Car industry support ‘will stay’

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BR C class 74306 Bloomberg Mercedes-Benz SA has won the honour to build every C-Class model at its East London since building its first one in 1994. Photo: Bloomberg

Johannesburg - The government has committed to continue its support of the automotive industry as Mercedes-Benz South Africa (MBSA) launched production of the new C-Class at its manufacturing plant in East London.

The launch followed an investment of R5.4 billion in plant and equipment, and skills training and development.

Trade and Industry Minister Rob Davies said yesterday that the Automotive Production and Development Programme (APDP) “is here to stay”.

Davies said the current iteration of the APDP would continue until 2020 and the industry could take it for granted that there would be further consultation about how it could be further improved.

He added that the APDP had been broadened in the past five years and now included public transport vehicles, including the manufacture of buses and minibus taxis, and construction vehicles involved in infrastructure development.

Davies said that considering the importance to the economy of manufacturing, and vehicle manufacturing in particular, there was no possibility of the automotive industry support being reduced. Even beyond 2020, the significance of the motor sector meant that any decision maker at that time would have to seriously consider the need for an automotive support programme.

He said this was made even more important by the fact that Africa was beginning to industrialise and new trade opportunities were opening up.

He believed he could give the assurance to the industry that there would be policy certainty and consistency in terms of a very substantial local support programme for automotive manufacturing.

Arno van der Merwe, the chief executive of MBSA and vice-president for manufacturing, said the local company started producing its first C-Class in 1994 and since then had won the honour to build every subsequent C-Class model to become a respected part of Daimler’s global network.

Van der Merwe said MBSA had steadily increased production capacity and output over the past five years, culminating in its record production of about 60 000 units in 2012.

He said this stable growth pattern would accelerate significantly with the introduction of the new C-Class and capacity would increase by more than 50 percent this year. Van der Merwe declined to specify the exact capacity of the plant.

He confirmed that about 85 percent of production from the plant would be exported. The markets to which MBSA exported would be broadened, but he declined to identify the new markets the plant would be servicing. The previous C-Class was exported to the US.

He confirmed the investment in the plant had created 550 direct jobs at its plant and a further 400 indirect jobs in a logistics service provider.

The investment had resulted in 10 new automotive component suppliers establishing a presence in South Africa; seven of these were manufacturing suppliers.

MBSA did not know how many jobs had been created by these 10 suppliers but Van der Merwe indicated it could easily be speculated that the seven manufacturing suppliers had created a further 1 000 jobs.

Davies said automotive component manufacturers had invested R2bn in South Africa to provide components for the new C-Class, adding that this MBSA project had resulted in the biggest single investment in the country. It had been supported by the Automotive Incentive Scheme, an integral part of the APDP.

Davies said the department had disbursed about R1.6bn to support the investments for the new C-Class through the incentive scheme.

He said support under the Automotive Incentive Scheme was front-loaded and introduced in 2009, while the APDP was implemented this year.

Davies said, from the scheme’s introduction until March, it had supported total investments of R22.5bn in the automotive sector, with R17bn of these investments by original equipment manufacturers (OEMs) and R5.5bn by component manufacturers.

He said there had been 193 projects, 16 from OEMs and 177 from component manufacturers, that together were supporting 9 756 jobs.

Davies said 2 677 of these jobs were at OEMs and 2 707 in the component manufacturing sector, which showed the sector created more jobs with less investment.

Simphiwe Kondlo, the chief executive of the East London industrial development zone, said component manufacturers had invested over R890 million in plant and equipment and more than R400m in building and infrastructure to support the new C-Class.

Markus Schafer, the divisional board member for Mercedes-Benz cars, production and supply chain management at Daimler, MBSA’s German parent, said the East London plant had firmly established itself in the production network of the group because of its track record, including the superb quality produced. This had resulted in it garnering the prestigious JD Power and Associates Award in the US for five consecutive years, achieving a platinum, two gold and two silver awards.

Van der Merwe said the new C-Class had also resulted in 10 new cutting-edge production technologies being brought to East London in the plant’s body shop alone.

Several new processes had also been introduced, including localised components and processes such as aluminium skin panels. Many of these technologies empowered the local supply industry. - Business Report


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