SA’s truck manufacturing dream ‘not feasible’

The government’s
technicolour-dream of a fullscale
SA truck manufacturing
industry is just not feasible in
its current form, according to
truck makers.
From information FTW
obtained, based on industry
deliberations, the conclusion
amongst truck makers is that
the government’s local content
proposal for heavy trucks,
aimed at value-addition and
job-creation, is set to cause a
massive and unsupportable
increase in the cost of trucks;
is financially unsound for
manufacturers; and will not
even achieve its objectives.
The manufacturers are
convinced, and have research
to prove it, that local content
options are continually
strained to the utmost to suck
out as much as is financially
and operationally feasible.
But the government’s latest
proposals to increase local
content are being conducted
in a rather indiscriminate
fashion, and do little but
push up costs – ultimately
seeing truck buyers paying
considerably more.
And Craig Uren, MD of
Isuzu Trucks SA, revealed to
Business Day (BD) that that
“considerably” added up to as
much as 30%.
The bugbear facing the
manufacturers is that the
department of trade and
industry (dti) has decided to
add the medium and heavy
commercial vehicle
manufacturing sectors to
its post-2020 automotive
industry development
policy – the SA Automotive
Masterplan 2021-2035.
What the department wants
is for trucks to be like cars,
with components sourced
from local suppliers – in the
hope that this local content
will create new jobs.
But the numbers don’t add
up, according to truck makers,
and their mumbles ensured
FTW that the whole scheme
was unjustified.
This was proven in another
part of the masterplan where
the authorities insisted,
despite reservations by the
industry, that one step would
be for cab trimming to join the
list of local content, and that
this would be a qualification
for the Automotive Investment
Scheme (AIS).
But the National
Association of Automobile
Manufacturers of SA
(Naamsa) conducted research
into the implications and costs
associated with cab trimming
– finding no rational business
case for domestic trimming
of cabs for medium and heavy
commercial vehicles (MCVs
and HCVs respectively). Add
to that, Naamsa’s executive
manager Dr Norman
Lamprecht told FTW, little
incremental job creation or
value addition.
Uren’s interview with BD
also detailed what Isuzu had
calculated for the interior trim
of truck cabs to be produced
and fitted in SA: Cost, R35
million; jobs created, 15. “It
doesn’t make sense,” Uren
added.
The truck makers put all
this before the authorities.
And, in this case, it seems as if
the data provided by the truck
manufacturers persuaded
the authorities to take a
decision. They postponed
the introduction of the cab
trimming requirement.
Next is tweaks to the rest of
the masterplan programme. A
negotiation that truck makers
hope will be equally successful.