Meeting the demands of SMMEs and acclimatising to SA’s labour environment, policies and construction laws have been named as some reasons for the delays which have threatened to stall one of Port Elizabeth’s largest-ever foreign manufacturing investments.
BAIC International has, however, reaffirmed its commitment to the R11bn car factory at Coega – the company’s first large-scale automotive investment outside of China.
“It is impossible that this project will fail,” BAIC SA chief executive Nemo Tian said at the company’s project management offices at Wells Estate.
Vehicle production, which had been expected to be under way on an SKD (semi-knocked down) basis by the end of 2018, is now projected to begin taking shape in the second quarter of 2019, once construction of the assembly line and welding shop is complete.
Full vehicle production capacity for the first phase of the project – projected to be about 50,000 units a year, ramped up to 100,000 in the second phase – is now only expected to start materialising in 2023, a year later than the initial target.
In addition, the construction of a paint shop, which is an important component of the intended “full value chain” factory, is now expected to be completed in early 2020.
This emerged in a candid interview with 54-year-old Tian, who was appointed to the new position in 2018 after 30 years’ service with China’s fourth-ranked automaker.
Construction at the site, situated within the Coega Development Corporation’s Special Economic Zone (SEZ), is moving rapidly.
The project, a joint venture between BAIC International and 30% shareholder the Industrial Development Corporation (IDC), was formally launched at a sod-turning ceremony in 2016.
While the project delays have been widely attributed to disruptions at the site and other disruptive actions by Bay SMMEs vying for BAIC contracts, Tian said the delays were not solely the fault of the SMMEs.
“This is BAIC’s first project of this nature outside of China and, as such, it has been a learning curve for us and we have been learning and gaining experience along the way,” he said.
“Other issues included learning about South Africa’s labour laws and construction requirements, including areas such as safety.”
With 60% of the vehicles that will be produced at the plant intended for export – with a heavy focus on the African continent – and 40% for sale in SA, Tian said this provided the plant with some flexibility with regard to time lines.
Tian said BAIC SA had already made some significant achievements, with SMME involvement targets not only having been met but, in some cases, exceeded.
The plant was also in a position to produce vehicles by year-end, albeit not at the full projected volumes.
Tian said Baba Ningi – who was gunned down in front of a Zwide butchery on Monday – had played a prominent role in the Bay SMMEs’ efforts to secure contracts at the site and other projects in the metro.
He had recently been appointed to a committee representing SMMEs which played an intermediary role between the SMMEs and BAIC SA and the IDC.
“We were informed of the death by the IDC and extend our condolences to his family.
“We have welcomed the SMMEs’ participation in the project and view them as service providers,” Tian said.
“When issues arise, we will try to find solutions. However, we do not accept violence as any solution.”
He said the company had already moved to establish a procurement office which would also investigate the supply of components from Bay manufacturers and attaining as much local content as possible.
African Chamber of Business president Luvuyo Popo said on Friday SMMEs were, due to the delays, still in a “wait-and-see position”.
The chamber is one of a number of organisations representing the SMMEs competing for BAIC contracts and which had been sceptical about the allocation of SMME work packages during the early phases of construction.
“There was an allocation of 60% of work that will be given to SMMEs and we will be waiting for that work to commence to see what packages are actually allocated,” he said.
Popo said that due to the climate of fear within the SMME sector, he would prefer not to comment further.