10 000 jobs to be created by new car plant

AN ESTIMATED 10 000 direct and indirect jobs will be created in South Africa by the planned R11 billion investment by Beijing Automotive International Corporation (BAIC) in a new vehicle manufacturing plant in the country.

Mandla Mpangase, a spokesman for the Industrial Development Corporation (IDC), confirmed this yesterday and that the IDC would have a shareholding of between 20 percent and 35 percent in the venture, with the balance held by BAIC, China’s fifth-largest automotive manufacturer.

Mpangase said the exact amount the IDC would be investing in the venture had not yet been finalised and would be determined by the corporation’s final shareholding in the project.

He said the IDC and BAIC signed a memorandum of understanding to formalise the co-operation last Wednesday during the official state visit to South Africa by Chinese President Xi Jinping. Production could commence within the next two to three years.

Mpangase said the IDC and BAIC intended to establish the new $800 million (R11.5 billion) original equipment manufacturer facility in South Africa to manufacture passenger vehicles, multipurpose vehicles, pick-up trucks and sport utility vehicles. The $800m investment excludes land and building costs.

Mpangase said the project would be phased, with the vehicle plant having an initial capacity of up to 50 000 units a year and ramping up to 100 000 units a year thereafter.

BAIC would export about two-thirds of this production to Africa and the rest of the world.

“The fact that it is important to export volumes makes it clear that the production facility would have to be placed at the coast, either KwaZulu-Natal (Durban or Richards Bay) or the Eastern Cape (East London or Port Elizabeth),” he said.

Mpangase said the establishment of a new BAIC original equipment manufacturer (OEM) facility in South Africa would create 2 500 direct jobs.

But Mpangase said it was generally accepted there would be an estimated multiplier effect of five times job creation in the supply chain on localisation of component manufacturing and other services, resulting in another 7 500 new job opportunities being created.

Mpangase said South Africa had the capability to produce all automotive components with existing suppliers with a deep value chain.

The current local content of existing OEMs in South Africa ranged between 40 percent and 70 percent.

“Taking all this into account, a similarly-sized new OEM could result in an estimated 10 000 decent jobs being created in the South African economy,” he said. Mpangase said the South African vehicle industry only accounted for about 0.6 percent of total global vehicle production, but accounted for about 7 percent of the country’s gross domestic product (GDP).

“By adding another similarly-sized new OEM to the South African industry, this facility could push this figure to 8 percent of GDP, especially considering that the contribution by the mining industry is going down.

“The impact of the exchange rate would then further push the contribution to GDP upwards if significant units are exported,” he said.

Lewis Lu, the business development manager at BAIC SA Investments, confirmed on Friday that BAIC would be investing in a vehicle manufacturing plant in South Africa that would commence production by the end of 2017.

It is believed BAIC will launch some fully built-up imported car models into the South African market from August next year.