SA’s automotive leaders have warned that failing municipal services in Nelson Mandela Bay and other parts of the country are inflating costs, eroding competitiveness and threatening the Eastern Cape’s multibillion-rand car manufacturing sector — putting thousands of jobs at risk.
Isuzu Motors SA chief executive Billy Tom said businesses were forced to take drastic steps to shield operations from municipal failures, including wiring electricity directly to their premises to keep traffic lights functioning and safeguarding facilities from outages caused by cable theft.
Tom, also the president of the Automotive Business Council (Naamsa), was speaking at the annual SA Auto Week held at the Coega Vulindlela Village on Wednesday.
It ends on Friday.
Tom said the sector was engaging with the government at a national level to address challenges and shape policies to drive the country forward.
“In the Eastern Cape, we’ve set up an automotive forum where the auto sector can talk to the leadership, but we need to be deliberate about it, where we take it to the local level, where the municipality understands the importance of the sector because now there is none, no understanding,” he said.
Tom said the forum was not reaching the local governments and the crisis lay in a municipality’s inability to grasp the importance of sustaining the automotive industry.
“My point is that at the provincial level we’re able to get things going but at the municipal level we battle,” he said.
“We battle to get the municipal officers to understand the sector.”
During his speech, Tom said they had taken it upon themselves at the Isuzu Vehicle Conversion and Distribution Centre (VCDC) in Markman to fix the traffic lights at the Addo Road and Buick Street intersection.
“Just a kilometre from here, I’ve got a facility where I keep thousands of cars and the robots never work, and I’m worried about accidents.
“You know what I did? I physically connected the electricity to my premises to ensure that the robot works.
“Those are the challenges we have.
“I’ve got to secure an electrical site because I need to ensure that I’ve got electricity for these cars, because if the cables are stolen, I’ll sit without electricity for six weeks and then I’ve got people I’ve got to pay.”
In September, a municipal spreadsheet showed 82 traffic lights across the city were out of service, either damaged or knocked down.
The city has 292 traffic lights.
Tom said the government and the private sector had partnered on several occasions to tackle challenges, including improving the electricity supply.
“We need to be conscious of this. The world is not waiting for us. But all is not lost. I think there is still an opportunity to fix what we have.”
Ford Motor Company Africa president Neale Hill echoed the concern.
He said though the province had secured significant investment in the auto sector, the government’s inability to ensure reliable electricity, water, logistics and basic services was eroding competitiveness and could push global manufacturers to deploy capital elsewhere.
“The thing that we really need to remember is that we need to nurture the investments that have been made,” Hill said.
“It’s great that we’re chasing new investments but it is so critical that not only in the Eastern Cape, but across the country, we nurture the investments that have been made because we’re the ones that put down roots, we’ve created employment, we bring an overall economic effect that supports all of the small businesses in this area.
“I think if you put the four original equipment manufacturers together that have roots in the Eastern Cape, we’re probably one of the largest single sector employers in the province.
“I think we must see how all sectors of government work together to provide a stable environment that allows us to do what we’re good at doing, which is to run our businesses and to keep our costs under control.”
Hill said global carmakers were constantly reassessing where to invest their capital.
“I don’t compete with Billy or with [incoming Mercedes-Benz SA chief executive] Abey [Kgotle] in terms of investment decisions, but I compete with four other plants that build [Ford] Rangers in the world, and if we are not cost competitive against those plants our company will choose to deploy its capital elsewhere.
“If you look at what’s been happening in SA over time, all of our costs have just continued to ramp up and our efficiency has continued to decline.”
Hill said spiralling costs, unreliable electricity supply, water shortages, broken traffic lights and failing rail and port logistics were eroding the province’s ability to hold on to existing investment, let alone attract new players.
“It’s very easy for importers to come in and set up shop because they don’t have the cost base that we’re faced with,” Hill said.
Both executives warned that unless urgent interventions were made, the country risked losing its competitive edge in the global automotive market — which would hit workers, small businesses and the wider economy.
“It’s great to chase the shiny, bright, new products that are coming in.
“We need to nurture the jobs that we have in the economy that are coming from the industries that have invested over a long period of time for us to continue to see investment coming into this economy,” Hill said.
Bay mayor Babalwa Lobishe acknowledged the challenges raised.
“I want to recommit that as the local state, we’re committed to further engagements with local OEMs and other manufacturers because ours is to retain the industries,” she said.
“We’ve been interacting with their issues through the business chamber and I think we have live relations with the chamber.
“As a result, we have a monthly meeting with VW Group Africa to sort out their issues.
“We’re here to fix issues that have been neglected for the past eight years.”
Later, Lobishe said that she was shocked to learn Isuzu had directly connected electricity to traffic lights.
“I don’t know what might have happened that we didn’t pick up that Isuzu was assisting and connecting robots, which is not their function,” Lobishe said.
“This means we must fix it because we can’t expect an industry to intervene in a matter that is our mandate.”
Acting Eastern Cape premier Mlungisi Mvoko said the only way to keep OEMs in the province was through government collaboration and partnerships.
“If we don’t have those partnerships, we’re never going to understand some of the challenges they’re facing,” Mvoko said.
“We will only get to learn about it at the worst time.
“The only way challenges in Nelson Mandela Bay can be resolved is if they get closer to each other so that at an early stage the municipality can detect [problems].
“If government is not closer to them, by the time they discover that there are serious challenges, it might be too late.”
Nelson Mandela Bay Business Chamber chief executive Denise van Huyssteen said the challenges facing the sector in the country revealed that industries could not thrive without reliable basic services.
“The problem is your companies that do the local assembly and create the real jobs, their domestic market share is shrinking and they need economies of scale to be able to compete, and I think one of the key takeaways from that is the OEM saying they don’t mind you guys trying to bring in new investment, but take care of the ones that are already here,” Van Huyssteen said.
The Herald
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