‘Local content must increase’

As Rob Lord, Safmarine’s
‘Mr Auto’ considers the
challenges and opportunities
facing the automotive
industry in 2010, he adds his
support to the sentiments
expressed by Naamsa
president David Powels at
the SA Automotive Week
conference held in October
last year.
Powels told delegates that
local content must increase
from less than 40% to over
70% if the auto industry is
to survive.
Lord believes that
growing South Africa’s
auto support industries and
expertise will not only grow
the local auto industry as a
whole, but also auto exports
from South Africa.
“Substantial investments
have already been made
in growing our local
manufacturing base and
increasing the number of
locally manufactured, fully
built up vehicles exported
from South Africa.
“A reduction in import
volumes combined with the
increase in export volumes
will also go some way to
addressing the current
imbalance of the trade,
which is costly to both
shipping lines and OEMs,”
says Lord.
“Reducing the number
of vehicle components that
need to be imported will
also help reduce overall
manufacturing costs as
transport currently accounts
for a large percentage of
the OEMs’ procurement
budget.”
Last year South African
auto exports dropped by
almost 40%, partly due
to the collapse of global
markets but also because
South Africa was unable to
compete on cost with the
auto manufacturers in Asia.
However, Lord says
the news that Ford Motor
Company of South Africa
(FMCSA) plans to invest
R1.5 billion in the local
production of a newgeneration
Ford pick-up as
well as the manufacture
of the Puma diesel
engine (scheduled to start
production this year), bodes
well for the local industry.
“Not only is Ford looking
to produce large volumes
(around 70-90 000 units per
annum) but the company
also plans to export around
70% of the locally produced
vehicles to ‘new’ overseas
auto markets in the Northern
hemisphere and supply parts
to South America. The
bulk of South Africa’s auto
exports currently move to
‘traditional’ markets such as
Europe and the USA.
“While the increased
exports are good news for
shipping, it is equally good
for South Africa as the Ford
replacement pick-up and
Puma engine projects will
create jobs and boost skills,”
says Lord.
The Puma diesel
engine is currently being
manufactured in Turkey
but South Africa is being
earmarked as a major
supplier.
Lord says FMCSA will
produce around 270 000
Puma units, of which
approximately one third
will be for local use in
the replacement pick-up
production and the balance
of two thirds for export.