An ambitious 30-year, R50-billion concept hopes to establish Rosslyn, north of Pretoria, as South Africa’s vehicle assembly capital. The project name for the development is the Tshwane Auto City, and it hopes to emulate places such as Detroit, in the US, which houses America’s big three car-makers, or Toyota City, in Japan.

The man whose job it is to drive the development of the proposed special economic zone is Automotive Industry Development Centre (AIDC) CEO Barlow Manilal. The 13-year-old AIDC is tasked with assisting in increasing the global competitiveness of the South African automotive industry. It is a Gauteng Growth and Development Agency subsidiary and is the organisation that will implement the project.

Manilal says the aim of the Auto City project is to achieve economies of scale, luring more original-equipment manufacturers (OEMs, or vehicle makers) to Rosslyn, while also enabling an improved business environment for those OEMs already there, through, for example, providing a more efficient logistics network.

“Tshwane Auto City will be the biggest multi-OEM development region in the country. This project is ambitious, yes, but with the vision and support of the City of Tshwane as a principal driver of the concept, it is achievable.”

OEMs already active in Rosslyn are BMW South Africa (SA), Nissan SA, Tata Trucks and UD Trucks, as well as a number of local component suppliers, with a large percentage of these housed in the Automotive Supplier Park, a dedicated component supplier park near the Nissan plant.

BMW SA and Nissan SA are the volume players on this list, exporting their vehicles globally. BMW SA has already upped production on the back of the January introduction of government’s Automotive Production and Development Programme (APDP), which rewards volume assembly, while Nissan SA is gearing up to do the same.

Ford Motor Company of Southern Africa (FMCSA) is also housed in the Tshwane region, with its export plant located on the other side of the city, however, in Silverton.

Other vehicle production nodes in South Africa are Durban (Toyota), East London (Mercedes-Benz), Uitenhage (Volkswagen) and Port Elizabeth (General Motors).

Capacity Problem
The APDP and a concept called ‘Vision 2020’ were driving factors for the AIDC when planning Rosslyn’s future expansion.

This incentive programme hopes to enable the production of 1.2-million vehicles in South Africa by 2020. Production volumes reached around 550 000 vehicles in 2012 and are expected to rise to about 650 000 units in 2013.

When compared with global standards, South Africa’s infrastructure is already under stress from current production numbers, says Manilal. Increasing production means that more and more vehicles will have to be transported by rail, handled by ports, and ferried to dealers. Much greater intra-African trade is also anticipated on the back of the Africa Free Trade Agreement, which is due for full implementation around 2017.

Further increasing capacity at plants also spells the arrival of new component suppliers in South Africa, and they will also need to move their products by road and through harbours and airports.

“And they will need power and water,” adds Manilal.

“As a province, we considered that Tshwane is the place where the biggest concentration of automakers in the country resided, and then thought about how we could augment the infrastructure that already existed to cater for the APDP and beyond, and conceptualised the Tshwane Auto City project.”

The Rosslyn industrial precinct is currently all work and no play, with little or nothing in the way of housing, green spaces, entertainment or retail facilities to turn it into a more desirable destination for investors.

Some of the roads in the area also require upgrading. In fact, a world-class transport network is essential for an industry which relies on just-in-time part deliveries to plants, and then vehicles to railway lines to ports.

But what is an auto city?

Such a development houses all the fundamentals around people, product and process.

Tertiary institutions providing trained staff to the companies in the auto city is critical, says Manilal.

A globally competitive auto city also has research and development facilities, manu-facturing plants, residential and retail spaces, a race and test track and an efficient logistics chain, all coupled to favourable trading terms, which should be provided through incentives for the companies residing there.

Manilal believes that improving the supply chain into and from Rosslyn will serve as the biggest key to unlocking the precinct’s potential. Here the Wonderboom airport, which belongs to the City of Tshwane, will play a major role.

“An investigation into extending the runway, for example, to accommodate international freight carriers will be an important consideration. A key criterion for the auto city is a viable and efficient airport focusing on inbound and outbound freight,” says Manilal.

Expanding the rail capacity into Rosslyn is also key, as it provides mass transport of vehicles to and from the ports for export and import purposes.

Manilal says the AIDC is investigating the current rail capacity and opportunities for upgrades in line with the anticipated growth projections. Initial talks with all related parties have started, he says, with the understanding that the precinct is equidistant from the Durban and Maputo ports, both of which have vehicle facilities.

The Tshwane Auto City project will also look to establish a vehicle distribution centre from where vehicles will be dispatched to dealers and ports.

Improving the logistics chain also means that roads have to be significantly upgraded, with Manilal saying that this can happen while the AIDC waits for the rest of the developments to fall into place.

“At a conceptual level, we envisage three lanes in and out of Rosslyn, and we are looking at dedicated freight lanes that can ensure parts reach the plants efficiently.”

A new housing development node will attempt to provide affordable housing close to people’s places of work, also focusing on their leisure and sports needs. A retail node will enable people to shop close to where they live and work.

Current conceptual planning also allows for a test and racetrack, conferencing rooms, an automotive museum and a hotel.

Work on the research and development hub will include the Council for Scientific and Industrial Research (CSIR) and The Innovation Hub.

The AIDC’s joint project to establish a training academy with Nissan SA will also be expanded under the Auto City concept.

The first classrooms in the Gauteng Automotive Training Academy will be available for tuition at the end of March, with the entire project scheduled for completion by the end of May.
The academy will feature a training simulator, including body welding and vehicle spray painting areas, such as those in the Nissan SA plant.

The government-owned institution is expected to train around 1 000 students a year.

“We also want big toolmakers in Rosslyn, press shops and, ideally, a foundry,” notes Manilal.

Money Talks
The “cherry on top” will be to secure an incentive package from provincial and national government, says Manilal.

“While not having an incentive package will not sink the project, it will definitely accelerate its development.”

The current incentive packages offered at industrial development zones in the country will not be sufficient for the Tshwane Auto City, notes Manilal.

“We need a paradigm shift in the way developments are incentivised in South Africa. We need a new, more relevant set of incentives for high growth yielding economic zones that compete for investment globally.”

Manilal believes an Auto City incentive package should include preferential rates and taxes, as well as utility consumption incentives linked to exports, for example.

“However, such incentives will have to be broad-based and multidimensional and will have to flow from all three tiers of government.”

The Auto City project will also manifest itself well as part of Gauteng’s 2055 Strategy, as well as Tshwane’s 2055 Strategy, adds Manilal.

The prefeasibility study for the Tshwane Auto City concept was completed in 2011.

In the end, says Manilal, the project will work and become viable if there is demand from the automotive industry, coupled with all key stakeholders partnering to secure the requisite funding for the project.

Funding will have to be through a public–private partnership model, he adds.

“Ideally, government will provide the infrastructure. Once that is in place, it will create an enabling environment, take it to the tipping point where the private sector will become involved.

“We believe we will have all the key strategic players on board.”

The Next Step
The AIDC will, over the next 12 months, establish a technical support office that will work to move the concept to technical feasibility by taking a detailed, technical look at all the plans for the Auto City development. This technical design phase is estimated to cost around R12-million.

“We have also spoken with the OEMs, but have not workshopped the development with them extensively.”

Documentation has also already been submitted for the project to be registered as part of the Durban–Free State–Gauteng logistics and industrial corridor project. This corridor is a strategic integrated project (Sip), with all Sips overseen by the Presidential Infrastructure Coordinating Commission.

The Sips target economic development through infrastructure development.

If economic considerations are favourable and the AIDC is successful in its discussions, Rosslyn is expected to house another two OEMs within the next few years, says Manilal.

“These are new vehicle manufacturers not currently assembling in South Africa – not OEMs relocating to Rosslyn. We are pursuing them to set up shop in South Africa. We are also looking at securing commercial vehicle and bus assembly plants for Rosslyn.

“We continuously look for new component manufacturers to open plants here. We need critical mass. We hope to get 20 new component manufacturers into Rosslyn over the next ten years – which is what the APDP demands in its quest for 70% localisation on vehicles built in South Africa.”

However, says Manilal, as he notes the problems around the current precinct, Rosslyn has not developed much over the last 20 years.

“The infrastructure in Rosslyn is outdated and cannot accommodate the influx of new component manufacturers, or two new OEMs. For one, there is not enough water.

“We also do not want to only play catch-up with current demand when we develop the Tshwane Auto City; we want to develop infrastructure that will serve as a catalyst for more investors to come to Rosslyn.”