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GM farewell may be an opportunity for new investor

Business Report
The possibility of a new investor taking over the part of General Motors’ (GM) vehicle manufacturing facility in Port Elizabeth that was not sold to Japan-based Isuzu is being explored. Deputy President Cyril Ramaphosa confirmed this in Parliament last week in reply to a question, adding that the part of the GM facility not sold to Isuzu could be used by a new investor “to produce other vehicles, possibly in another market segment or as a contract manager”. Ramaphosa’s comments follow GM’s announcement last month of its decision to disinvest from South Africa and stop manufacturing and sales of Chevrolet in the domestic market.

About 589 employees out of GMSA’s total workforce of about 1500 are expected to be affected by the motor manufacturer’s disinvestment decision.

However, it is unclear what production facilities Ramaphosa was referring to, because Isuzu appears likely to use the entire Struandale plant for its future operations.

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In a shock announcement General Motors has stated that it intends to pull out of the South African market. File picture: Marco Bello/Reuters

Denise van Huyssteen, the general manager communications for Africa and the Middle East for GM, yesterday confirmed the sale of the Struandale plant to Isuzu Motors was subject to the required local regulatory approvals and that Isuzu intended to purchase the entire Struandale plant.

“The Isuzu Motors South Africa operations, subject to the relevant approvals being met, is planned to be effective from January 2018,” she said.

Sidwell Medupe, a spokesperson for the trade and industry department, said the department was continuing engagements with GM South Africa regarding their exit from the country and looking at a variety of issues, including the sale of their plant and equipment as well as the impact on jobs. “Unfortunately we are not in a position to share details of such engagements until something tangible gets realised,” he said.

ALSO READ: GM exit shows SA must build own auto industry, says EFF

Medupe said the department was also not in any position at this stage to publicly talk about investors, including Isuzu, because it was yet to have tangible or concrete commitments. “We do not want to prejudice anyone or create undue expectations,” he said.

Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa, said yesterday that it was the first he had heard of a possible new investor using part of GM’s production facilities, but stressed vehicle companies did feasibility studies on an ongoing basis in South Africa.

Vermeulen confirmed three companies had done detailed evaluations over the last two years about using South Africa as a base for sales into the domestic and export markets.

In terms of GM’s disinvestment plan, Japan-based Isuzu Motors, through newly established company Isuzu Motors South Africa, plans to acquire GM’s light commercial vehicle manufacturing operations in Struandale in Port Elizabeth and continue manufacturing the Isuzu KB and medium commercial vehicles and heavy duty trucks in Port Elizabeth.

Isuzu Motors SA will also acquire GM’s remaining 30percent shareholding in the Isuzu Truck South Africa joint venture and take over control of GM’s parts distribution centre and vehicle conversion and distribution centre.

BUSINESS REPORT

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