Nelson Mandela Bay the engine of SA automotive industry

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It is common knowledge that the Eastern Cape, and Nelson Mandela Bay especially, is the hub of SA automotive manufacturing — an industry that, with all its associated component manufacturers and deep supply chain here, is the lifeblood of this metro.

The keynote address at the Nelson Mandela Bay Business Chamber’s AGM last week by Mikel Mabasa, CEO of the Automotive Business Council, Naamsa, made this abundantly clear, even to those already aware of the significance of this industry.

Almost 45% of local vehicle production takes place in the Eastern Cape, and more than 50% of the at least 350,000 passenger/light vehicles exported annually are moved through our ports.

This is the tip of the iceberg in terms of the impact of the auto industry in this metro in investment, spending, procurement and employment.

SA’s auto components manufacturers and suppliers are heavily concentrated in the province, particularly in this metro, and then there is the surrounding, complex network of raw material suppliers, logistics providers, and providers of supporting services from cleaning and catering to marketing, legal and accounting services — and the ripple effects into other businesses.

The impact of this is substantial — some say the impact of Ford’s departure to Pretoria and the disinvestment of General Motors in the 1980s (and again in 2017) is still felt.

Whether it’s a shopping mall, restaurant or plumber, most businesses in the metro benefit from the economic impact of the automotive industry and the employment it creates, which translates into consumer spending power.

Volkswagen SA, for example, is the largest private employer in the Eastern Cape.

Tucked away in Mabasa’s presentation was a nugget of positive news for the future, that Naamsa is engaging with three new vehicle manufacturers (OEMs) interested in setting up operations in SA — and that two of those are considering Nelson Mandela Bay as their location.

Though in the early stages, that is a tremendous signal of optimism that could strengthen the local auto manufacturing and components industry, bringing new investment and creating employment.

There are some potential downsides, however, in that this metro is already heavily reliant on auto manufacturing and, while ensuring that this investment is retained, also needs to urgently focus on diversifying its economic sectors, particularly towards new “green economy” opportunities.

Securing these investments will require the Bay to demonstrate an attractive investment prospect.

We do have advantages in a great location for employees, such as good schools, reasonable property prices, natural attractions, shopping and leisure amenities and so on.

Our two ports, already handling automotive imports and exports, offer a significant advantage.

But we also need to show that we can mitigate the impact of load-shedding, cut through red-tape hurdles to land acquisition and zoning, that basic services can be supplied reliably, and that our logistics infrastructure and services are efficient and effective for imports and exports.

In addition, the local auto industry also faces two key threats to its sustainability: the rapid advances in adoption of new energy vehicles (NEVs, including electric and hybrid vehicles), in which SA is lagging behind; and the weakness of the country’s logistics infrastructure, lacking in efficiency and north-south inter-connectivity.

All these factors and concerns underscore the importance of the memorandum of understanding (MOU) signed between the business chamber and Naamsa last week.

Our organisations have key interests and strategic priorities in common — chief among them to capitalise on the strength of the auto industry in the Bay and the advantage of our two ports, to position the metro as the logistics hub for the SA automotive sector.

This will require strengthening the logistics infrastructure and inter-connectivity of road, rail and ports, particularly the critical north-south corridor so that there is efficient two-way connection between auto manufacturing in the Bay and Tshwane, to support imports of raw materials and components, and exports of finished vehicles as well as components such as catalytic converters.

Leveraging the competitive advantage of our two ports requires improved rail-port integration, investment in tracks and rolling stock to increase the capacity of rail transport, and improving port efficiencies and cargo turnaround times to reverse the current problem of shipping lines skipping SA ports due to delays and congestion.

Getting this right has numerous spin-off benefits for the Bay, improving logistics and export efficiency for agro-processing and other sectors, business opportunities in materials handling and logistics, and moving freight off the roads and back to rail, including the raw materials transported from mines in the Northern Cape.

The strategic partnership between Naamsa and the chamber allows for pooling of skills, networks and resources to strengthen existing initiatives aimed at improving logistics infrastructure and connectivity, and driving collaboration between the private sector and Transnet, especially to reach clarity and time frames on opening port and rail operations to third-party operators.

Another key area of mutual interest is the vital need for a sustainable transition to electric vehicle production through a clear, decisive and predictable policy environment in SA.

Naamsa is lobbying to fast-track this, so that automotive manufacturers have certainty in the switch to NEV manufacturing, and to ensure that the component manufacturers can make the shift too, as well as potentially supporting battery manufacturing industry in the metro.

The chamber in turn will lend support where ever possible to Naamsa and the automotive companies who operate here.

This is a strategically important development for the Bay, enabling us to leverage the strength of a national organisation that shares our vision for the metro as a world-class logistics hub supporting automotive and other sectors, and ensure that we retain vital investment and jobs.

Denise van Huyssteen is CEO of the Nelson Mandela Bay Business Chamber.


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