General Motors in South Africa

General Motors South Africa (GMSA), a wholly owned subsidiary of General Motors Corporation, is a leading manufacturer in the South African motor industry and falls under GM’s Latin America, Africa, & the Middle East (LAAM) region. GMSA markets Opel, Isuzu, Suzuki, Chevrolet, and SAAB. The company’s Port Elizabeth based assembly plants manufacture the Corsa, Corsa Utility, Isuzu KB and Isuzu N and F series trucks.

Automotive Industries talks to Robert Socia, President and Managing Director of GM South Africa.

AI: Why does General Motors retain an assembly operation in South Africa?

Socia: Firstly, GM has a history in the region having penetrated the South African market back in 1913 with the import of Chevrolets to the country. Later in 1925, GM set up an assembly facility in Port Elizabeth. Subsequently, other plants were established, with the company recording many successes, GM remained in South Africa up until the late 1980’s. As a result of the political situation in South Africa and the resultant pressure in the US, the corporation withdrew from the country in 1987.With democracy proving to have longevity, GM acquired 49% shareholding in1997 and then in 2004 the corporation acquired the balance of shareholding in the local company.
Secondly, with an expected volume of 570 000 vehicles in 2005, South Africa is GM’s largest market in Africa and the second largest in the Latin America, Africa and the Middle East region. GM’s objective is to participate in growth markets and in this regard significant progress has been made in South Africa. The company’s share of the market grew from 10.8% in 2003 to 12.2% in 2004 and year to date we are currently running at 13.7%.While the stable political and economic environment has played a key role in stimulating demand in the country, it is significant to note that we have not only succeeded in growing our volumes but also our overall share of the market.

Going forward we will be aiming to further grow our share and in support of this we have implemented GM’s Global Manufacturing System (GMS).This ensures that we operate according to one common global system and that our efforts are geared towards producing high quality products. We have also placed a dedicated focus on improving our levels of service to our customers.
Thirdly, the company is based in Port Elizabeth- on the East Coast-and suitably located midway between the Ports of Cape Town to the south-west and Durban to the north-east. This is an ideal location from which to effect logistic operations both inside the country and for export markets. In addition, the company has easy access to South Africa’s largest regional economy – Gauteng – by road, air or rail.

AI: What do you see as the main strengths of the South African vehicle assembly industry?

Socia: Some of the strengths of the local industry include: access to raw materials; low electricity costs and a stable transport and telecommunications infrastructure. In addition, the country is well positioned to serve the world’s major vehicle assembly regions. The local vehicle industry has also demonstrated the ability to design components specific for conditions in Africa. One of the greatest strengths is the Motor Industry Development Program (MIDP), which has played a key role in growing the industry in this country.

AI: What do you see as the strengths of the local component industry (South African and NMMM)?

Socia: The component industry shares many of the same strengths as the vehicle assembly industry, such as low utility costs, an established transport infrastructure, etc. Apart from the MIDP, a number of government incentives also contribute to the development of the industry. These include: the Skills Support Program, Productive Asset Allowance, Foreign Investment Grant, etc. In terms of the Nelson Mandela Metro, obvious advantages are the close proximity to a port, the emergence of the Coega IDZ, the localization of three major OEMs and also the fact that, the metro has become a catalytic converter hub for export with major overseas suppliers having invested in the region e.g. Corning, Engelhard, Delphi, Umicore, Tenneco to name a few.

AI: Where do you see opportunities for component suppliers to move into South Africa?

Socia: With the introduction of a number of vehicle export programs together with the strength of the domestic market and its potential growth in the future, an opportunity exists for international suppliers to move into the market.

AI: What is GMSA doing to promote the development of the South African component industry?

Socia: GM South Africa has a dedicated Component Export Department working toward securing new export business opportunities for the local component industry. We are actively seeking opportunities for the local supplier base that are competitive. We are also ensuring that local suppliers are included in GM’s world wide purchasing process so that, where appropriate, they are considered for possible business opportunities with GM on a global basis.

AI: What advantages does the Coega Industrial Development Zone offer?

Socia: Since Coega is a multi-billion dollar industrial development complex covering 28000 acres (11 500 hectares) and includes a deepwater port, it is uniquely positioned to serve all the world’s major vehicle assembly regions. for e.g. components are already being exported from Port Elizabeth to the U.S., Russia, China and the UK, to name a few markets. The automotive cluster in the Coega IDZ aims to build on this by creating new opportunities by clustering component suppliers in a custom secure zone that meets international environmental standards. Suppliers located in the IDZ, will further be well positioned to service manufacturers like GM South Africa based in the region. By creating a major distribution and processing hub for Southern Africa and beyond, in terms of imports and exports, manufacturers may be able to minimize production, procurement and even supply chain management costs-due to a foreseeable fast and reliable port facility as well as existing road, rail and air links to territories.

AI: What export and expansion plans has GMSA announced?

Socia: Earlier this year GM awarded General Motors South Africa, a HUMMER export contract valued at $3 billion. Currently, the company is gearing up operations to assemble the H3 with further investment in the Struandale plant. Aimed primarily at export markets in Europe, Asia Pacific, the Middle East and Africa, the H3 will also be available to domestic motorists in the latter part of 2007. Facility and equipment upgrades are being effected with plans to incorporate a new a new body shop into the facility and also a general assembly area. Struandale’s state-of-the art paint shop will also benefit from modifications undertaken to meet the requirements of H3. To assemble the new product, tooling will be introduced both internally at GM South Africa and externally at supplier level, where the company will develop a tooling program for certain parts and component suppliers, many of which are based in the Eastern Cape.

AI: Is there more to come?

Socia: Yes there is more to come. GM South Africa’s objective is to grow its presence in South Africa and is committed to seeking opportunities to do so.