MIDP certainty will determine future investment

DaimlerChrysler focuses on technology-driven tasks ED RICHARDSON “WE WOULDN’T be here if it didn’t make business sense,” says Dr Hansgeorg Niefer, the newly-appointed chairman of the managing board of DaimlerChrysler South Africa (DCSA). The company, which has been in South Africa as Mercedes Benz since 1954, sees further growth opportunities for both itself and component suppliers. This follows the awarding of a contract to assemble the next generation C-Class Mercedes-Benz – the W204 – in DCSA’s plant in East London. At present, some 200 Mercedes-Benz C-Class vehicles and 40 Mitsubishi Colts leave the plant daily and go straight to the East London harbour or into the local market. Niefer says that DaimlerChrysler enjoys a number of advantages being based in South Africa. These include competitive labour costs, flexibility and the Motor Industry Development Plan (MIDP). “Compared to Europe our manufacturing is much more flexible and we can quickly change models on the production line if there are any problems. This is due to the balance between automation and labour. People can adapt more easily than machines. We also like to employ people in order to create jobs in South Africa,” he says. There is a drive to boost investment into South Africa. “We are constantly talking to suppliers in Germany and US. There are clear indications that it is not only European companies, but also US firms that are seeing major business opportunities. “We also realise that if we want to attract more suppliers, we are going to have to focus more on technology. Labour-intensive work is increasingly moving to India and China, and we have to focus more on technology-driven tasks which cannot be moved to other manufacturing destination as easily,” he says. Future investment will also depend on greater certainty about the MIDP, which expires in 2012. Niefer says government must give the industry concrete post-2012 plans if investment is to continue in the local automotive assembly market. One of the interesting initiatives has been to bring a group of US minority business enterprises to South Africa and to introduce them to the African entrepreneurs. After meetings with 50 South African Black Economic Empowerment companies, the US businesses left seeing South Africa as a country where they can invest with technology transfers. Three companies out of the 15 that visited are busy with negotiations. Given South Africa’s distance from the major export markets and suppliers of components, DaimlerChrysler is benefiting from its close links to the port of East London. “East London has the advantage of not being congested, which means that vehicles and containers move quickly. We are really happy with the port of East London. They are really committed and focused on us,” he says.