‘Crutches blunting auto makers’ export edge’

2012-08-23 00:00

THE automotive industry is operating with government-aided “crutches”, which indirectly threaten to hamstring the industry’s ability to become a world-class, globally-competitive industry.

This is the view of respected industry analyst and facilitator of the Durban Automotive Cluster (DAC), Professor Justin Barnes.

He told guests attending the DAC’s AGM in Durban yesterday that the “crutches” are the Motor Industry Development Programme (MIDP, 1996-2012) and the Automotive Production and Development Programme (APDP as of January 2013) introduced by the government.

In a highly competitive global industry that is witnessing the rise of China and India as dominant production and consumption players, Barnes warned that many local firms were lacking in global competitiveness. While incentives like the MIDP had helped the industry and were commendable, they also threatened to create a false sense of security based on false economies.

Barnes said local firms and the government needed to address a range of competitiveness issues, including: high infrastructure costs (road, rail and port); labour costs; materials costs; technology gaps; total factor (of production) productivity; supply chain deficiencies; government’s administered prices (like electricity); and a lack of adherence of lean production principles.

He said this would ultimately determine whether South Africa became a casualty of Asia’s rise as the dominant automotive production hub and consumption market.

The DAC is a public private partnership between eThekwini Municipality and KZN automotive industry.

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