Vehicle manufacturer Volkswagen South Africa (VWSA) has attracted a number of key national and international components manufacturers to set up operations in Uitenhage, in the Eastern Cape.

The company, which unveiled this initiative this week, said the supplier plan was in line with the new Automotive Production Development Programme (APDP).

The initiative would attract investments of about R1-billion, and some 1 000 new jobs would be created by mid-2009.

Six new components supplier factories were already under construction.

Five of the new factories would be situated in the Nelson Mandela Bay Logistics Park (NMBLP), while another would be built at the entrance to the Uitenhage industrial area.

Interior plastic components manufacturer Faurecia Interior Systems, metal pressing parts manufacturer Bioxwich Industries, side-mirror and cables manufacturer Flextech, bumper systems manufacturer Rehau Polymer, and headliner and door panels manufacturer Grupo Antolin would all construct facilities at the NMBLP.

The automotive components division of South African company, Bel-Essex Engineering, would build a new facility directly opposite the Volkswagen plant.

"We are determined to go to the next step and take up the challenge presented by the new APDP to further extend our manufacturing capability and competitiveness," commented VWSA MD David Powels.

He added that the manufacturer's focus would be on cost, quality, technology, labour stability and people skills development.

"We have instituted an unprecedented focus on dramatically increasing manufacturing depth and extent of the local component supplier industry," added Powels.

He explained that there was a 20% gap between the cost competitiveness of South Africa, compared with that of Western Europe, and a 30% difference between the automotive manufacturing cost structures in South Africa, compared with that of emerging automotive "powerhouses", such as India, China and Russia.

Powels stressed that South Africa's automotive manufacturing industry could only survive in the medium-to-long term if it secured higher levels of local content.

"This includes the need to introduce new technologies and increase the use of local materials in the domestic components manufacturing industry," said Powels.

The existing domestic supplier base would also have to "significantly improve" its processes and productivity levels to survive and grow in the medium term.

VWSA purchasing division head Karlheinz Hell said that the company's focus was to combine local strengths with international expertise, knowledge and technologies.

"By establishing these partnerships, especially if the result is competitive pricing, we will grow a sustainable foundation to optimise our supplier base," said Hell.

He added that the Coega Development Corporation (CDC), which was the operator of the NMBLP, had also proved to be an "excellent partner" in VWSA's localisation drive.

The CDC stated that VWSA's initiative would strengthen the position of the region in the automotive sector.

"The positive impact of these developments to the economy of the Eastern Cape will be huge. They will bring dramatic shifts in people's lives in the metro and in the province far sooner than expected," said CDC CEO Pepi Silinga.