Pretoria - Nissan South Africa has been awarded a R1 billion contract by its Japanese parent, Nissan Motor Company, to export locally assembled left- and right-hand drive, single-cab Hardbody pickups to Europe, Singapore, Australia and New Zealand.
Julio Panama, Nissan SA's managing director, said yesterday the contract would result in a direct capital investment of more than R250 million in equipment at its plant in Rosslyn near Pretoria and with its suppliers.
Panama said the contract was for an initial two years from October 2005. It could be extended by three years, depending on performance.
"Our challenge is not only to deliver quality and levels of service to meet global standards but to increase the initial volumes over the next two to three years," Panama said.
He said the contract not only provided Nissan SA's 2 500-strong workforce with job security but also provided exciting opportunities for growth.
The award of the contract follows the Nissan Motor Company's acquisition of Sanlam's remaining 37 percent shareholding in Automakers, the holding company of Nissan SA, for an undisclosed amount in December 1999 to increase its stake in the company to 87 percent. Nissan Diesel held 4.3 percent and Mitsui 8.7 percent.
Panama said the contract would double Nissan SA's export volumes of the single-cab Hardbody pickup. It entailed the export of 2 800 units a year to Australia and New Zealand and 1 800 to Europe and Singapore.
The additional units to be exported would have a direct impact on cost per unit and Nissan SA's export credits, and would limit the company's exposure to currency fluctuations, he said.
"It will obviously benefit South Africa's economy by earning additional foreign exchange and will result in job creation and additional business to a range of our suppliers, who should expect a volume increase of 20 percent."
Panama said the local content of vehicles to be exported was about 65 percent and about 50 suppliers would benefit from the contact.
Alec Erwin, the trade and industry minister, congratulated Nissan SA on the contract, adding that these contracts "did not come easy".
He said the greater employment security provided by contracts such as these was extremely valuable.
It would be unrealistic for South Africa to achieve massive job creation in industries such as automotive manufacturing when there was already gigantic excess capacity in the world, Erwin said.