R1.2bn Coega investment boost for SMMEs in automotive sector
THE rapid growth of Nelson Mandela Bay’s emerging automotive hub at the Coega Industrial Development Zone has gained more momentum with the announcement of a R1.2-billion investment in SMME component supplier development and the establishment of a new automotive industrial park in the IDZ.
A memorandum of understanding between the Beijing Automobile International Corporation (BAIC) – which is poised to begin construction of an R11-billion vehicle plant in the IDZ – and the Industrial Development Corporation (IDC) was signed at the weekend.
It paves the way for the R1.2-billion investment by both parties to develop SMMEs in the automotive sector in the Eastern Cape.
The developments were welcomed by a range of stakeholders and Economic Development, Environmental Affairs and Tourism MEC Sakhumzi Somyo, who expressed joy over the SMME investment in particular.
“No one can dispute that the automotive sector remains one of the biggest employers of our people,” Somyo said.
“What has proved to be a challenge over time is the guaranteed entrance and benefication of black businesses into the auto manufacturing value chain.”
He said the BAIC, along with project partner the IDC, had committed to achieve at least 60% local content on all vehicles to be manufactured at the new BAIC plant by the fourth year of production.
“We are hopeful that other OEMs [original equipment manufacturers] that have been in operation for decades in our country would at least match this commitment as they are currently sitting at an average of 35%,” Somyo said.
The industrial park would not only cater for the BAIC, but also domestic OEMs and for exports.
He said six suppliers from China and South Africa had concluded their feasibility studies and were interested in setting up operations in the industrial park to manufacture car seats, bumpers and dashboards, among other components.
The industrial park is expected to start operations next year, with a guaranteed minimum 600 permanent jobs, while the BAIC plant is expected to create about 1 000 jobs in its first phase of production.
Automotive Industry Development Centre Eastern Cape managing director Hoosain Mahomed said the developments were positive initiatives for new entrants into the sector and for the industry.
National Association of Automotive Component and Allied Manufacturers of SA executive director Renai Moothilal welcomed the deal as a sign of the commitment to develop the automotive supplier base in Port Elizabeth, and the country as a whole.
Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said: “The Eastern Cape already has five multinational vehicle manufacturers operating in the region that could benefit from the planned industrial park.
“We welcome the increase in employment that [it] would create.
“The projected employment opportunities will continue to progress the recent positive increase in the employment rate in the region.”
Coega Development Corporation (CDC) spokesman Dr Ayanda Vilakazi said the facilitation of first-tier component suppliers in the IDZ for BAIC had been on the cards since the start of the negotiations for the new plant.
“The CDC has always earmarked and marketed Zone 2 of the Coega Industrial Development Zone as the automotive zone,” he said.
“The FAW truck assembly plant is currently [its] largest investor.
“The zone has the infrastructure and services in place to allow for a quick turnaround time for the establishment of the first-tier components industrial park.
“The area earmarked for the BAIC supplier park in Zone 2 comprises 70 hectares,” he said.