Motor industry revs up for its return to work
Sector awaits the government’s terms under which it will be allowed to resume production
The motor industry is waiting to hear the terms under which it will be allowed to resume manufacturing from the end of this week.
On Saturday, after intense industry lobbying, trade & industry minister Ebrahim Patel reversed the government’s earlier decision that vehicle and components manufacturers should not be among sectors allowed to resume production from May 1 once the lockdown to curb the spread of Covid-19 is downgraded from level 5 to level 4.
One proviso is that no more than 50% of employees may be on site at once.
Tim Abbott, president of the National Association of Automobile Manufacturers of SA (Naamsa), said this may not be practical for all companies.
He says other issues also need clarification before companies can make firm decisions on how to resume work. The industry was given until midday on Monday to submit proposals.
Even when rules are clear, manufacturing is unlikely to get going immediately from May 1.
Teams will need at least the weekend to prepare machinery and production lines. Even then, Abbott says, vehicle companies will have to wait for components from their suppliers. For some companies, the wait will be even longer.
Before the SA government imposed a lockdown at the end of March, the local subsidiaries of BMW, Mercedes-Benz and Ford had already been instructed by their multinational parents to suspend operations along with other group plants.
Abbott, MD of BMW SA, said his company’s plant, which produces the X3 car, will start up again on May 18 — the same date set for Mercedes-Benz SA.
Renai Moothilal, director of the National Association of Automotive Component and Allied Manufacturers (Naacam), said there is a “sense of relief” among suppliers that they can return to work, particularly those with export orders to service.
Prof Justin Barnes, the government’s chief independent adviser on automotive policy, has warned that the SA motor industry could suffer permanent damage if a continued lockdown stops vehicle and components companies from fulfilling export contracts.
About 64% of the vehicles built in SA find overseas buyers.
Abbott says he still hopes the government will reconsider its decision to keep motor dealerships closed.
They are allowed to carry out urgent vehicle repairs but, despite being upgraded from level 2 to level 3 on the risk-adjustment scale, they still cannot sell vehicles.
“For local motor companies that rely almost exclusively on local demand for the vehicles they produce, permission to start building again doesn’t help much if there is no outlet to sell them,” Abbott said.
Mark Dommisse, chair of the National Automobile Dealers Association, said dealers are likely to start laying off employees from mid-May if they are unable to open for business.