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APDP alleviates effects of strikes on auto sector in past 12 months

5th September 2014

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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Government’s Automotive and Production Development Programme (APDP) has succeeded in mitigating some of the effects of the labour action seen in the local automotive industry over the last 12 months, says Metair MD Theo Loock.

The APDP incentivises volume component and vehicle production, as well as parts localisation. It is set to run to 2020.

The automotive industry last year experienced eight to nine weeks of strikes by members of National Union of Metalworkers of South Africa, as well as an almost five-week strike by the unions in the steel and engineering industries this year.

Metair is a JSE-listed international manufacturer and distributor of automotive products to vehicle manufacturers and the replacement and aftermarket sectors.

“A constantly destabilised labour environment will have some long-term negative effects,” says Loock.

“We are very, very fortunate. The APDP has given use a buffer, because the incentives cancelled some of the potential negative effects of the labour environment, but can it continue to do so? I don’t know.”

Loock says he is concerned about “the major destabilising effect of continued labour disrup-tion” on the South African manufacturing industry.

“We can produce more [vehicles and com-ponents] in South Africa, if we have a stable automotive industry.”

Loock says it is time for “sense to prevail”, and for South Africa to get back to work.

Labour instability not only curbs current production, but also sends “a warning signal” to the international community about South Africa as a trusted supplier to the global industry.

Some original-equipment manufacturers (OEMs) have halted studies to further increase production on current models in South Africa, or to expand through new model production.

The series of strikes seen over the last 12 months means that the local automotive industry is constantly “either building forward to put contingencies in place, or catching up on what had been lost”, adds Loock.

Metair will spend the period to the end of the year working to stabilise its local manufac- turing operation, while also trying to improve manufacturing efficiencies, says Loock.

Continued labour action means that Metair continues to produce at levels 30% to 40% higher than under normal circumstances.

Earlier this year, Metair was still catching up on volumes lost during last year’s nine-week strike, but then also had to build additional stock ahead of the steel industries strike this year, as OEMs worked to mitigate the strike’s effect.

This makes it difficult to determine what a normal, stable day of production will look like.

National Association of Automobile Manufacturers of South Africa director Nico Vermeulen says that the combined impact of the strikes seen over the last 12 months, across all economic sectors, has probably reduced South Africa’s gross domestic product by 1% to 1.5%.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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