SA Automotive Week comes to Nelson Mandela Bay this week from Wednesday to Friday, marking 90 years of South African automotive manufacturing in the birthplace of an industry now facing arguably the most severe set of threats to its existence.
De-industrialisation, the erosion of South Africa’s manufacturing capacity and strengths, putting mass employment at risk, has been creeping up on us for a decade or more.
SA has among the highest unemployment rates in the world, at 33.2%.
Recent headlines of industrial closures, downscaling and retrenchments — from the steel industry through to the automotive, pharmaceutical and beverages manufacturing sectors — are red flags that this is speeding up, across all areas of manufacturing.
“Trump tariffs” have quickly become an easy target to pin the blame on for factory closures, reduced production levels and job losses.
The reality, though, is that the manufacturing sector has been under pressure for a number of years due to a combination of factors, including the unreliability of the delivery of basic services and lack of infrastructure maintenance, electricity unreliability and cost, declining safety and security, logistics inefficiencies, policies and incentives not always having the intended outcomes, the general lack of ease of doing business, and cheap imports entering our market.
The “Trump tariffs” are just another layer on top of everything else.
What should the response be to all of this? While tariff protection and incentives would provide some welcome relief, they are temporary fixes.
In addition to getting the basics of service delivery and logistics right, what is needed now is a mindset of reinvention, of innovative thinking around turning threats into opportunities in a changed future driven by technology and renewable energy, rather than trying to maintain a status quo that is rapidly disappearing.
Such reinvention must be based on exploiting our current manufacturing strengths, which are considerable in terms of skills and technology, diversity and a proven ability for agility and fast adaptability, anchored by multinationals experienced in manufacturing to world-class standards.
Identifying unique niches and global gaps that can be filled, with a focus on low carbon manufacturing products in the automotive arena through to environmentally friendly construction materials and other products, will be essential.
To this end, the business chamber established a Local Economy Reinvention Think Tank, where we have pulled in engineers and out-of-the-box thinkers from various industries to proactively identify new opportunities.
Targeted workstreams are focused on hydrogen, global gaps, low carbon altermotive (niche automotive products) solutions, green tourism and the digital economy.
Green hydrogen is a key technology that SA needs to be embracing at greater speed.
Hive Hydrogen’s planned R109bn green ammonia production plant for the Bay has the potential to create thousands of downstream and upstream opportunities, for example in renewable energy, wind turbine manufacturing and electrolyser manufacturing areas.
Leveraging this opportunity, we need to leap-frog electric vehicles and look towards hybrids and hydrogen as the solution for SA and Africa markets.
These are more feasible prospects in this context, as they do not require costly charging infrastructure and, importantly, draw on the depth and range of local components manufacturing.
Key future growth product opportunities lie in medium and heavy commercial trucks and light commercial vehicles.
Micro-mobility (two- and three-wheelers) have immense potential in African markets, for passenger and delivery vehicles, using hydrogen or hybrids, and EV technology can play a useful role too, for example in last-mile delivery vehicles.
Existing steel component manufacturers have the capabilities to manufacture electrolysers, while catalytic convertor manufacturers are well placed to manufacture hydrogen fuel cells.
It is clear that manufacturing of internal combustion vehicles will continue longer than anticipated, and markets in the southern hemisphere, not moving as swiftly as the north, will still need to be serviced with new vehicles, parts and after-market support.
South Africa can fulfil this role.
In addition, our strength in automotive component manufacturing will always be required, as EVs still require tyres, glass, injection moulded plastic and welded and pressed metal components.
And opportunities exist for making these components in a low carbon, sustainable way — for example, the proof of concept we have already secured through our think tank initiatives is for the use of hemp as a sustainable alternative to plastic in components such as bootliners and acoustic matting.
This is part of a project to create a complete hemp value chain around Nelson Mandela Bay, stretching from SMME growers to agro-processing to manufacturing.
Realising all these opportunities for industrial reinvention and regeneration will depend on acting with speed and urgency, on getting the right policies and plans in place and, most importantly, implementing them.
Turning the possibilities into reality will be complex, subject to combinations of local, continental and global factors that are not all within our control.
However, there is one crucial “make or break” aspect that is within our control, that government, business and civil society working together can make happen — and that is getting reliable, basic service delivery working for residents, businesses and communities.
We need action now in the municipalities of the major metros and towns in SA which put the greater good of the local economy and job retention and creation first.
This is essential for keeping the factory doors open and enabling the industrial reinvention needed to secure all of our futures.
- Denise van Huyssteen is chief executive officer of the Nelson Mandela Bay Business Chamber.
The Herald