Photo by: Duane Daws
The sharp devaluation of the rand against major currencies will provide only short-term benefits to component 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 for its manufacturers to “focus on becoming more resilient and eventually succeed”, Houdet adds.
He says it is important for local component 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.”
SUPPLY CHAIN COMPETITIVENESS
Announced last year by Trade and Industry Minister Dr Rob Davies, the R63-million Automotive Supply Chain Competitiveness 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 Association of Automobile Manufacturers of South Africa and Naacam implement a new national strategy for competitiveness improvement.
Key focus areas of the initiative include improving component 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 in addressing a number of the “underlying issues of labour instability” in the automotive industry.
He also emphasised, however, that the government’s Automotive Production Development Programme will remain the flagship fiscal support programme for the automotive sector.
Houdet says B&M Analysts from 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.
“ASSCI will be a very powerful tool to look after the needs of the automotive industry and, in particular, the component industry,” says Houdet.
“It is a very powerful tool as it is accountable to industry, and because it allows us to deal with our issues collectively, and no longer only individually.”