Ford drives change in car makers’ sentiment

Top-level talks aim to bolster sector after strikes hit exports

SENTIMENT among SA’s car manufacturers is rallying ahead of top-level talks today with Trade and Industry Minister Rob Davies, which aim to bolster an industry whose confidence and output have been hit by labour militancy.

Ford Motor Company global president and CEO Alan Mulally said yesterday that the US vehicle giant was not planning to cut back its operations in SA, despite the recent motor industry strikes that disrupted its export programme and cost SA’s car sector a cumulative R20bn in lost earnings, while slashing exports by 75%.

Mr Mulally said in an interview at the Johannesburg International Motor Show yesterday that Ford Southern Africa’s Silverton, Pretoria, vehicle assembly plant remains a core part of the group’s global manufacturing operations. He suggested that its importance could grow, following a decision to create a new Ford division for the Middle East and Africa.

Mr Mulally was anxious to ease fears over Ford’s plans. He said the group was happy with its global manufacturing operations, which were “pretty much where we want them to be”.

Silverton is designed to build up to 110,000 Rangers annually and the current model is due to continue until at least 2018. Mr Mulally said production would continue as planned and that the group did not intend to build assembly facilities anywhere else in Africa. The company has sold cars in SA since 1923.

However, he said reliability of delivery was critical for any plant and observed: “We are continually re-evaluating our manufacturing footprint around the world.”

While he took care not to imply criticism of labour or SA’s government, he said any country that seeks foreign investment must create an environment where investors feel secure. Nissan SA MD Mike Whitfield said yesterday that of the approximately 6,000 cars and pick-ups his company was unable to build because of the strike, “only about a third” would be recovered.

He said the strike, which led to all seven of SA’s major vehicle manufacturers being unable to fulfil export orders, had “done huge damage to SA’s reputation as a reliable manufacturer”.

BMW SA announced recently that SA’s unstable labour situation had cost it the chance to build a new car in the country. MD Bodo Donauer said that after four years of negotiations, he had been confident of attracting additional manufacturing investment to SA.

Instead, after the recent strikes cost BMW SA production of 14,000 cars — 80% of which were for export — the German parent company decided it could not risk trusting SA with more business. Though Mr Donauer stressed that the decision would not affect existing 3-Series investment plans, he said a new vehicle would have created hundreds, possibly thousands, of additional jobs at the company and its suppliers.

Ford Southern Africa, which invested R3.4bn in Silverton and its Port Elizabeth engine plant, exports the Ranger pick-up to 148 markets. Like other companies in SA, it lost thousands of production units during the strikes, prompting MD Jeff Nemeth to warn that SA’s labour instability could frighten off foreign investors.

Mercedes-Benz SA said it would push ahead with a R3bn investment plan in the country that would see it increase local output to 100,000 units a year. CEO Martin Zimmermann said the outlook for growth in SA is “very positive”.

The company would introduce new technology and a third shift to its local plant, which now

produces about 60,000 units a year. Mercedes would recover lost production from the strike in six to seven weeks, Mr Zimmermann said. “We have quite a significant order book.”

The expansion will take out some of the sting of fellow German car maker BMW’s recent announcement that it would not build a new model in SA.

BMW public affairs GM Guy Kilfoil said yesterday that BMW would be attending the meeting with the minister today and that grievances would be aired. However, he said the outcome would depend on “what he (the minister) wants to achieve”.

“BMW did not threaten to disinvest — it is a fact that the strikes were damaging. We remain 100% committed to our investments,” Mr Kilfoil said.

Although details of today’s meeting with Mr Davies were scant yesterday, it is understood that the discussions are aimed at devising an enduring damage control plan.

Conspicuous by their absence will be the unions, although follow-up talks with labour are also being planned.

“Unions will not be at this meeting, but there will be a follow-up with them — we will work with labour,” National Association of Automobile Manufacturers of SA (Naamsa) director Nico Vermeulen said yesterday.

“We will need a more in-depth discussion in due course … we need to move forward in a positive way.” Naamsa is hoping that the three-year wage deal signed with the National Union of Metalworkers of SA (Numsa) will foster the stability needed for the industry to move forward and attract investment again. It said it would be important for multinational companies to work with the government and labour to prevent a reoccurrence of the strikes.

However, Numsa spokesman Castro Ngobese said the motor bosses “remained arrogant” and wanted to continue to reproduce “apartheid-era poverty wages”. He labelled the talks as part as of a broader offensive to undermine labour rights.

“The union refuses to be blackmailed by companies like BMW,” he said.