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Oct 02, 2012

SA labour disruptions cause for concern, says Ford Asia, Africa boss

Engineering|Pretoria|Africa|FMCSA|Ford Motor Company|India|Ports|transport|Africa|Europe|Australia|Brazil|China|South Africa|Thailand|United States|FMCSA Plant|Silverton Plant|Equipment|Product|Jeff Nemeth|Joe Hinrichs|Power|Ford Ranger|Ranger|Southern Africa
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The last number of years had seen more labour disruptions to Ford’s business in South Africa than to any of the US manufacturer’s other global plants, said Ford Asia Pacific and Africa president Joe Hinrichs on Tuesday.

Speaking to Engineering News Online during his visit to Ford Motor Company of Southern Africa’s (FMCSA’s) Ranger plant, in Pretoria, he noted that the company was “concerned, from a global perspective”, about the labour unrest in South Africa.

“No one country is isolated. We use suppliers from all over the world. We all compete in a global marketplace. We have a 100 plants all over the world and we rarely have disruptions there. That happened 30 years, 40 years ago. I cannot remember the last time we had disruptions in the US, India, Brazil or China.”

Hinrichs added that labour costs in South Africa were rising faster than inflation, and that the economy was punctuated with frequent work stoppages, such as at the ports and, currently, in the transport industry.

“For South Africa to compete, it needs to take a higher perspective on what all of this means to the country. The labour economic growth rate and work stoppages do not measure up to a globally competitive scale.”

FMCSA’s plant produced and exported the new Ranger one-ton pick-up to 148 markets worldwide, Africa and Europe included, in a multibillion-rand investment completed last year.

“We just made a significant investment, and we are very excited about our product,” said Hinrichs. “Our near- to medium-term considerations are to build more Rangers. But, we have to be aware of longer-term considerations. Consumers will not pay extra because a vehicle was made outside the global competitiveness scale. The want value for money. They don’t care where the product was built.”

He added that he respected the process of wage negotiations, but found the work stoppages that accompanied it in South Africa “frustrating”.

“We have to have one foot in today, and one foot in tomorrow.”

FMCSA’s Silverton plant had “made a lot of progress, a lot of advances in their processes. This is very encouraging”, noted Hinrichs on Tuesday.

He said uptake of the new Ford Ranger had been “outstanding”, with demand for the product surging.

While adding a second shift to the plant produced some answers to growing demand, parts suppliers were still lacking capacity, with Ford now co-investing to ensure increased output. This included buying tooling, for example, or providing equipment to produce certain high-end parts.

The old Ranger had a 10% share in the local one-ton pick-up market, with this growing to 18% year-to-date, noted FMCSA president and CEO Jeff Nemeth.

While the vehicle market was down in Europe, new Ranger demand was up compared with the old Ranger. Key pick-up markets such as Australia, Thailand and the Middle East were also up, and expected to remain strong next year, added Hinrichs.

In some quarters, Africa was expected to grow into the next big new car market, following on from Asia Pacific.

Hinrichs said the FMCSA plant was especially important in supplying one-ton pick-ups to the European market – which did not assemble the product – under a preferential agreement South Africa had with the continent.

“South Africa fits in nicely in this equation.”

Even more important in the numbers game, especially to those counting jobs at the Department of Trade and Industry, was that the new Ranger had 65% local content, including the power train, compared with 35% on the old Ranger.

“Where [Ford's] local buy was R1-billion a year, it is now R4-billion a year, and growing,” said Nemeth.

Hinrichs noted that capacity at the FMCSA plant could grow further should the need arise, through the addition of a third shift.

However, “right now, we have to increase production with the second shift we have added, and increase the supply base’s productivity”.

Edited by: Creamer Media Reporter
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