The South African economy has received a major boost with the Isuzu Motors purchase of the Struandale plant in Port Elizabeth.
In a statement on Sunday, the Department of Trade and Industry (dti) said the launch of the plant will boost investor confidence in the country.
Last year, Isuzu announced it would purchase the light commercial vehicle operations in Port Elizabeth as well as the balance of shareholding in its Isuzu Trucks South Africa operations.
The Japanese manufacturer purchased the Struandale plant, which belonged to General Motors. General Motors in May 2017 announced that it was disinvesting in South Africa. The move, it said at the time, was part of a broader, international strategic restructuring position by the company to exit certain markets.
Isuzu Motors, consolidated into one business now known as Isuzu Motors South Africa (IMSA), became effective from January 2018 and will build Isuzu pick-ups and trucks.
Speaking at the launch of the plant on Friday, dti Minister Rob Davies said the investment by IMSA will save jobs.
“We know that this investment will mean that 1 000 jobs in the facility will be saved and there are 3 000 jobs in the direct supply chain and many thousands more in the supply companies. Jobs will continue to be guaranteed in the future,” said Minister Davies.
He said South Africa’s automotive industry is a global, turbo-charged engine for the manufacture and export of vehicles and components. Many major multinational firms use South Africa to source components and assemble vehicles for local and international markets.
“With its ability to link throughout the economy, government has identified the automotive industry as a key growth sector.
“The auto industry is important to the future of manufacturing in this country and whatever emerges in the future will be based on a significant level of support for it going forward,” said the Minister.
The sector contributes 7.5% of South Africa’s gross domestic product (GDP) and employs about 113 000 people directly. It is key to ensuring greater economic growth.
The President and Representative Director of Isuzu Motors of Japan, Masanori Katayama, said the company is keen to grow its business in South Africa.
“This is the first commercial and light commercial vehicle manufacturing operation outside of Japan in which we have acquired a 100% ownership. We are represented in 30 countries outside of Japan and successfully operate 47 manufacturing plants in these countries with joint venture partners.
“Our decision with regards to South Africa demonstrates the confidence we have in this market and also is indicative of our longer-term view that South Africa will serve as an important base for our future growth on the African continent,” said Katayama.
Isuzu also used the launch to reveal the company’s new SUV segment contender‚ the Isuzu MUX (Multi Utility Crossover).
Key growth sector
Minister Davies said government is committed to supporting the local production of vehicles in order to boost the economy and exports as well as to create jobs.
“The automotive and components industry is well-placed for investment opportunities, and our commitment to local vehicle production is marked in our Industrial Policy Action Plan, with a prime focus towards adding value in the manufacturing and industrial sector.
“Export promotion, job creation and inclusive growth remain as the fundamentals to this policy,” he said.
The industry has exhibited significant growth under the Motor Industry Development Programme (MIDP) and its successor, the Automotive Production and Development Programme (APDP), which was implemented in 2013.
The programme aims to stimulate the expansion of local production to 1.2 million vehicles a year by 2020, while significantly increasing local content at the same time.
Minister Davies said companies with production plants in South Africa are placed to take advantage of the low production costs, coupled with access to new markets as a result of trade agreements with the European Union and the Southern African Development Community (SADC) Free Trade Area.
Opportunities are also available in the production of materials such as automotive steel and components.