‘We need to know’

SA mo­tor in­dus­try stag­nat­ing be­cause of lack of guide­lines on APDP

The Witness - Wheels - - MOTORING -

THE South African mo­tor in­dus­try is in ur­gent need of guide­lines from the Depart­ment of Trade and In­dus­try (DTI) re­gard­ing the fu­ture of the Au­to­mo­tive Pro­duc­tion and Devel­op­ment Pro­gramme (APDP). This mes­sage came through loud and clear dur­ing a con­fer­ence ar­ranged by the Na­tional As­so­ci­a­tion of Au­to­mo­tive Com­po­nent and Al­lied Man­u­fac­tur­ers (NAA­CAM) at Au­tomechanika Jo­han­nes­burg on May 6.

The del­e­gates had been hop­ing that the DTI would an­nounce the re­sults of its APDP re­view at the con­fer­ence at Expo Cen­tre as two rep­re­sen­ta­tives from the gov­ern­ment depart­ment were to have been speak­ers on the day. How­ever, the speak­ers, Lionel Oc­to­ber, the direc­tor-gen­eral and APDP spe­cial­ist, Roger Pi­tot, de­clined to at­tend on the ba­sis that they were still await­ing fi­nal­ity of the doc­u­ment and its ap­proval by Cabi­net.

Robert Houdet, the ex­ec­u­tive direc­tor of NAA­CAM, said de­lays in the pub­li­ca­tion of the re­view im­pacted on the abil­ity of ve­hi­cle and com­po­nent man­u­fac­tur­ers to draw up fu­ture pro­duc­tion plans.

“South Africa is nowa­days pro­duc­ing only 0,6% of global ve­hi­cles and man­u­fac­tur­ers could eas­ily move pro­duc­tion to fac­to­ries in other parts of the world if there were de­lays in pro­vid­ing de­tails of the way the APDP was to be changed fol­low­ing the re­view process,” ex­plained Houdet.

Ken Lello, the chief op­er­at­ing of­fi­cer — SA op­er­a­tions, at com­po­nent man­u­fac­turer Me­tair, ex­panded on the sub­ject by say­ing that it was also vi­tal the road ahead af­ter the APDP ends in 2020 be spelt out within the next 18-24 months to en­able com­pa­nies to un­der­take long term project plan­ning.

Lello went on to say that ve­hi­cle pro­duc­tion in SA had ac­tu­ally de­clined since 2006 and the coun­try’s share of the global mar­ket had fallen from 0,86% in 2006 to a cur­rent level of 0,59%.

“To­tal built-up ve­hi­cle im­ports had in­creased to more than 50% - 62% in the case of pas­sen­ger cars. We will cer­tainly not meet the dti’s tar­get of pro­duc­ing 1,2 bil­lion ve­hi­cles by 2020 as we are only geared up for vol­umes of about 600 000 units a year un­der the cur­rent APDP reg­u­la­tions. There are also few real in­cen­tives for the com­po­nent man­u­fac­tur­ers, which is of con­cern for the fu­ture of this lo­cal in­dus­try,” he said.

There were in­ter­est­ing com­par­isons made be­tween the flour­ish­ing man­u­fac­tur­ing in­dus­try in Thai­land and the fairly stag­nant sit­u­a­tion in South Africa in an ad­dress by Dou­glas Com­rie, of B&M An­a­lysts.

This fol­lowed a fact-find­ing mission to the Asian coun­try in Fe­bru­ary where the dif­fer­ences in the re­sults of the two coun­try’s dif­fer­ing in­dus­try sup­port pro­grammes were high­lighted.

The Thai­land pro­gramme pro­vided a high level of pro­tec­tion for lo­cal ve­hi­cle mak­ers and re­sulted in 90% of the ve­hi­cles sold in that coun­try be­ing lo­cally man­u­fac­tured. It also re­sulted in in­ten­sive hu­man re­source devel­op­ment and tech­nol­ogy trans­fer, which in­cluded the man­u­fac­ture of en­gines and trans­mis­sions.

Thai­land also op­ti­mises its po­si­tion as a sup­plier of built up ve­hi­cles and CKD com­po­nents to neigh­bour­ing coun­tries as well as util­is­ing Thai­land’s free trade agree­ments to pro­vide economies of scale in pro­duc­tion.

Com­rie said that this ap­proach had re­sulted in an­nual ve­hi­cle pro­duc­tion in Thai­land now run­ning at 2,5 mil­lion while South African out­put was still in the re­gion of 500 000 units a year af­ter both coun­tries had been mak­ing half a mil­lion ve­hi­cles an­nu­ally in 2002.

The gen­eral con­sen­sus at the con­fer­ence was that sig­nif­i­cant changes are re­quired in the APDP to in­crease lo­cal pro­duc­tion in line with the ob­jec­tive of in­creas­ing SA’s global com­pet­i­tive­ness.

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