The drive to increase local content in vehicles manufactured in South Africa has been boosted by investments worth about R680 million in the past year thanks to four global manufacturers of automotive components.
These investments have been facilitated by the Eastern Cape Development Corporation (ECDC) and one of its subsidiaries, the East London industrial development zone (IDZ).
The latest contribution facilitated by the ECDC involved providing R15m in asset-based finance to German-based global automotive company TrelleborgVibracoustic for equipment.
The German company entered into a majority-owned R36m joint venture with East London-based Ikhwezi Investment Holding last year to manufacture chassis bushings for the Mercedes Benz C Class and E Class to support a South African supplier of automotive suspension systems, Foxtec-Ikhwezi.
Sitembele Mase, the chief executive of the ECDC, said the agency’s R15m investment in this multimillion-rand venture was well-timed and ensured modern technology was brought to the Eastern Cape.
It would also improve skills and create job opportunities in the motor manufacturing sector.
“With this investment we have swung the manufacturing philosophy and technology of the plant towards increased local content. Disbursement started at the beginning of the current financial year.
“We have leveraged on other export trade opportunities to the European markets. We are proud of the fact that we have used the incentives from the Jobs Stimulus Fund to further boost local employment opportunities at the plant,” he said.
Other investments in the region in the past year include R380m spent on the expansion of the Johnson Controls plant at the IDZ; R180m invested in a new plant in the IDZ by German exhaust and silencer technology specialist Friedrich Boysen to supply exhausts and mufflers for the new Mercedes-Benz C Class; and R80m committed by international supplier RG Brose, which will supply seat structures and door modules for the C Class.
The Eastern Cape is home to the vehicle manufacturing plants of the local arms of Mercedes-Benz, Volkswagen and General Motors and the Ford Motor Company of Southern Africa’s engine plant.
Mase said the automotive industry provided 30 percent of the jobs in the Eastern Cape’s manufacturing sector and accounted for 32 percent of gross added value. He added that half of South Africa’s passenger vehicles were manufactured in the province and 51 percent of the country’s motor exports originated from it.
Mase said investments in the automotive sector had been influenced by the new incentive programme for the industry, the Automotive Production and Development Programme, whose major objectives were to increase domestic production volumes to 1.2 million vehicles a year by 2020 and diversify and deepen the components supply chain.
He said all these automotive component companies were investing in increased capacity.