Prominent speakers at the recent Autocluster Conference held in Kyalami included Numsa national researcher Jeffrey Ndumo, British-based Society of Motor Manufacturers and Traders expert Christopher Macgowan, Econometrix director Tony Twine, Naamsa MIDP committee chairman Roger Pitot and AIDC project manager Mamongalo Mahlatsi.

Prominent speakers at the recent Autocluster Conference held in Kyalami included Numsa national researcher Jeffrey Ndumo, British-based Society of Motor Manufacturers and Traders expert Christopher Macgowan, Econometrix director Tony Twine, Naamsa MIDP committee chairman Roger Pitot and AIDC project manager Mamongalo Mahlatsi. earlier this month quoted Gert Debeer, director of the Canadian automotive business Autofacts, as predicting that fewer, but larger multi-brand franchises were set to become the norm in South Africa. Because dealers were facing pressure from manufacturers to invest in new technology and found it difficult to recoup the costs of such capital expenditure, "larger dealers were more likely to survive and many smaller dealers would go under", Debeer told delegates.

Retail Motor Industry organisation chief executive Jeff Osborne estimated that about 10 per cent of vehicle parts sold in South Africa were counterfeit. These counterfeit parts compromised the reliability of cars and hence road safety and took about R1 billion in business away from legitimate dealers every year.

NUMSA’s national researcher Jeffrey Ndumo used the event to voice the trade union’s disillusionment with the government’s Motor Industry Development Programme, the affordability of new cars and job stability.

Ndumo said the MIDP was fairing poorly in respect of the balance of trade and the industry’s rationalisation and job creation and that the scheme did not fully address issues such as sustainable employment, promoting high quality vehicles, increased production and the improved trade balance to promote growth and a more internationally competitive market.

Initiated in 1995 and set to continue until 2012, the MIDP was also criticised by Christopher Macgowan of the UK’s Society of Motor Manufacturers and Traders.

A leading industry expert, Macgowan doubted whether it was practical to have vehicles manufactured as part of a government mandate as this could mean a step back in terms of technology and efficiency. As most manufacturing plants are owned by multinationals, government had to take greater care of the policy employed, he said.

Of further concern was the way in which the industry was being restructured, leading to increased productivity but at the expense of jobs, Ndumo said.

"The strategy was expected to contribute to the growth of employment and of the sector. But to achieve high volumes, companies adopted high technology that resulted in the shedding of jobs. Total job losses from 1996 to 2001 were 16 200 and in 2003 more job losses have taken place,” he added.

The nature of the South African economy was such that labour intensive industries should abound to create jobs, the opposite of which is occurring with rationalised companies. Africa, and indeed South Africa, had very distinct requirements and expectations of its motor industry with vehicle affordability and other factors affecting the industry had a particular impact that differed from developed nations.

To address this issue, NUMSA is in favour of possible government involvement in a manufacturing venture to build cheaper local vehicles. It was suggested that locally-produced cars with 1,4-litre to 1,6-litre engines, and cars with high local content, be exempt from tax.

"The rapid growth of CBU exports in the short period 1998-2002 is largely responsible for the view that the MIDP has been successful and should not be improved or altered as a policy to drive the growth of this industry,” said Ndumo.

"But the question is whether such rates of export growth of components and vehicles assembled locally can be sustained. There were signs last year (2002) of a substantial deceleration of the growth of the CBU exports and domestic production.

"The faster growth of CBU exports thus contributes little to an improvement in the balance of trade.

"The export growth of CBU and a few components is not very closely integrated with other segments of the sector and the economy at large, creating an Island of Exports.

"While exports have risen, imports have increased as well, thus contributing to the decline of local content."

Other Numsa concerns centre on South Africa having poor and relatively costly public transport systems, creating a heavy reliance on vehicles for the transportation of goods and people in what Numsa believes to be collusion between and amongst car dealers and banks in determining vehicle prices.

Skills development continues to cause NUMSA some concern in light of the industry’s poor response to addressing basic and task-specific skills development. With the number of matriculants passing mathematics and science (skills necessary to the industry) dwindling, there may be an even bigger problem. "HIV/AIDS impacts negatively on skills and human resource development. In most South African companies, it is cheaper to treat than to ignore HIV/AIDS in the workforce” said Ndumo.

Motor industry analyst and Econometrix director Tony Twine believes a long-term solution to the vehicle affordability problem in South Africa is to raise the earning power of the population relative to the price of cars.

Twine said price was not the sole determinant of affordability and the “individual level of affordability of various goods was a function of the price and the income available for their purchase”.

Twine said the country was worse off in terms of vehicle affordability now than it was in 1984, probably because the new vehicle market was sensitive to exchange rate fluctuations: "My feeling is the technical improvements made by the global motor industry have added to the cost of vehicles rather than making them cheaper."

Twine said the affordability crisis had as much to do with the value that individuals in South Africa were capable of generating, and therefore consuming, as it had to do with the differential price increases of vehicles over the past two decades.

Furthermore, because of the local motor industry’s relatively minute share of the global automotive supply network, it could achieve greater levels of economic output by continuing to benefit from government’s MIDP programme, Twine said. That was with the proviso that the export-destination countries did not start implementing counter duties against SA's automotive exports.

This approach also left the domestic industry vulnerable to the politics of mother company boardrooms, said.

He said total local production of about 380 000 vehicles, including exports but excluding imports sold domestically, amounted to less than 0,7 per cent of global production and was "only a tiny blip on the radar screen".

Roger Pitot, the chairman of Naamsa's MIDP committee, said the raw materials task team set up by the motor industry development council would evaluate the supply chain of each major raw material and identify solutions as well as make recommendations to facilitate and optimise the use of South African raw materials in the industry.

Pitot said that by merely extending the existing programme the 2002 mid-term review of the MIDP conducted by academics "avoided rocking the boat" and questioned whether the programme was meeting its objectives for globalisation, trade balancing, employment stability and affordability.

Pitot's comments follow those made last week by Naacam executive director Clive Williams, who is also the chairman of the raw materials task team.

Williams said the objective of this task team was to get "people working as a supply chain" and not caring only about their own businesses. "If necessary, we'll get the government to come in and wave a finger," Williams added.

He said South Africa did not have a well-developed downstream industry because of import parity pricing and raw materials could now be exported, converted and then exported back to the country at a price at which it could not be produced locally.

More than 7 000 local motor sector employees and 42 000 family members have been reached in one of the most wide-ranging efforts by the private sector to deal with the HIV/Aids pandemic, quoted Mamongalo Mahlatsi, the Automotive Industry Development Centre's project manager for socio-economic programmes, as saying at the conference.

Mahlatsi quoted a progress report that said 18 companies based in South Africa had already put in place HIV/Aids programmes under the centre's workplace wellness initiative.

Ford, DaimlerChrysler, Volkswagen and BMW were among the vehicle assemblers that pioneered private sector HIV/Aids initiatives at their South African plants, and their suppliers and dealers were now also initiating programmes.

The release of details of the success of the centre's motor industry programme follows the controversial discussion paper written by the Human Sciences Research Council, which links globalisation and corporate restructuring to the Aids pandemic.

Original article from Car