Warning on loss of SA’s motor industry
The loss of its motor industry would cost SA at least 660,000 jobs and R84.5bn in wages, reduce GDP by more than R210bn and widen the country’s trade deficit by R40bn, says Econometrix MD Rob Jeffrey.
The loss of its motor industry would cost SA at least 660,000 jobs and R84.5bn in wages, reduce GDP by more than R210bn and widen the country’s trade deficit by R40bn, says Econometrix MD Rob Jeffrey.
He was speaking in Johannesburg on Thursday at a motor industry briefing organised by the National Association of Automobile Manufacturers of SA (Naamsa). Econometrix recently completed a report on the motor industry’s contribution to the broader economy.
Industry executives are in talks with the Department of Trade and Industry about the next phase of automotive policy after the current Automotive Production and Development Programme (APDP) expires in 2020. Trade and Industry Minister Rob Davies wants negotiators to map out a framework to 2035 and to consider including trucks, buses and motorcycles in a policy that, until now, has been limited to cars and light commercial vehicles.
Naamsa president Mike Whitfield, who is also MD of Nissan SA, hoped the department would finalise its post-APDP strategy before the end of 2017.
Despite broad support for a policy that has attracted more than R40bn in foreign investment and will bring in a further R8bn in 2017, the APDP, which started in 2013, has not been universally popular. Critics, including some politicians who would like to see the programme’s production incentives diverted to other projects, say the APDP’s costs outweigh its benefits. Vehicle and components manufacturers, for example, can claim back up to 30% of new production-related investments. However, Volkswagen SA MD Thomas Schaefer said the incentives were not generous by international standards. “Take away the APDP incentives and no more new investment will come this way,” he said.
Naamsa director Nico Vermeulen said local vehicle production was expected to reach a record 640,000 in 2017 — reached far beyond the sector itself. The motor industry spent more than R200bn annually on goods and services from other industries.
The “direct” motor industry — including vehicle and components producers, new- and used-vehicle dealers, transport companies, repair and service providers and spare-parts suppliers — employed nearly 500,000 people, he said. Throw in jobs created in other industries to support automotive and the number rose to more than 925,000. Some regions, most notably the Eastern Cape, were heavily dependent on the motor industry for jobs and taxes.
Instead of looking for ways to weaken the motor industry, “other industries should look upon it as a model of how to overcome the obstacles they face”, Vermeulen said.
SA desperately needed to re-industrialise in order to reduce unemployment and stimulate economic growth. Instead, it had shed more than 200,000 manufacturing jobs in recent years, he said.