The South African automotive industry experienced 34 days of labour strikes in 2013 as it negotiated new three-year wage deals within the assembly and components manufacturing sectors, says newly appointed Toyota South Africa Motors (TSAM) president and CEO Andrew Kirby.

This year will see organised labour and the industry return to the bargaining table to thrash out new wage accords.

One of the key issues in expanding the automotive industry in South Africa is long-term labour stability, says Kirby.

He is hopeful that the tone of this year’s negotiations will be different from the talks conducted in 2013 for a number of reasons.

For one, South Africa’s vehicle manufacturers, the Department of Labour, the Department of Trade and Industry (DTI), the National Union of Metalworkers of South Africa and the National Association of Automobile Manufacturers of South Africa all visited Australia at the end of last year in an effort to learn why vehicle manufacturing will come to an end in that country in 2017.

The focus was on how to avoid the same from happening in South Africa.

The findings of the study trip have been compiled into a report that has been circulated widely within the industry in an effort to develop “a joint understanding” between all stakeholders on the challenges facing manufacturing in South Africa, says Kirby.

The study states, among other facts, that vehicle assembly Down Under will cease as a result of weak collaboration between government and local vehicle assemblers; free-trade agreements that have proven detrimental to local manufacturing; as well as the Australian government’s decision to reduce duties on imported vehicles, thereby halting the protection of its own assembly industry.

Apart from the visit to Australia, all the stakeholders also convened at a special-purpose indaba in January this year, with government, labour and the industry discussing the prevailing business environment in the automotive sector, while also seeking better alignment between all the parties’ objectives.

Kirby says industry has also worked hard to gain “a better understanding” of the issues placed on the table by organised labour.

“Prebargaining has not started yet,” says Kirby. “But you can see that we started our discussions much earlier than was the case in 2013. We have worked hard to put a better foundation in place.

“It also appears that all parties understand the importance of avoiding a strike during this negotiation cycle.”

However, adds Kirby, “it remains impossible to predict what will happen once negotiations start”.

Kirby considers government’s Automotive Production and Development Programme (APDP) to be a “very good step up” on its predecessor, the Motor Industry Development Plan (MIDP).

The APDP has assisted the South African automotive industry in increasing its global competitiveness and exporting its products to a number of markets abroad, he says.

Kirby also believes that South Africa’s automotive industry is in a stronger position than Australia’s – one reason is the strong partnership that has been forged between government and industry since the implementation of the MIDP in 1995.

The MIDP ran from 1995 to 2012, with the APDP set to run from 2013 to 2020 – a much shorter period.

The APDP, similar to the MIDP, seeks to stimulate growth in the local automotive industry through a set of government initiatives.

DTI has already noted that it will extend the APDP beyond 2020, with work in this regard starting this year. The mandate of the team working on the new programme is to examine the entire automotive sector and not just the sectors covered in the APDP – which means that it will now also include light, medium and heavy vehicles and motorcycles.

In negotiating any new support structure, TSAM would like to see a programme that consists of more than “a set of regulations”, says Kirby.

“We need a masterplan that will afford long-term policy stability and enable the South African industry to grow.”

Kirby would also like to see a support programme that runs for longer than the APDP’s eight years.

“Our investment cycles are very long – between five and ten years. Any new APDP must have a longer time frame.”

It would also be positive if work on a replacement programme could be wrapped up sooner rather than later, as this would remove investment uncertainty within the industry. Investment decisions with implications beyond 2020 are already up for discussion in boardrooms abroad.

Any new programme must provide adequate protection for local manufacturers, while also placing strong emphasis on exports, as a weakening domestic new-vehicle market requires the industry to export in order to survive.

It should also consider ways of stimulating domestic demand, adds Kirby.

He believes a new APDP should also offer an expanded Automotive Investment Scheme (AIS).

The AIS gives back up to 30% of vehicle assemblers’ and 35% of components manufacturers’ qualifying investments in the form of a tax-free cash grant.

“We need to expand the AIS well beyond 30%, especially for qualifying tooling projects,” says Kirby. “This will grow the components supply base, deliver more jobs [and] more local content and expand the skills base.”