Johannesburg - General Motors’ manufacturing operation in South Africa is poised for a significant boost, securing GM’s presence in the country and resulting in further capital investment and the creation of many new job opportunities.
This follows the signing of a framework agreement between GM and Isuzu, further strengthening the relationship between the two manufacturers.
In a statement on Friday GM and Isuzu confirmed the signing of the agreement and that it was focused on increasing cooperation and the level of involvement of Isuzu in GM’s operations in South Africa.
“The main objective of this agreement,” it said, “is to ensure the South African manufacturing operation is well positioned to assemble light commercial vehicles at high volume for both domestic and export markets while continuing to provide a strong portfolio of Chevrolet, Opel and Isuzu vehicles to its customers.
“This agreement serves as confirmation of GM’s commitment to the long-term future of its operations in South Africa. More details will be communicated once discussions have been completed over the next year.”
GMSA operations vice-president Ian Nicholls said on Friday that the agreement was the culmination of a lot of hard work by GM employees in South Africa and globally, and also signalled the start of more work to finalise a detailed agreement during the balance of this year and into 2016
SETTING UP FOR THE NEXT CYCLE
Nicholls said the agreement would not have an impact on GM’s manufacturing operations in South Africa in the short term, but would set it up for the next cycle of production.
“It will have a long-term impact on our manufacturing activities in South Africa, which will be positive for employment,” he said. “There will be the direct employment benefits in the operations of GMSA and the indirect benefit of high volume production and increased localisation, which will have a positive impact on GMSA’s supplier base.
“I can’t quantify the impact at this stage, but it will be big,” he added.
The increased production of Isuzu vehicles by GMSA is also likely to lead to increased capital investment in its plant in Port Elizabeth, but will probably coincide with the launch of a new Isuzu light commercial vehicle.
The Isuzu bakkies models currently produced by GMSA are about two to three years into their lifecycle, which is usually about seven years.
Nichols added that Isuzu was an important partner for GM in Africa through its manufacturing operations based in South Africa, Kenya and Egypt, and also its distribution across the continent.
He said the agreement also built on the existing co-operation and partnership between Isuzu and GM in South Africa, which had been in place for almost a decade through its joint venture that focused on building and distributing medium and heavy commercial trucks.
Nichols stressed that Isuzu was a key brand for GM in South Africa after being offered in the market for almost four decades and commanding a 14 percent share of the one-ton bakkie segment and a 15 percent share of the medium and heavy commercial truck market.
GMSA has been under pressure to achieve the minimum annual production threshold of 50 000 units in the Automotive Production and Development Programme, which qualifies locally based motor manufacturers for certain incentives and benefits.
Tanya van Meelis, chief economist at the department of economic, confirmed in June that both GMSA and Nissan South Africa had been granted temporary exemptions from the APDP’s minimum annual production threshold.
GM Africa communications manager Denise van Huyssteen said at the time a longer-term manufacturing footprint was currently under development for GMSA, but it was premature to speculate about which products would form part of its future manufacturing portfolio.
“Our objective remains to grow our locally assembled vehicle production for both the domestic and export markets,” she said. “As we enter the next phase of capital investment, we will be looking to undertake further upgrades to our manufacturing operations and investment in next generation programmes.”