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SOPA – good news for auto industry but ‘thin on detail’

Home Manufacturing & Processing Automotive SOPA - good news for auto industry but ‘thin on detail’

EASTERN Cape Premier Lubabalo Mabuyane’s state of the Province address is a balanced attempt in addressing the challenges of the province, but it could have delivered more details on how automotive OEMs will be supported by the Provincial Government.

That was the reaction from the Automotive industry Development Centre (AIDC) Eastern Cape CEO Thabo Shenxane, who said the premier had both acknowledged the importance of the sector and highlighted initiatives which would entrench the Eastern Cape as the hub of automotive manufacturing on the continent.

“The premier’s reference to Ford’s R16-billion investment in South Africa and particularly to Transnet’s commitment to the development of the SouthCor rail corridor as a logistics highway for the movement of goods and automotive components between Gauteng and Nelson Mandela Bay, is highly significant,” Shenxane said.

He added that the development of the rail corridor would have significant economic spin-offs for the Ford Engine Plant in Struandale and its supply chain as well as export volumes through the port of Coega.

“In addition to the Ford investment, we bring to the attention of the Premier that during the 2018/19 financial year, our own OEMs (VW, Mercedes and Isuzu) announced investments worth over R17 billion into our province.”

Shenxane said these OEMs required ongoing support from the provincial government, especially on port, rail, road and utilities infrastructure related enhancement. “The AIDC EC hopes that the province will pay particular attention to this.”

He said other highlights included Transnet plans to deepen and widen the entrance channel of the East London port to accommodate larger vessels, which would cater for the continuous growth of export volumes by Mercedes Benz SA.

“Continued development at both the East London and Coega IDZs continued to strengthen the Eastern Cape’s value proposition as an investment location.  We look particularly forward to further announcements around what the Premier termed ‘high value infrastructure projects’.”

Shenxane hailed the announced landing of the 2Africa undersea cable, as “an opportunity to develop advanced manufacturing and integration of 4IR into the region’s automotive supply chain and to enhance digital connectivity capabilities of the Eastern Cape in order to attract future investments into the province.

“The retention of IT skills alone through the development positions the province even more strongly with investors looking for skills and infrastructure that supports future production technologies.”

Shenxane said the developments announced around skills and technical training were further good news for the sector.

Mabuyane confirmed investments of R569 million in building 4 new TVET campuses in the Eastern Cape province. Ikhala TVET College will have two more campuses in Sterkspruit and Maletswa;  East Cape Midlands will build a new campus in Graaf Reinet and Ingwe TVET college will create a new campus in Ngqungqushe.

It was “encouraging” that the premier had acknowledged the issue of the availability of a reliable supply of energy and welcomed work to stabilise this through gas to power and other projects.

In his address Mabuyane also noted that the province’s Gas-to-power Program aimed to host additional gas-driven power generation of between 1000 to 3000 MW.

Shenxane said the province’s announcement that it had already initiated consultations with the secretariat of the African Free Trade Agreement had the “potential to grow the region’s automotive sector exponentially as Africa seeks to increase trade within’.”

In this regard, he said the AIDC EC has started engagements with the Africa Association of Automotive Manufacturers with the intention of identifying export opportunities for both manufactured vehicles and parts.

“The speech contained a lot of very good news for the region’s automotive sector and clearly indicates the premier’s appreciation of the sector’s value to the Eastern Cape economy,” Shenxane said.

“As South Africa’s leading producer of vehicles and its biggest exporter, accounting for around 49% of SA’s vehicle exports, the Eastern Cape and by extension South Africa’s supply chain will be buoyed by accelerated infrastructural investment.”

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