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With the world’s economy rapidly leaning towards green, the South African automotive component sector has decided to adjust itself to fit in.
More than 45 organisations from the automotive industry gathered for the South African Automotive Week (SAAW) conference, which took place at the East London International Convention Centre (ICC) towards the end of August.
The conference focused on the impact of the global green economy on manufacturers of auto components.
The conference formed part of the Amandla Endalo (Power of Nature) Renewable Energy Summit and Trade Show, which was scheduled to take place at the ICC but has been postponed to 2012.
According to Andrew Binning, CEO of Inkanyezi Event Organisers, most of the opportunities afforded to auto manufacturers in today’s economy lie within the renewable energy sector.
“The thinking behind the conference was to help manufacturers to diversify,” he said.” Components that are manufactured for vehicles can also be used in the renewable energy sector. Manufacturers have to position themselves for the change.”
Threats and opportunities
Though a number of green opportunities were discussed at the conference, the threats to the industry received just as much attention.
Ed Richardson, the media liaison officer for SAAW, said the increasing pace of technological advancement, with which South African manufacturers struggle to keep up, is one of the threats facing the component industry.
He also mentioned that vehicle manufacturers, because they tend to favour composite plastics from other developing nations over local metals, have also dented the sector in this way.
To counter these threats, Richardson urged manufacturers and government to invest in skills and technology.
“For instance, Mercedes-Benz South Africa is the top exporter to the US and should continue to invest to ensure that it remains at the top,” he said.
Richardson is adamant that South Africa has sufficient raw materials – such as lithium and metals – and skills to grow the automotive industry.
Roger Pitot, director of the National Association of Automobile and Allied Manufacturers, offered another solution which would see companies focusing on developing low technology vehicles for Africa and emerging markets.
“In terms of component localisation, probably the lower technology model will be the optimal one,” he said.
He added that the component industry was at risk of being left behind as imported vehicle systems and manufacturing processes became more complex.
Electric car not the end of SA motor industry
Optimal Energy‘s CEO, Kobus Meiring, said the electric car sector in South Africa is expected to generate R7-billion (US$952-million) a year and create 10 000 sustainable jobs. Optimal Energy is the developer and manufacturer of the Joule, South Africa’s first all-electric car, which has been favourably received at overseas motor shows.
Though these green cars will change the global motor industry, speakers at the conference believed that the trend does not spell the demise of South Africa’s traditional automobile sector.
Johan van Zyl, MD of Toyota South Africa, is one of those who were optimistic about the survival of original equipment manufacturers.
He is certain parent companies will give car manufacturers new models and technologies to maintain production, and added that vehicle assemblers in the Eastern Cape province – the country’s automotive manufacturing hub – were already adapting to the changes.
One of those companies is Uitenhage-based Volkswagen, which has implemented the Blue Motion technology for the production of fuel efficient cars. In terms of carbon emissions, the Blue factory sticks to its targets, surpassing many Western manufacturers in the process.
Taking advantage of green economy
The greening of the automotive sector presents the Eastern Cape with an opportunity to grow and compete with other regions in South Africa and around the world.
This was what Mcebisi Jonas, the Eastern Cape’s MEC for economic development, environmental affairs and tourism, believes.
Speaking at the conference, Jonas acknowledged that the province’s old manufacturing enterprises are under threat from the cheaper manufacturers in China.
However, he said the Eastern Cape emits less carbon than most regions in South Africa, which gives the province a competitive edge.
“Our recent spekboom project, launched at the Eastern Cape Climate Change conference in East London in June, is but a sign of things to come. We have also been developing key initiatives in the biofuels sector including biodiesel and bioethanol in the East London and Coega industrial development zones.”
He added that the province has already launched a climate change mitigation strategy, which will help transform the region into a carbon sink.
Jonas spoke of the upcoming Eastern Cape Auto Cluster, which will promote eco-friendly automobile manufacturing.
However, he dismissed the idea of electric vehicle production as the only means of green manufacturing. He said companies can reduce emissions by producing traditional vehicles that are lighter and have improved internal combustion engines.
Eastern Cape boasts big three
With 70% of the country’s component manufacturers based in the Eastern Cape and 90% of those in East London, it was only logical for the conference to take place in the coastal city.
The East London industrial development zone already has an automotive supplier park that presents lucrative opportunities to component manufacturers. This is mainly because the Mercedes-Benz plant is close by.
The Eastern Cape boasts three of the largest car manufacturers in South Africa – Mercedes-Benz, Volkswagen and Ford. It is also home to over 150 component suppliers.
In 2007, the total automotive component exports amounted to R39-billion ($5.3-billion) with its biggest markets being Europe, the US and Canada.
The province has already positioned itself as a potential investment location for electric car manufacturers.
According to the Eastern Cape Development Corporation website, the province is fully capable of producing electric vehicles for the domestic and international markets.