Coega lead as IDZs race to build new car plants

Plans to establish a new greenfield multi-model vehicle manufacturing plant operated by an outsourced assembler in the East London industrial development zone (IDZ) are still on track.

Tembela Zweni, the executive manager of zone development for the East London IDZ, said last week that construction was scheduled to commence in 2017 and the plant would be fully operational by 2019.

It would be “a multibillion [-rand] facility” and create about 46 000 jobs, he told Business Report at the SA Automotive Week in Port Elizabeth.

Zweni said the IDZ had received strong interest from “quite a number” of vehicle brands and it was continuing discussions with six of these, but it was up to the IDZ to convince the manufacturers that the concept would work.

He said the project would probably be launched next year once all the agreements and financing for the facility had been finalised.

The multi-model vehicle outsourced assembler initiative was first announced by the East London IDZ in October 2009.

The plan then was to have an assembly plant with an annual capacity of a minimum of 50 000 units to enable it to qualify for benefits available under the Automotive Production and Development Programme, which will replace the current Motor Industry Development Programme from January next year.

Corrie Kotze, a director at Automotive Investment Holdings and a consultant to the East London IDZ, said in 2009 that it would be the first automotive original equipment manufacturer plant established in South Africa in 40 years. The plant would create jobs and boost automotive exports.

However, Chinese vehicle manufacturer First Automobile Works (FAW) has stolen a march on this target down the coast.

FAW reported last month that construction would start next month on its R600 million vehicle and truck assembly plant in the Coega IDZ.

Construction of the FAW plant is expected to be completed by December next year. It will create an estimated 1 000 jobs during construction, with about 500 permanent work opportunities expected to become available when the first phase truck assembly facility is commissioned.

Further employment will be created during the second phase when FAW commences with production of 30 000 passenger vehicles a year, in addition to 5 000 trucks a year.

Kotze said in 2009 that a greenfield plant of the size of the planned multi-model facility normally involved an investment of about R4 billion.

The East London IDZ confirmed in 2009 that it had held discussions with outsourced assemblers Edag and Karmen from Germany and Magna Steyr from Austria.

The total investment in the plant would include infrastructure in the East London IDZ that would be paid for by the government. The outlay would be recouped through rentals paid for facilities used by the outsourced assembler and other service providers.

It was estimated in 2009 that infrastructure to support an assembly plant capable of delivering 50 000 units a year would require an investment of about R1bn.

The balance of the investment in the plant would be paid by the foreign outsourced assembler and other service providers. – Roy Cokayne