Towards a framework for the development of effective subcontracting relations and networks among small, medium and large firms in the motor vehicle manufacturing industry in Kenya

Abstract

firms. Secondly, the sector was chosen because of the complexity of the motor vehicle industry with one motor vehicle comprising about 10,000 component parts, all of which would be difficult for one company to manufacture in-house. The research was mainly qualitative, but a quantitative approach was also adopted. Thematic content analysis approach was used to analyze the qualitative data and descriptive statistics to analyze the quantitative data. The study interviewed managers of two of the three motor vehicle assemblers and nine franchise holders. Sixty six managers of component parts suppliers filled and returned questionnaires. Observation and perusal of records was also done. xv The results indicate that the level of subcontracting that takes place between small, medium and large firms in the motor vehicle manufacturing industry in Kenya is minimal. The little subcontracting that exists is motivated mainly by a desire to remain in the good books of the government. The main benefit derived from subcontracting by the large enterprises is lead time, which is shorter. For the SMEs it is that the big firms provide them with a steady market for their goods. The big enterprises are not willing to buy component parts from local suppliers and especially not local SME suppliers mainly due to the inability of the SMEs to supply quality products to schedule, lack of local suppliers for certain parts and competition from imported second hand vehicles from Japan, Singapore and lately from Europe. The proliferation of makes and models also requires frequent technological changes which both assemblers and SMEs owners find difficult to keep up with The study recommends that the government should reduce the age of imported second hand vehicles to not more than five years and find a way of compelling the franchise holders and assemblers to buy parts locally. SMEs should also find a way to acquire up to date technology and become more competitive. The government must come up with a sound well articulated industrial policy for the development of the motor vehicle industry.