WMMI needs US$7m fresh capital

jolt sluggish production and upgrade its ageing plant.
The company’s operations have over the last few years suffered from acute shortage of funding and stiff external competition.
Managing director Engineer Dawson Mareya said a dose of fresh capital would help turn around its fortunes.
“We require between US$5 million and US$7 million for working capital and capital expenditure. Capital expenditure would enable us to upgrade our production plants,” he said.
Limited resources and crippling external competition have conspired to keep production and capacity utilisation low at the company.
Capacity utilisation is hovering around 20 percent.
Government, through the equally cash-strapped Industrial Development Corporation, is the controlling shareholder. Itochu of Japan owns the remaining stake.  Lack of funding has resulted in high cost of production, making WMMI vehicles more expensive compared with fully-built imports.
Prohibitive interest rates on the local market mean the company continues to rely on credit facilities for imported completely-knocked-down kits.
But Eng Mareya said the arrangement suffered temporarily after typhoons hit Thailand late last year.
WMMI has an arrangement with Itochu of Japan for the supply of CKD kits and some of the units come from the Thailand plant.
The company has endured a torrid time due to cheaper imported completely built-up vehicles from Japan and South Africa.
It has unsuccessfully lobbied the Government to review significantly duty on imported vehicles.
Nonetheless, WMMI contends it does not have the support and protection enjoyed by its competitors, for instance in South Africa.
Vehicle manufacturers in South Africa receive a 40 percent rebate on imports under the Motor Industry Development Programme, enabling them to export vehicles at below-the-cost of production.
Zimbabwe went through a decade of economic turmoil and raising duty on imports would certainly provoke uproar from the public. But WMMI says it would keep its fingers crossed that competition does not advance further into the small-market sector, to which it supplies a limited range of models, such as the BT50 trucks.
The company said it hopes the limited range of vehicle models would sustain it until the shareholders inject fresh capital to buttress production and upgrade the plant for low-cost vehicle assembly. But challenges around securing affordable finance are  not peculiar to WMMI, considering that the manufacturing industry requires US$2 billion to restore its productive capacity.