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BAIC vehicle manufacturing plant project, South Africa

8th September 2017

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
BAIC vehicle manufacturing plant project.

Location
The plant will be located on 47.3 ha, under a covered area of 88 969 m2, in the Eastern Cape Industrial Development Zone (IDZ) of South Africa.

Client
The Industrial Development Corporation (IDC) and the Beijing Automotive Group Corporation (BAIC) have signed a deal to develop the vehicle manufacturing plant.

BAIC will be the major shareholder, holding 65%, with the IDC holding 35%.

Project Description
The BAIC plans to build a completely knocked-down vehicle manufacturing plant in the 50 000 ha zone, which is linked with the Ngqura deep-water harbor, located not far from Port Elizabeth. The car manufacturer plans to export about two-thirds of its production, so access to harbours is critical.

The plant will produce passenger, multipurpose and sports utility vehicles, as well as bakkies, and will be rolled out in phases. The plant will have an initial capacity of producing 50 000 vehicles a year, ramping up to 100 000 units a year.

The project will be rolled out in two phases.

The first phase will have an installed capacity to manufacture 50 000 units a year and will include a body shop, paint shop and assembly line. It will produce small cars, small sports-utility vehicles and pickups – three of the most popular vehicles in South Africa.

Phase 2 will double production to 100 000 units a year.

The project consolidates the Eastern Cape as an automotive hub, with companies, such as Volkswagen, Mercedes Benz and General Motors, already major investors in the province.

Plans for the BAIC plant include the future construction of a supplier park in the Coega IDZ to facilitate parts supply to the assembly line.

Jobs to be Created
More than 2 500 jobs will be created during the construction phase. About 1 000 people will be employed in the plant during Phase 1, with another 10 000 jobs to be created throughout the automotive value chain.

Value
The investment is valued at R11-billion.

Duration
Construction of the new plant, which would start in December, is expected to be completed in the first quarter of 2018.

The plant should reach its 50 000-unit capacity by 2022, according to BAIC Automobile South Africa JV chairperson Dr Haiyang Dong. The implementation of Phase 2 should be completed by 2027, according to current planning.

Latest Developments
It has been a year since the BAIC and the IDC broke ground on a new vehicle assembly plant in the Coega IDZ.

At full capacity, the R11-billion JV plant will be able to produce 100 000 vehicles a year.

The R4.25-billion first phase will have the installed capacity to manufacture 50 000 units a year.

About two-thirds of production is said to be destined for the export market.

BAIC and the IDC last year said that construction work on the first phase of the plant would be completed in the first quarter of 2018, with the first car to roll off the line in June the same year.

A number of people have, however, questioned the slow progress at the building site. Local businesses have also stated that they are being sidelined from working on the project. There have also been questions around BAIC’s importing building materials instead of sourcing them from South Africa.

IDC automotive and transport equipment business unit head Joy Balepile is confident that the June 2018 start-of-production date remains feasible and that the JV will reach its local-content targets.

These targets include 85% local content on construction materials; 35% of construction work be awarded to small, medium-sized and microenterprises; 75% local employment at the construction site and 60% local-content parts on the vehicles that are assembled at the plant.

Balepile has warned, however, that the project is “still in its early phases”.

“We are working with local entrepreneurs, noting that it is still early in the project. We are still accepting bids on the project. We are, however, ramping up our communication with local communities. The bulk of the work will not go overseas.

“We have a plan in place with BAIC to ensure we meet the local content targets.”

Balepile has said that local-content requirements have been set “based on discussions with our Chinese partner. They are minimum requirements. They should really be exceeded”.

The IDC earlier this year signed a deal with BAIC to establish a supplier park to be located close to the Eastern Cape vehicle plant.

The supplier park will be built once the assembly plant is operational.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
IDC, tel +27 11 269 3000 or fax +27 11 269 3116.
BAIC, tel +86 10 56630185 or email haojinyi@baicintl.com.
 

Edited by Creamer Media Reporter

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