Ash. When including other industry heavyweights such as Daher Socata and Bombardier, Morocco’s aero- nautics industry hosts more than 120 companies and employs more than 11,000 people, according to TMSA figures. Morocco has attracted 47


inbound aerospace FDI projects, more than any other north African country, according to greenfield investment monitor fDi Markets.


Future growth As multinational manufacturers reassess their supply chains, follow- ing fragility highlighted by the cor- onavirus pandemic, TMZ and Morocco are well positioned for fur- ther investment. The average wage of automotive


workers in Morocco is more com- petitive than Egypt and several cen- tral and eastern European coun- tries, including Slovakia, Romania and Poland, according to Fitch Solutions, an affiliate of the US-based ratings agency. In a research note in April 2020,


Fitch Solutions said that they expect north African countries, but especially Morocco and Egypt, to benefit from “restructuring efforts from 2021 onwards as automakers will be keen to cut their spending as much as possible in 2020 due to the weak demand for vehicles and costs from production disruptions caused by the Covid-19 pandemic”. With the launch of the African continental free trade area at the beginning of 2021, TMZ could also increase its role in trade within the African continent. Mr Nassif believes that TMZ


“could be Tier 1” within African regional development, adding that Renault already uses Tanger Med port to bring cars from some European plants and dispatch them to Africa. ■


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