Chinese vehicle manufacturer First Automobile Works (FAW) will invest R600 million, of which R200 million will go towards the construction of a state-of-the-art truck and passenger car plant at the Coega Industrial Development Zone outside Port Elizabeth.
Today, 28 February 2012, saw the signing of the lease agreement between FAW and the Coega IDZ. The local Nelson Mandela Bay Business Chamber has marked this day as a milestone for Nelson Mandela Bay and complimented the Department of Economic Development (DEDEAT), CDC and FAW on the conclusion of this catalytic investment, as the region can look forward to reaping the fruits of these labours for generations to come.
The investment is jointly funded by the FAW and China-Africa Fund and will, in the first phase, generate 500 permanent jobs for the Eastern Cape.
A team will be established to investigate the procurement of local content from the automotive component manufacturers over the coming years.
It comes on the back of a recent visit by President Jacob Zuma to China where he signed bilateral trade and investment agreements between the two countries and governments commitment to spensing over 24 billion rand to the Estern Cape over the next seven years.
Coega marketing and communications manager Ayanda Vilakazi says FAW’s decision to invest in the Eastern Cape was prompted by Coega’s location, the proximity of the Port of Ngqura, the logistical solutions on offer, the availability of skills in the Nelson Mandela Bay Metropolitan area and support mechanisms offered by Coega.
“FAW’s decision to build the plant in South Africa is significant as it will be one of the biggest manufacturing investments by a Chinese entity in the country so far. The arrival of FAW in the Eastern Cape also adds to the existing list of automobile manufacturers in the province, which includes Volkswagen SA, General Motors SA, Ford and Mercedes Benz,” Vilakazi says.
Marking the historic sod turning, Kevin Hustler, CEO of the Nelson Mandela Bay Business Chamber said; “We view today’s ceremony as a firm step towards confirmation of FAW’s commitment to the CDC IDZ and the Nelson Mandela Bay region, as well as to the Eastern Cape and South Africa. This investment helps bring critical mass to the CDC IDZ. An anchor investment such as this makes it clear to other investors that the region is receptive to investment, thus ensuring the attraction of future direct foreign investment. On behalf of the Nelson Mandela Bay Business Chamber, we welcome FAW to the City and look forward to engaging them proactively with regards to their future socio-economic development of our region.”
The plant will be built on 400 000 square meters of land in Zone 2 and is expected to produce 5 000 medium-heavy commercial vehicles and 30 000 passenger and light commercial vehicles in subsequent phases.
The truck assembling facility is expected to create 500 to 800 jobs, with more jobs being created when FAW start producing an additional 30 000 passenger vehicles annually.
FAW is China’s leading exporter of vehicles. In 2010 FAW produced 2 558 166 vehicles, an increase of 31.6% from 2009. This included more than 300 000 trucks making it the third-largest truck manufacturer in the world. Since entering the market in 1984, FAW has produced 16 million vehicles and has consistently been a Fortune 500 ranked company.
Additionally, FAW has joint venture operations with many of the world’s leading vehicle manufacturers including Volkswagen, Toyota and Mazda. In 2010 over a million automobiles were sold through these joint venture operations.
The tally of investors who have committed themselves to ploughing billions of rands in the IDZ but not yet operational currently sits at 11. This will be a shot in the arm of the IDZ as the number of potential operational jobs to be created by these investors is estimated at 3 147, a substantial figure considering the Eastern Cape is one of the provinces battling a huge unemployment rates.