PE bags R11bn car deal
[caption id="attachment_143461" align="aligncenter" width="500"] Assembly line. Picture: Taneli Rajala via Wikipedia[/caption]
IN one of the biggest investments in Port Elizabeth’s history, a Chinese company is to build an R11-billion vehicle manufacturing plant which will create thousands of permanent jobs and hundreds more during its construction.
The plant will manufacture pickup trucks, sport utility vehicles (SUVs) and sedans for the African market.
The huge investment – part of it funded by the Industrial Development Corporation (IDC) – is set to create 2 500 direct jobs and thousands of indirect ones.
This follows an agreement signed in China at the weekend between the IDC and China’s fifthlargest vehicle manufacturer, the Beijing Automobile International Corporation (BAIC).
Some of its subsidiaries include passenger car maker BAIC Motor, military vehicle and SUV maker BAW, and truck, bus and agricultural equipment maker Foton Motor, which already has a presence in South Africa.
Construction on the Nelson Mandela Bay plant, which represents the company’s biggest single investment in Africa, is set to start before the end of the year or early next year.
IDC spokesman Mandla Mpangase said the plant’s exact location had not yet been finalised and was still subject to a feasibility study, which had started.
“We have just signed the agreement to set up the plant in PE, which will have some really great economic spin-offs,” Mpangase said. “The final selection of the actual location will be finalised shortly before the completion of the bankable feasibility study.
“However, because of the export element, it would make sense for the production facility to be in the coastal area.” While the bulk of the construction bill will be footed by BAIC, the IDC will be a co-funder.
Mpangase said the IDC funding amount would depend on the feasibility study. Nelson Mandela Bay municipality economic development political head Zukile Jodwana said any investment that would help cut into the massive unemployment rate and benefit the local economy was always welcome.
The region’s unemployment rate is 36%. The plant is expected to produce about 50 000 vehicles a year during its first phase, with that set to double in the second stage.
The latest investment f o rm s part of 26 bilateral agreements – valued at about R94-billion – between South Africa and China signed by President Jacob Zuma and his Chinese counterpart, Xi Jinping, in early December.
The IDC, which provides financial support to businesses and investment projects, is partnering on these agreements in a bid to bring large-scale investments to South Africa.
This in turn will create jobs, increase exports and hasten economic growth while maintaining cooperation with China. Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said five multinational vehicle manufacturers were already operating in the region.
“This enables the region to have a shared skills pool of qualified labour, as well as a diversified and strong local supplier base, which the new vehicle manufacturer can most certainly leverage and benefit from,” Hustler said.
Nafcoc regional convener Litemba Singap said the organisation would help lobby to get the plant set up in the city’s automotive hub, the Coega IDZ.
He particularly welcomed the jobs and the opportunities for small business participation in the construction phase. The IDZ was one of a number of potential sites visited by a BAIC delegation last year. But Coega spokesman Ayanda Vilakazi said that was as far as discussions had gone with the vehicle manufacturer.
“We cannot comment on this because we are also in the dark,” Vilakazi said.
“There was an initial discussion at the beginning of the year and it has not progressed from that. “There was no commitment to build, so we are not sure where they will decide to build,” Vilakazi said.
Recent investments in the motor industry in Nelson Mandela Bay include Volkswagen SA’s R4.5-billion expansion and FAW’s R600-million manufacturing plant at the Coega IDZ, plus continued investment by Ford SA in its engine plant at Struandale.
A BAIC subsidiary, BAW South Africa, opened a minibus taxi assembly plant in Gauteng four years ago in a R196-million investment that created 469 jobs in that region.
