The sharp devaluation of the rand against major currencies will provide only short-term benefits for components exporters, warns National Association of Automotive Component and Allied Manufacturers (Naacam) executive director Robert Houdet.

“The weak rand will eventually push up inflation, increase material costs and see labour asking for bigger wages. Electricity prices will also increase.”

Europe, for example, does not want its currency to devalue to help its exporters, but rather that its manufacturers “focus on becoming more resilient and eventually succeed”, Houdet adds.

He says it is important for local components manufacturers to use the current environment to become more efficient.

“If you make some money from exports, use the time and money and work – invest it to become successful, more efficient. Do not see this money as windfall profit.”

Competitiveness Programme
Announced last year by Trade and Industry Minister Dr Rob Davies, the R63-million Automo- tive Supply Chain Competitive-ness Initiative (ASCCI), set to run to 2017, will see the National Union of Metalworkers of South Africa, the Department of Trade and Industry, the National Asso- ciation of Automobile Manu-facturers of South Africa and Naacam implement a new national strategy for competitiveness improvement.

Key focus areas of the initiative include improving components supplier operational capabilities, increasing levels of localisation and achieving manufacturing value addition in South Africa.

Davies said in October that the programme would go some way towards addressing a number of the “underlying issues of labour instability” in the automotive industry.

He also emphasised, however, that government’s Automotive Production Development Programme will remain the flagship fiscal support programme for the automotive sector.

Houdet says B&M Analysts, of Durban, has been appointed to run the initiative, which will be headed by the consultancy’s Douglas Comrie.

The first ASSCI meeting is scheduled for March.