automakers in Morocco to expand its
foothold in Africa, where it made $362.5
million in sales last year, which was an
increase of 3. 6 percent from the previous year.
Kansai, which said its profits from
Africa increased by 21. 6 percent in the
full year ending March 31, 2015 to $13.2
million, is likely to start production in the
new plant near the Mediterranean city of
Tangier in the first quarter of 2017 according to top officials quoted by Kyodo
News Agency in mid-April.
Although the company is yet to is-
sue an official statement confirming the
amount to be invested in the new plant
and details of when the project will break
ground, Kansai’s choice of Morocco seems
to be in response to Morocco’s proxim-
ity to Europe where PPG Industries, with
which Kansai has established an alli-
ance to serve certain automotive original
equipment manufacturers (OEMs), said
there is “economic weakness in the years
during and following the recession with-
out a substantive recovery since.”
A key partner in the new automo-
tive coatings plant venture will be the
European automakers in Morocco led by
French firm Renault which nearly four
years ago opened North Africa’s largest
car plant in Morocco in an area reports
described as being “close to Europe which
offers tax benefits to manufacturers.”
Kansai also appears to have been at-
tracted by the general good performance
of Morocco’s automotive industry which
the Harvard School of Business (HBS)
said in a report “has had a strong value
proposition” because of the country’s
“strategic location close to Europe and
emerging markets, free trade agreements
with large consumer markets, and a sta-
ble political environment.”
The industry, HBS said, has also
benefitted from the significant govern-
ment investments to “make the business
environment more attractive such as in
training centers, special economic zones,
infrastructure, and tax incentives for au-
tomotive producers.”
The report stated that by 2013
Morocco’s two OEMs of Renault and
SOMACA produced 167,000 cars and
the automotive industry had “attracted
10 suppliers which could be considered
‘global suppliers’” with the sector earn-
ing an estimated $2.5 billion from ex-
port revenues.
The HBS report, ‘The Automotive
Cluster in Morocco: Competitiveness and
Recommendations for Future Growth,’
also said “Morocco has a large number
of free trade agreements, which cumula-
tively gives them access to 55 countries,
representing 60 percent of world GDP.”
Kansai, among other top coatings
companies eyeing a share of the grow-
ing North Africa market, has also been
attracted by Morocco’s strong economic
growth, up to 4. 4 percent last year up
from the 2.4 percent according to World
Bank estimates.
“The emergence of new growth drivers
in higher value-added export industries
and the expansion of Moroccan com-
panies in Western Africa are potentially
creating the conditions for Morocco to
become a hub for trade and investment
between Europe and Africa and boost its
position in global value chains,” the bank
said in a report on Morocco’s economic
outlook released early this year.
London-based Information Research
Ltd., a global industry consultancy which
focuses on paints and coatings market re-
ports and data, estimated that by the end
of 2016, Morocco will produce slightly
more than 200,000 tons of paint behind
Africa market leaders Egypt, South Africa
and Algeria. Morocco’s paints market
share is approximately 16 percent of
Africa’s total production previously esti-
mated at 1 million tons.
Kansai’s good performance in Africa
in 2015 raises the prospects of the com-
pany’s continuing growth in a continent
where key sectors such as building and
construction define the trends in paints
and coatings consumption.
Apart from Morocco, Kansai is a key
player in the markets of South Africa and
Zimbabwe, which returned profits for the
company in the last financial year.
In 2015, the company said that “al-
though the South African economy was
weak, sales continued to increase as a re-
sult of sales promotion efforts.” Kansai
Paints entered the South African market
through the acquisition of Freeworld
Coatings under a $300 million deal
which saw it take 93.37 percent of the
then Johannesburg Stock Exchange
listed firm, a move some described as “a
hostile takeover.”
“Profits also increased despite the
impact of factors including soaring raw
material prices and investment in sales
promotion,” Kansai said in its full year
report for 2015.
The bullish performance by Kansai
in Africa was also boosted by its
Zimbabwean subsidiary, Astra Industries
Ltd., which was consolidated in July
2013, with the company saying the entity
“contributed to the consolidated business
results” for 2015.
Kansai teamed up with Astra man-
agement and staff in 2013 to acquire a
63.25 percent stake in Astra Industries
Limited in a $5.5 million deal with
the Finance Trust of Zimbabwe Ltd.
Kansai’s products are already in
many African markets such as Kenya,
Mozambique, Seychelles, Mauritius,
Malawi, Botswana, Namibia and
Zambia among others.
And in Morocco, the coatings markets
have attracted other leading global paint
makers including BASF which two years
ago launched R-M, the premium auto-
motive refinish paint brand.
The company said during the launch
the automotive coatings market in
Morocco is “dynamic and fast-growing.”
“The country has almost 3 million ve-
hicles in circulation and major automo-
bile manufacturers are investing in new
technologies throughout their networks
to repair vehicles in the best possible con-
ditions,” BASF said.
“For BASF, the automotive industry
is a major sector, and we want to develop
complete and innovative solutions for
leading car manufacturers.” The com-
pany said it anticipates $389 million in
combined sales in fiscal 2016 ending next
March, about a twofold increase from
four years ago.
The move by Kansai to expand in
Morocco is expected to add to the
growing trend in Africa where coatings
companies are taking advantage of the
resilience of the region amidst global
economic challenges. CW
