The Eastern Cape is home to four of the seven OEMs operating in South Africa and up to 100 major component manufacturers.
Eastern Cape based international vehicle assemblers include Mercedes Benz in East London, General Motors and Volkswagen in Nelson Mandela Bay and Ford which produces engines for the domestic and international market at its plant in Port Elizabeth
The Eastern Cape manufactures half of the country's passenger vehicles and provides 51% of South Africa's vehicle exports.
The sector accounts for over 40 000 formal sector jobs in the Eastern Cape - 10 000 employed at OEMS and an additional 30 000 employed by some 1500 supplier companies.
The Eastern Cape Government remains committed to strengthening this automotive sector in the province and this is evident in the fact is has undertaken the following initiatives:
- Providing funding for the establishment of the automotive logistics park (ALP) in the Nelson Mandela Metro in support of the automotive industry and its OEM's (first, second and third tier suppliers) for international contracts. The government have committed R30 million over the next five years to develop this logistics park.
- Providing funding for the establishment of the automotive supplier park (ASP) in the East London Industrial Development Zone (IDZ).
- The establishment of a multi-OEM model in the East London IDZ in support of the automotive industry.
- Support for and participation in the Eastern Cape Automotive Cluster.
Facts and figures
- Total automotive component exports for South Africa for 2011 amounted to R82.2 billion.
- There are 130 global export destinations for South African component exports;
- Investment by original equipment manufacturers (OEM's) between 2010 and 2012 was estimated at R7billion.
- The biggest market for South African automotive component exports is the EU followed by Africa the USA and Canada.
The industry is currently investing in new production lines as well as refurbishing their existing lines to accommodate new business from the OEMs. Most OEMs are releasing new models which require different designs in 2012 going into 2013. Industry incentives established by the national government could not have launched at a better time as most suppliers are benefiting from funding returns awarded by government through incentives like MCEP and the AIS. Production of the new Chevrolet Utility, which was developed as a joint product by General Motors in Brazil and South Africa, started in late 2011. Local content in the vehicle averages between 25% and 30%, although this may increase as the model moves deeper into its production lifecycle.
VW's recent introduction of the one-ton Amarok is expected to take a 7% to 12% share of the LCV market over the next two years.
Some 75% of the local Ford Ranger production has been earmarked for export, with the South African plant expected to deliver the vehicle into 148 countries. In total, the Ranger will be sold in a 180 markets, with Ford plants in Thailand and Argentina also contributing to production. Local content in the Ranger will be between 60% and 65%.
A range of institutional support for the sector is positioned within the Eastern Cape. The infrastructure support systems include:
- The Eastern Cape Automotive Cluster.
- The Automotive Industry Development Centre (AIDC);
- The Department of Economic Development Environment and Tourism (DEDEAT);
- The Eastern Cape Development Corporation (ECDC);
- The Coega Industrial Development Corporation (CDC);
- The East London Industrial Development Zone (ELIDZ);
- The Eastern Cape Socio-economic consultative council (ECSECC);
- The Small Enterprise Development Agency (SEDA);
- The Higher education sector in the Eastern Cape has strong relationships with the Nelson Mandela Bay Metropolitan University (NMMU) and Rhodes University
Provincial opportunities that exist in terms of the automotive and component sector include:
- New component manufacture - potential exists for investment into component manufacture in support of the automotive industry in the province.
- Catalytic converters - business opportunities exist for investment in stainless steel, ceramic core & assembly operations directly related to the catalytic converter industry based in Port Elizabeth.
- Automotive tooling, parts and components - opportunities exist for businesses to invest or expand in the areas of tooling, jigs, assembly lines, auto and safety glass, plastic automotive fittings, engine parts and rubber and plastic components.
- Automotive supplier park - the ASP is up and running at the East London IDZ, offering attractive opportunities to component manufacturers, particularly those that supply the nearby Mercedes Benz South Africa operation.
- Business opportunities in the automotive component cluster - co-operation with established first and second tier suppliers for storage solutions, JIT distribution, research and development and training initiatives.
- New vehicle manufacture - the Eastern Cape has been identified as a potential investment destination for a new electric car production and assembly plant for both domestic market and export. The Eastern Cape offers excellent location advantages coupled to access to SADC and African markets.
AUTOMOTIVE INDUSTRY DEVELOPMENT
The ECDC provides dedicated support and world class engineering services and programmes to the Eastern Cape automotive sector, in order to improve its global competitiveness.
It does this primarily through its agency the Automotive Industry Development Centre (AIDC), which is an implementing agency of national and provincial government that provides subsidised technical and manufacturing related services and programmes to South African companies. Its team of highly qualified engineers, does this with the primary aim of giving legs to government's focus of growing jobs and the economy by making South African manufacturers more globally competitive.
The Eastern Cape Automotive Cluster was launched on 22 March 2012 with the AIDC performing a secretariat function.
The most significant outcome of the cluster programme is to align and bring together all stakeholders in a cohesive fashion within the EC automotive sector.
The directive for each unit in the cluster (Supplier Development, Logistics and Skills Development) seeks to utilise Task Teams to outline specific deliverables for the EC Automotive Cluster.
The AIDC serves on each of these teams and would seek to further re-design and align its initiatives and programmes to satisfy the call from OEMs and suppliers towards common goals.
The AIDC plays a pivotal role in facilitating the use of various incentives from government i.e Automotive Investment Scheme (AIS) and the Manufacturing Competiveness Enhancement Programme (MCEP).
In Supplier Development, the latest testimonials from industry and other stakeholders further serve to highlight the effectiveness of the Tirisano Programme as well as the Wellness/AIDS programme. These programmes have continued to underpin developing suppliers to become globally competitive. A plethora of pressures and threats exist in the industry which include high costs, low productivity, rising utilities costs and operational leadership practices.
The organisation continued and will continue to adapt its programmes as the cluster process unfolds through the technical action committee and cluster steering committee.
The AIDC EC has recorded its highest savings achievements to date. With new application methods and renewed focus on cleaner production, lean manufacturing, wellness and skills training, companies under the AIDC programmes are reaping long term benefits.
For more information of the AIDC and its programmes please visit wwww.aidcec.co.za or contact 041 399 2000, info@aidcec.co.za
