Output from Mercedes’ South African unit to reach record levels in 2008 despite slowdown

31st October 2008 By: Irma Venter - Creamer Media Senior Deputy Editor

Despite the global and local economic slowdown, the Mercedes-Benz plant in East London will produce a record number of vehicles this year, says Mercedes-Benz South Africa (MBSA) management board member: manufacturing and procurement Joachim Follman.

The plant is expected to produce 64 300 cars, buses, bakkies and trucks, in 2008 – compared with 38 200, in 2007 (when the previous C-Class was in its run-out phase), 48 000, in 2006, and 54 800 units, in 2005.

MBSA chairperson Dr Hansgeorg Niefer says the jump in production comes courtesy of C-Class exports to the US, as well as “healthy acceptance of the product here in South Africa”.

Niefer adds that the East London plant is currently operating at capacity, and that there are “no retrenchment plans in place”.

This defies the trend currently evident in the local market, where several vehicle manu- facturers have indicated that they are scaling down employee numbers – including General Motors South Africa and Ford Motor Com-pany of Southern Africa – owing to deteriorating market conditions.

“Our head count has actually been increasing,” says Follman.

He says MBSA employed 200 additional people at the beginning of the year, with more staff needed should production volumes grow further.

“We also expect to employ more people on the commercial vehicle line,” notes Follman.

The MBSA commercial vehicle assembly has been increasing steadily, fuelled by economic growth in the early years of this decade, and, most recently, by government’s drive to build and improve the country’s infrastructure.

Production increased from 1 900 units, in 2002, reaching 3 800 units, in 2005, 5 000 units, in 2006, with 6 800 units expected for 2008.

How long MBSA’s healthy exports to the US will continue is, perhaps, open to debate, with industry guru JD Power forecasting that vehicle sales in this market, taking strain owing to the current global economic turmoil, will drop from 16,5-million units, in 2007, to 13,6-million units, in 2008, and 13,2-million units, in 2009.

However, MBSA could also benefit from the US consumer’s move away from large, fuel- hungry sports-utility vehicles.

MBSA exports about 2 000 cars to the US each month.

Newest Addition

The newest addition to MBSA’s production line-up is the Mitsubishi Triton double- and club-cab bakkie.

The Triton double cab was introduced to the South African market in March 2007.

However, the bakkie line-up was imported from Thailand until this month, when MBSA officially launched its new Mitsubishi manufacturing line, which now produces both the club- and double-cab derivatives.

The locally built Triton range replaces the Mitsubishi Colt Rodeo.

Niefer notes that MBSA, as the parent company, invested more than R200-million in the new Mitsubishi manufacturing line in East London.

He says eight MBSA employees were sent to the Mitsubishi plant in Thailand for comprehensive training.

Follman notes that Triton production numbers at East London are about 2 000 units a year, but that the line’s capacity is 5 000 units a year.

An increase in production may be triggered by “increasing market acceptance of the Triton”, he adds.

About 200 people work on the Triton production line, with the bakkie’s local content at 48%, much the same as its Colt predecessor.

MBSA has been granted the right to export the Triton to sub-Saharan right-hand-drive markets.