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New APDP has right intent, but sets challenging targets, says Ford MD

Neale Hill

The Ford plant in Silverton

The Ford plant in Silverton

3rd December 2018

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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Ford South Africa (SA) and sub-Saharan Africa is still digesting what exactly government’s revised Automotive Production and Development Programme (APDP) means for its operations in South Africa, says MD Neale Hill.

Cabinet has approved extending the current APDP to 2035, but with a target of increasing local content on South African-built vehicles from less than 40%, on average, to 60%.

“We plan to maximise the benefits available to us from government, in order to continue supporting the company’s objectives of keeping production in South Africa, contributing to economic growth and creating jobs,” says Hill.

“There has been a lot of consultation between government and industry on this programme. What you see is a compromise between government and industry, with concessions on both sides.

“One cannot argue with the intent of the APDP, but are there challenges? Yes.”

Hill says Ford is currently at around 43% local parts content, with the 60% target to be phased in over time.

He does not believe that the new APDP will jeopardise Ford SA’s attempt to secure production of the new generation Ranger, which should be launched by 2022.

“We have done a lot of scenario planning to understand how various outcomes of the APDP would impact us, and we are focused on keeping manufacturing in South Africa.”

Ford SA builds the current generation Ranger bakkie and Everest sports-utility vehicle at its Silverton plan, in Pretoria, for the local and export markets. The Ranger is the volume product, and is exported to 148 markets worldwide.

The company also builds engines for the Silverton plant at its Struandale facility, in Port Elizabeth. This plant also exports engine parts.

Ford has just spent more than R3-billion on increasing capacity at its Port Elizabeth and Pretoria operations, and to gear up for production of the face-lifted Ranger and Everest, and the new high-performance Ranger Raptor.

Capacity in Silverton is now at 168 000 vehicles a year.

Production will set a new record in 2018, at just over 100 000 units, with almost 70 000 units exported.

“We aim to break this record next year,” says Hill.

Logistics Challenges
Increasing production, however, magnifies the challenges that Ford SA face as a vehicle producer and exporter.

“Logistics remain a challenge. Transnet controls the whole value chain, from our gate to when the vehicle departs the Durban harbour,” explains Hill.

“We continue to look at the costs, reliability and stability of the system. Port and road congestion are also issues.

“We keep on looking for opportunities to streamline the process to make it more efficient. We need to remove the obstacles that are potentially throttling us back to being more successful.

“We are busy exploring using Port Elizabeth as an additional port for exporting and importing our vehicles.”

Hill says issues such as wildcat strikes at the Durban port can create a logjam that prohibits Ford SA from sending its vehicles to Europe.

Ford SA is the sole supplier of Rangers to Europe.

Hill says the company also requires stable and reliable electricity supply to all of its operations.

Of equal concern is next year’s wage negotiations within the motor and component manufacturing industries.

“We really need to find a relationship between labour, government and business that makes South Africa an attractive location for automotive investment.

“The South African government wants the industry to get to 1% of global production. This is between 1-million and 1.4-million vehicles a year – roughly double what is now.

“Achieving this will require high-level cooperation between the three parties.”

SA, Ford Sales
Hill expects the South African new-vehicle market to reach similar levels in 2018 as in 2017, or to perhaps decline somewhat.

“We are in a state of uncertainty in political and socioeconomic terms and this is impacting consumer confidence. Government is also trying to balance its books, so their fleet spending is down.”

Hill believes the market will remain stagnant in the first half of 2019, as it awaits the outcome of May’s national elections.

“These elections will hopefully produce some certainty, which could lead in a period of sustained growth.”

Ford SA sales will be down in 2018 compared with 2017, linked to supply constraints on the EcoSport, the lingering impact of the Kuga debacle and customers awaiting the launch of the Raptor, as well as the face-lifted Ranger and Everest.

New MD
Hill took up the post as MD of Ford SA following the rather abrupt departure of Casper Kruger, who spent just over 12 months at the Pretoria head office.

Kruger took over from Jeff Nemeth, who spent seven years at the helm of Ford SA.

“Casper’s decision to leave was entirely personal,” explains Hill.

“He was looking what was working for his lifestyle and his family life. There were also some movements within the global Ford structure, with Jacques Brent [a former Ford SA executive] moving on as head of the African and Middle Eastern markets to a position in North America.

“Casper wanted to pursue other interests in the motor industry, but outside the OEM [vehicle manufacturing] space.”

Hill is no stranger to South Africa. He worked at Ford in South Africa from 1991 through to 2006. Following stints in Thailand, Australia, New Zealand and China, he returned to South Africa as sales and marketing director, before taking over from Kruger on July 1 this year.

“The intention is certainly to remain in the job for a three-year period. The view is to create stability in the leadership team in South Africa,” says Hill.

 

Edited by Creamer Media Reporter

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