Mercedes-Benz also cutting back on operations in SA
Ford’s Silverton vehicle assembly plant and Port Elizabeth engine plant to shut on Friday
German-owned carmaker Mercedes-Benz SA (MBSA) joined Ford Southern Africa on Monday in announcing plans to cut back operations in SA in response to the Covid-19 crisis.
The decision by the two companies will bring to three the number of car manufacturers after BMW SA announced last week it was suspending manufacturing for a month at its plant in Rosslyn, Tshwane, because of the virus. The company hopes to restart operations on April 20, but says this will depend on circumstances.
Other companies say they could follow suit if the pandemic gets worse.
MBSA says its East London vehicle-assembly plant will gradually reduce manufacturing operations and work in some administrative departments. Manufacturing is expected to stop completely on April 9 for an initial five weeks.
As with BMW SA and Ford Southern Africa, the company says the decision to suspend production was driven by a mix of health and business demands.
An MBSA spokesperson said: “The decision will help the company prepare for a period of temporary lower demand and to protect the company’s financial strength.”
East London builds a variety of C-Class car models, of which the overwhelming majority are exported. The global crash in new-car demand because of Covid-19 made a production suspension inevitable after BMW and Ford, both of which are also export dependent, had made the same decision.
Besides cars, East London also assembles trucks and buses.
Earlier on Monday, Ford motor company announced its intention to suspend its SA manufacturing operations because of the pandemic. Its assembly plant in Tshwane’s Silverton and engine plant in Port Elizabeth will shut on Friday.
Any further shutdowns will have an effect far beyond the motor industry, which accounts for 30% of SA’s manufacturing output, 14.5% of exports and nearly 7% of GDP. It also employs about 120,000 people directly and supports an estimated 800,000 more in other manufacturing and service sectors supplying the industry.
Ford Southern Africa says its decision was driven partly by the need to protect employee health and the business.
International demand for new vehicles is collapsing as the pandemic wrecks economies about the world. SA’s motor industry, which exports more than two-thirds of its production, is particularly exposed.
Ford Southern Africa’s Silverton plant, which builds the Ranger bakkie, Everest sports utility vehicle and Raptor high-performance pickup, exports to 148 countries and territories. The SA-produced Ranger is Europe’s best-selling bakkie.
The Port Elizabeth engine plant supplies several Ford assembly plants around the world. Imports are also an issue, with more than 50% of the value of SA-made vehicles imported, and some of the foreign factories that supply the parts are closed.
SA is one of several emerging economies where Ford is suspending production. The group’s Indian operations closed on Saturday. Vietnam will follow on Thursday, then Thailand and SA on Friday. Ford doesn’t know how long the shutdowns will last.
“They will continue for several weeks depending on the pandemic situation, national restrictions, supplier constraints and dealer stock requirements,” said a spokesperson.
It has been less than a week since SA’s vehicle manufacturers put out a joint statement saying they did not expect Covid-19 to force any of them to shut. BMW SA changed its tune the next day
Ford has invested more than R11bn in Silverton and Port Elizabeth since 2010. Its Silverton plant can build 168,000 vehicles a year, and its Port Elizabeth plant can build up to 250,000 complete engines and 280,000 component kits a year.