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Eastern Cape bags Asian car deal

PORT ELIZABETH — The East London Industrial Development Zone (IDZ) has announced plans to build a R4bn automotive assembly plant. The plant’s facilities will be shared by a number of Asian car companies. This means the Eastern Cape will become an outsourcing destination for the assembly of motor vehicles for South-East Asia, including China, Korea and India.

The IDZ is conducting the planning stages of the project, but it could be operational as early as 2011. The plant is to be funded partly by government and partly by private investment. The plant will initially focus on the assembly of passenger vehicles. The IDZ said there is a possibility of expanding to the assembly of commercial vehicles at a later stage. “The East sees Africa as a stepping stone to the rest of the world,” said Corrie Kotze from AIH Consulting, which is assisting with the project.

“We know they want to build plants in Africa. So, we are going to get them to come here with this project,” he said. If an assembly plant is to be economically viable, it must fabricate a minimum number of vehicles each year. The emerging South-East Asian car makers are unlikely to reach these volume requirements within the next few years. Therefore, the proposed production facility will allow companies wanting to invest in South Africa to share facilities, infrastructure and logistical services.

“Clustering is the way forward for them. It will help them reach a critical mass of 50 000 units a year collectively,” said Kotze. “We are taking all the big investment out for the newcomers. They will essentially rent our facilities,” he added. The motor  anufacturers will be

importing most of the car parts for their locally assembled vehicles into South Africa. However, IDZ CEO Simphiwe Kandlo said there will be initiatives to increase the amount of locally made components in these cars.

“The obvious idea is to start localisation. But first we will focus on getting the assembly and get job creation going,” said Kotze. After the cars are put together, the majority will be exported to the USA, Europe and the rest of Africa. IDZ executive manager of business

development Tembela Zweni said the East London IDZ is the “ideal location” for the plant, because it already operates a 16-hectare automotive supplier park on its premises. These suppliers will, at a later stage, be able to supply some components to the assembly plant. He added that the IDZ is six kilomtres away from the East London’s river port. Meanwhile, Eskom chairperson Bobby Godsell has defended the Eskom chief’s massive salary increase. He told the Portfolio Committee on Public Enterprises on Wednesday that the debate should instead concern whether Jacob Maroga’s R5m per-year salary is appropriate.

Godsell considered newspaper reports about a 26.7 percent hike “misleading and unhelpful”. Godsell added that an “intelligent

debate” on Maroga’s salary was required, especially in light of the fact that Eskom has a turnover of more than R100bn. Democratic Alliance MP Pieter van Dalen had pointed out that Maroga was earning twice as much as President Jacob Zuma. Dalen said the increase had been awarded just after a national power crisis and that consumers were still paying for the problems. — News24.

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