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Dire interpretations

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David Powels, head of Naamsa and CEO of Volkswagen South Africa, gave a speech at South African Automotive Week which raised the spectre of the SA motor-industry vanishing in seven to 10 years.

Okay, he didn’t put it that bluntly, but his words left little room for any other interpretation. A word he used repeatedly was “competitiveness”, with dire comparisons between South Africa (SA) and other countries.

Among other things, he bemoaned the low local content of our vehicles, which he implied was a cost pressure. SA has, in fact, had a local content programme in various guises since 1984 and if it hasn’t made auto makers “competitive” in the last quarter-century, I can’t see it doing so in the next decade. Likewise our harbour costs – I agree that the quoted costs are madness, but SA’s vehicle export programme has been flourishing since 2001. Why has it taken so long for the motor industry to publicly rebuke Transnet?

Productivity is also only thinly linked to competitiveness in the motor industry – motor vehicle production lines are set to run at a speed which provides the optimum balance between output and worker ability. I doubt South African production lines move any slower than the world average; yet, our vehicle quality is consistently hailed as being among the best.

Closer to the heart of things is the cost of labour in South Africa. The legally entrenched human rights which South African workers enjoy don’t come cheap and should not be up for discussion in any event. For Powels to compare our competitiveness with China’s is one-dimensional –  most things are cheaper in China, as they are in any totalitarian state which doesn’t have to add the cost of  South Africa’s approach to build quality, human rights or the environment to its production balance sheet.

Maybe the motor industry should stop viewing its alleged lack of competitiveness in pure financial terms and start viewing it as a composite of production costs, a quality-of-assembly factor, workers’ rights and environmental factor.  Sure, we can build more vehicles per hour, but only at the expense of quality. Or we could pay lower salaries and lobby government to relax labour laws, but the cost of the ensuing industrial relations and human rights debacle would soon exceed any savings. Maybe we could remove all pollution controls at our motor plants and pocket a few bob while our air quality declines to that of Beijing.

The South African motor industry is not uncompetitive. But unlike in some other countries, it cannot escape the payment of “social responsibility” costs. Instead of foretelling doom, NAAMSA should be banging the world over the head with this fact. Every day, people pay more for a free-range chicken than for some fishy tasting battery hen raised on its personal square foot of concrete. They pay more for haute couture than sweatshop rags. Why should cars be different? Are we content to let South Africa be just another manufacturing destination or will we include some pride in our democracy on the sticker tag?

Overseas, motor manufacturer parent companies should, in the averaging of their unit costs, be happy to absorb the “social responsibility” premiums of producing in a country like South Africa, because their South African subsidiaries have made them lashings of profit in the past. If they’ve failed to offset some of those earnings against a reality that can no longer be deferred, or cannot apply creativity to dealing with that reality, the question is not whether our local manufacturers will survive. It’s whether they deserve to.

 


Rob Handfield-Jones has spent 20 years indulging his three passions: vehicles, road safety and writing. He heads up driving.co.za, a company which offers training in economical and safe driving.

 

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