Trade and industry minister Rob Davies. Picture: BUSINESS DAY
Trade and industry minister Rob Davies. Picture: BUSINESS DAY

The SA motor industry can’t become globally competitive on its own but needs wholesale changes across the industrial and infrastructural landscape, Ford SA president Neale Hill said on Tuesday.

A revised automotive development strategy, coming into force in January 2021, will require motor companies to increase the value of local content in SA-made vehicles to at least 60%. The current average sits below 40%. Companies will also have to drastically grow the number of black-owned companies supplying components and sub-components.

The new version of the Automotive Production and Development Programme (APDP) will run to 2035. By then, if all goes according to plan, motor industry employment and annual vehicle production will both double, to 240,000 people and 1.2-million units, respectively.

However, Hill said that to succeed, the APDP must be part of a broad economic restructuring. Higher production volumes have to be economically viable. Increases in local content can be no more than incremental as long as the motor industry is forced to rely on overseas beneficiation of raw materials produced in SA. The country is a rich source of iron ore and platinum but the motor industry is forced to import finished products.

“We could make big leaps in local content if we only do something about the value chain,” Hill said. “We need a multi-industry strategy.”

The department of trade and industry (DTI), which administers the APDP, recognises this — which is why the programme is part of a broader strategy called the SA Automotive Masterplan. Through this, the government will improve national infrastructure, such as ports, rail and roads, making it easier for the industry to conduct its export-based business. More than half of all vehicles built in SA are destined for foreign markets.

It would also help if SA had a reliable electricity supplier. Assembly plants all have emergency power available, but even a second’s loss of power can cause production to be suspended for up to two hours while assembly-line robots are reconfigured.

The government has talked for decades about improving infrastructure, without achieving much. Durban, the country’s main port, is a constant source of logjam frustration. Ford’s Pretoria factory is currently exporting vehicles through Port Elizabeth. Maputo, in Mozambique, is also coming under consideration again.

However, it’s not just the government that doesn’t convert words into action. Motor companies have been talking for more than 30 years about components collaboration. Instead of seven motor companies each sourcing near-identical parts from different suppliers — often overseas — it should make sense to use one local supplier for all their needs.

Hill said: “If we want to achieve the 60% local content target, we have to look seriously at collaborating, to get the local economies of scale we need. Things such as mirrors, seat frames, seat materials, wiring harnesses and steering wheels are possible. But we have to stop talking and do something about it.”​