Unreliable power hurts VW production
• Local MD Thomas Schaefer tells how electricity spikes halt assembly line robots, and moots a R3bn waste-processing power plant
Attempts by German carmaker Volkswagen (VW) to increase production at its SA car plant are being undermined by lack of support at local and national level, says local MD Thomas Schaefer.
Attempts by German car maker Volkswagen (VW) to increase production at its SA car plant are undermined by lack of support at local and national level, says local MD Thomas Schaefer.
VW SA’s Uitenhage vehicle assembly plant, near Port Elizabeth, hopes to set a new record in 2019 by building 162,000 Polo and Vivo cars. Of those, twothirds, or 108,000, are for export, and the remaining 54,000 for the domestic market.
But Schaefer says unreliable Eskom electricity supply hits production. Despite back-up generators, momentary power spikes halt robots on the assembly line robots in their tracks. “It’s like a heart attack,” he says. The robot “forgets” where it is in the process, and vehicle bodies already on the production line have to go back to the start.
Eskom, which got another multi-billion-rand bailout from the government on Tuesday, has long been regarded by ratings agencies as the biggest risk to the growth of the economy. The shortage of electricity remains one of the main obstacles to President Cyril Ramaphosa’s investment drive.
A possible solution to the electricity problem would be a waste-processing plant enabling VW to create its own energy. Organic waste from chicken and animal farms would be turned into biogas, which would then be converted to electricity. BMW SA has a similar venture supplying its Rosslyn assembly plant.
Schaefer estimates that a waste plant would cost more than R3bn and create 1,000 jobs. But it would require co-operation from the dysfunctional Nelson Mandela Bay municipality. VW officials see little hope of reliable collaboration from there in the foreseeable future.
Then there is Transnet. Production in 2019 was hit by a goslow by Transnet workers at Port Elizabeth harbour. In a justin-time manufacturing environment, where late unloading of a single container of vehicle components can halt production, harbour productivity fell more than half. To overcome this, VW temporarily unloaded containers in Cape Town and transported them by road to Uitenhage.
Even when functioning normally, says Schaefer, the Port Elizabeth harbour underperforms. Overseas harbours with similar equipment and investment are twice as efficient. It’ sa complaint common to most SA harbours. Although the government offers generous incentives for multinational motor groups to invest in SA, says Schaefer, many advantages are lost when the import-export infrastructure doesn’t work. As one of its contributions to the 2021-2035 SA Automotive Masterplan, intended to reshape the industry for long-term development, the government promised to fix what it admits are serious infrastructural failings. Production disruptions cost VW in SA more than R10m this year, Schaefer says. In a competitive global environment, where multinationals allocate production volumes to plants with the lowest costs, that is a damaging loss. Schaefer said Uitenhage still comes in below its rivals, but added: “We survive this year, but we can’t have all this again.” Despite the many challenges — including a domestic newvehicle market struggling to escape from a long-term slump
— he says there are several positive signals for the SA motor industry. The recent strike-free signing of a new three-year agreement on wages and conditions has reassured foreign investors. The government’s success in securing a deal that will allow the UK to continue high-volume imports of SAmade vehicles has removed a potential nightmare for the industry. In 2018, the UK took more than a third of all cars and bakkies leaving SA.
There is also progress in creating a comprehensive African free-trade zone in which SA motor companies would play a leading role in establishing a pan-African motor industry.
VW, which already sends car kits to Kenya and Rwanda for assembly, hopes to launch a similar venture in Ghana before year’s end.