Local content of 60% for SA cars 'unfair'

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VW Citi Golf R-Line

VW Citi Golf R-Line

web_photo_industrialisation_vehicle_manufacturing_140217

VW Citi Golf R-Line

VW Citi Golf R-Line

JOHANNESBURG - The state’s plans for 60% local content in SA-built cars and light commercial vehicles were unworkable and unfair, critics said on Wednesday.

Trade and Industry Minister Rob Davies told a motor industry conference in Durban on Wednesday that the current 38% average was inadequate and that his department would push for 60% in the next phase of motor industry support policy, after the current Automotive Production and Development Programme (APDP) ends in 2020.

Interviewed afterwards, he reiterated that 60% should be the average, not a minimum for all local manufacturers.

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Volkswagen SA MD Thomas Schaefer, however, said the idea penalised high achievers. His company already boasts local content – defined as SA value addition in the assembly process including locally made components, labour and manufacturing costs – of more than 70%. Some others struggle to reach 30%.

He said all companies should be set the same goal. “Why should we increase our contribution to, say, 80% so someone else can slack off?” he asked. “It’s unfair and unworkable.”

Dave Coffey, president of the National Association of Automotive Component and Allied Manufacturers (Naacam) , which organised the conference, said: “Everyone needs to get to 60%. We can’t afford a situation that allows companies to play the system.”

Schaefer also sounded caution over Davies’s assertion that all motor companies would need a minimum BBBEE Level 4 in order to benefit from policy incentives in future.

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Proposed codes include a degree of local ownership – something global companies are unwilling to consider. Among suggested alternatives are for companies to contribute to an industry-wide black industrialisation fund.

“You can’t write something forcing multinationals to give up ownership or they will walk away,” Schaefer said. “That’s something none of us can afford,” he said.

He agreed with Davies that all players in the motor industry needed to set aside personal agendas in order to reach agreement on the next policy phase, which is set to run to 2035. But he said it would be difficult.

The demise of the Australian motor industry, which has many parallels with SA’s, had persuaded vehicle and components manufacturers, as well as the government and labour, of the need to find common ground to prevent the same happening in this country, he said.