CONTINUING industrial action in the metal and engineering sector is taking its toll, with BMW cutting back production at its Rosslyn plant and General Motors suspending production altogether at its factory in Port Elizabeth.
Statements made by National Union of Metalworkers of South Africa executives that if car companies are unhappy they should just “go ahead and leave” are causing anger and frustration, not just at the South Africa-based car makers, but in the boardrooms and strategy planning divisions of their parent companies around the world .
However, on Thursday First Automotive Works (FAW), a member of the Fortune 500 and one of the largest automotive companies in China, opened its new production operation in the Coega industrial development zone (IDZ) outside Port Elizabeth.
According to Pepi Silinga, CEO of the Coega IDZ , FAW might be the first.
“We are pushing other OEMs (original equipment manufacturers). One is close to committing, also from China.”
FAW’s R600m investment in South Africa appears so important that the plant was officially opened by President Jacob Zuma.
The plant is seen as a major component of what the mayor of Nelson Mandela Bay Municipality, Ben Fihla , referred to as the countries’ “special relationship”.
That relationship is expected to play a major part in achieving gross domestic product in South Africa.
“We have set a growth target of 5% by 2019,” said Mr Zuma.
“We view this occasion today as a key contribution towards attaining that goal,” he said.
“This investment also augurs well for South Africa’s position within the global automotive manufacturing network and proves once again that we have an attractive operating environment to host global multinational companies.”
It is also seen in light of the new Vision 2020 programme, which Mr Zuma said aims to double South Africa vehicle manufacturing by 2020.
Mr Zuma announced the establishment of an investment support programme for the assembly of medium and heavy commercial vehicles, like that offered to passenger car makers.
“It is a culmination of a journey of many years of work to bring a Chinese automotive manufacturer to South Africa, to Coega”, Trade and Industry Minister Rob Davies said at the FAW opening .
It is definitely significant, because it is the largest value add investment by a Chinese company in South Africa to date.
FAW is promising to create 350 initial employment opportunities at the plant. It intends creating another 600 when it begins producing passenger cars.
Initially the plant will produce only trucks , all of which will be locally assembled from imported kits. The annual number has been touted as 5,000.
Mr Davies confirmed that the final details have been worked out for medium and heavy commercial vehicles to be included in the new automotive production development programme (APDP).
The full details will be gazetted next month, but according to Mr Davies, they will echo the programme details for passenger vehicles, and will include a similar rebate structure.
Mr Davies did not specify how many trucks would have to be manufactured or assembled to meet the requirement.
However, he said FAW planned to produce 35,000 passenger vehicles, which, even when added to the 5,000 trucks, would see it fall about 10,000 vehicles short of the total number required to receive APDP rebates.
Whether there has been any special dispensation to FAW to entice it to set up shop at Coega is the subject of speculation.
However, at a function the evening before the opening, China’s ambassador to South Africa, Tian Xuejun, said : “I am convinced the South African government will continue to support the follow-up development of this plant and supply its guarantee of future.”
FAW is not new to our shores. It first arrived in South Africa in 1994 and has been distributing trucks through private partnership agreements ever since.