Davies announces competitiveness initiative

Trade and Industry Minister Dr Rob Davies

Trade and Industry Minister Dr Rob Davies

Photo by Duane Daws

18th October 2013

By: Irma Venter

Creamer Media Senior Deputy Editor


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It was important for the South African automotive industry to move forward following the recent “unprecedented lengthy strike” this sector had faced, said Minister of Trade and Industry Dr Rob Davies on Thursday.

Speaking at the opening of the Johannesburg International Motor Show, he noted that government had “encouraged all the stakeholders in the industry” to seek and create labour stability.

He said the local automotive industry was the most important subsector in South Africa’s manufacturing industry, with links to six other subsectors in the country.

Apparently driven by a need to create momentum in the automotive industry after the seven-week strike, Davies announced a new automotive programme that would serve to improve the competitiveness of the industry’s supply chain, and, in doing so, stimulate opportunities for increased production capacity and job creation.

The R63-million Automotive Supply Chain Competitiveness Initiative, set to run to 2017, would be 50% funded by the Department of Trade and Industry (DTI), and 50% by other stakeholders in the automotive industry.

Davies said the National Union of Metalworkers of South Africa, the National Association of Automobile Manufacturers of South Africa (Naamsa) and the National Association of Automotive Component and Allied Manufacturers would all participate in implementing this new national strategy of 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 believed 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 (APDP) remained the flagship fiscal support programme for the automotive sector.

He added that the APDP, implemented in January 1 and running until 2020, would be the subject of an early review that would begin before government’s next financial year.

Davies said the aim of the early review was to “create conditions of confidence” for the automotive industry in South Africa.

“We are all committed to work together to ensure our industry has a bright future.”

Naamsa president Dr Johan van Zyl, who also addressed the gathering, emphasised that labour stability was “an essential building block to safeguard the industry’s future” in South Africa.

He regarded the seven-week strike as “unnecessary labour action”.

“We must make sure events seen in the past few months do not re-emerge.”

The DTI would present a South African electric vehicle roadmap, which also placed emphasis on local manufacture, to Cabinet for approval before the end of next year, said Davies.

The roadmap would include standards for the industry, and place emphasis on government’s acquisition of electric vehicles.

Davies said the DTI did not believe that an electric vehicle manufacturing industry would start up in South Africa “this year or next year”, but hopefully in the medium term.

“We long ago saw a need to position South Africa to capture a part of the electric vehicle market.”

Davies also announced that the roll-out of a multimodel assembly plant, long planned for East London, had been progressing steadily.

The plant would seek to assemble vehicles for vehicle brands selling smaller volumes in South Africa. They were, therefore, not able to quality for government’s APDP manufacturing incentives, which had a 50 000-vehicle-a-year plant threshold.

“We have been working on this for some time. We are in the process to contract an independent operator from a list of six short-listed operators,” said Davies.

He said the final selection was expected in December.

The South African government “did not fear” the decision by Japanese manufacturer Nissan to set up an assembly plant in Nigeria.

This move was, in some corners, viewed as a potential threat to South Africa’s automotive industry, which had a strong focus on exports into the rest of the continent.

“We are working with Nigeria to establish a motor manufacturing industry there. We support the industrialisation of Africa,” said Davies.

He said Nigeria would make use of semi-knockdown (SKD) production kits - which means the vehicle’s most intricate parts are already largely assembled – and that the DTI was seeking to position South Africa as a supplier of these SKD kits.

Davies said the South African government had already had discussions with vehicle assemblers as well as the Nigerian government to enable this process.

Edited by Creamer Media Reporter



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