File photo: Reuters

Johannesburg - The investment by Mercedes-Benz South Africa (MBSA) in its manufacturing plant in East London for the new C-Class has escalated to more than R5 billion and created an additional 800 jobs.

The new C-Class will be launched in June.

MBSA disclosed a year ago that it had increased its capital expenditure budget for its plant to well in excess of R3bn for this new model, much of it to boost its capacity to 100 000 units on a three-shift operation.

But Arno van der Merwe, the manufacturing vice-president and chief executive designate at MBSA, said yesterday that it had started this multi-faceted rejuvenation and investment programme in 2011 and from then until next year the investment would be more than R5bn.

Van der Merwe said it included large investments in a new body shop, improved assembly facility, improving the quality and capability of its paint shop and increasing the plant’s production capacity.

“It’s part of a longer-term plan to make sure the plant’s capacity can be fully utilised and we have good quality levels in all the processes inside the plant,” he said.

Martin Zimmermann, the MBSA president and chief executive, said the total investment was significant and showed the commitment MBSA and parent company Daimler had in the country and its belief in its employees and its ability to leverage this investment.

The increased investment follows BMW South Africa last year announcing during the strikes that disrupted motor manufacturing industry production for about seven weeks that it had been removed from the bidding table for a second model at its Rosslyn plant.

There have also been recent reports that Nissan excluded South Africa as a possible production location for its new Datsun car model.

Van der Merwe said the significance that the quality awards received by MBSA had made in the investment decisions could not be underestimated, together with the 30 percent improvement in efficiency in the past five years to a level that was among the best in the Daimler group.

This had earned the plant a lot of respect and trust and “obviously supports any future investment discussion”, he said.

Zimmermann stressed that MBSA’s employees created stability and great performance, and the manner in which the plant had made back production to meet all its production targets last year after the strike “was definitely a huge credibility factor in Germany”.

There has been speculation about MBSA producing a second model.

Van der Merwe stressed its full capacity was committed to the new C-Class but a second model was something it would like to see happening in the future although it was “not part of our short- to mid-term decision-making process”.

MBSA’s investment had created about 800 jobs – about 400 direct jobs in its plant and a further 400 in an outsourced logistics service provider.

He said the investment had also resulted in significant investments in South Africa by 10 new suppliers. - Business Report