Gauteng MEC for Economic Development, Mxolisi Xayiya’s Address at the Johannesburg International Motor Show (JIMS), Nasrec, 18 October 2013.
CEO of Gauteng Growth and Development Agency (GGDA), Siphiwe Ngwenya
CEO of AIDC, Barlow Manilal,
Representatives from International and Local Original Equipment Manufacturers (OEMs)
Delegates to the Johannesburg International Motor Show
It is my esteemed honour to welcome you here to a session whose intention is to share and reflect on the importance of partnerships between the private sector and government.
This occasion is a golden opportunity for us to put our heads together to chart the course for the automotive industry in Gauteng Province.
It is important that there is a direct hotline running from where most of you are based in Tshwane and the provincial government.
Without elaborating any further, let me indicate and reassure you that your industry is an indispensible part of our plans to grow our economy and create the many jobs required for us to get out of our economic quagmire.
And I also want to be categorical that I share most of your apprehensions about some of the factors that have affected your normal course of business in recent weeks.
As the MEC for Economic Development, my door is wide open for frank and honest engagements with all of you.
You know, as well as I do, that our collaboration and partnership will only yield the desired results if it is not treated as an “optional extra” but an essential element of creating a better Gauteng that is responsive to business needs.
A Gauteng that is unparalleled in terms of offering the best experience for business in South Africa. If we get this right, these factors will ultimately make Gauteng a better place to live in.
Ladies and gentlemen,
The Gauteng Provincial Government is committed to bolstering the competitiveness of the automotive sector as we truly believe that this sector is well positioned to catapult our province to an era where joblessness and slow economic growth are matters of the past.
Therefore, we view this engagement as a critical platform wherein all the stakeholders converge to seek ways in which they can take advantage of the opportunities to grow the economy of this province and by extension our country.
Despite the recent hurdles we have experienced on the labour front, Gautengis the premier investment and trade destination in our country.
The province continues to firmly establish itself as the engine of growth not only of South Africa but for the continent as well.
As the Department of Economic Development, we are focused on moving Gauteng into a globally competitive city region. Our strategic objectives include:
- The development of strategic economic infrastructure for employment-led growth and development
- Re-industrialisation to support the growth of labour-intensive industries
- Building an innovative and knowledge-based economy to drive competitiveness
- Strengthening green economy interventions to support sustainable economic growth and development
- Promoting trade and investment as well as creating decent sustainable employment
A key vehicle for achieving our objectives is the work of our implementation arm, the Gauteng Growth and Development Agency and its sector-focused subsidiaries which include the Automotive Industry Development Centre (AIDC) and the Automotive Supplier Park (ASP).
They are the hands and feet of government on automotive and industrial development issues, and I always remind them that they must bear in mind the reality of the triple challenge of unemployment, poverty and inequality when they go about executing their daily tasks.
Our focus as a province on the automotive sector is not an accident of history. The automotive sector is a vital and strategic sector for Gauteng and South Africa.
Our country is home to eight of the largest vehicle assembly plants in the world. The automotive sector also plays a crucial role in employment generation, with an estimated 300 000 people employed in the sector.
In Gauteng alone, the automotive manufacturing and trade industry contributes between 5-6% of the province’s Gross Geographic Product (GGP) and employs 39000 employees who are mainly located in Rosslyn in the City of Tshwane.
According to the National Traffic Information System (eNaTIS) October 2011 statistics, Gauteng has the highest vehicle population in South Africa with a total of 355 720 (million) of the total 9 073 613 self-propelled vehicles in the country registered in this province. This figure is more than double the size of self-propelled vehicle registrations in KwaZulu Natal and the Western Cape. This makes the province a key market and production site for local industry.
The automotive industry is also the largest and leading manufacturing sector in the domestic economy. In addition, the industry has strong backward and forward linkages to other sectors of the economy, including the steel industry, financial services, motor retail and advertising.
This means that what happens in the automotive industry has a ripple effect on the rest of our economy and it is this reality that explains why the industry is so close to our hearts.
Ladies and gentlemen
It would be foolhardy for us to ignore the fact that the industry has its own challenges. The global economic crisis has had a significant bearing on this sector. We know that this has been a testing period and we are, in many respects, still reeling from the pressure exerted by this reality.
The principal challenge facing the sector was aptly summarised in a recent study of the South African automotive sector which made the observation that:
“The automotive industry in South Africa is under extreme pressure to perform. International principals are requestinga return on their investments, just as in their home and other international markets. In the current difficult global economic climate, it is even more important to become efficient and cost effective.” [1]
The automotive sector has been through a difficult period and we should discuss possible avenues for engagement that have the potential to avert labour issues or protracted strikes.
Critically, global competitiveness is such an important factor in the automotive industry. We must not lose sight of the fact that we are competing in a global arena. An arena in which South Africa does not receive any concessions but must comply to both the competencies and advantages of other established and emerging economies.
It is thus crucial for our local industry to have world-class processes, skills and products to compete with what is available worldwide.
The Gauteng Department of Economic Development, through our agency the GGDA and subsidiary the Automotive Industry Development Centre (AIDC), has developed a comprehensive programme of interventions that seek to continually support and develop the automotive industry both at formal and informal levels.
All our programmes will seek to support government’s objectives of economic growth and job creation. It is for this reason that through the AIDC, the Gauteng Provincial Government will be hosting four dedicated workshops in collaboration with Industry, here at JIMS. These will focus on:
- Productivity and Competitiveness
- Environmental and Greening Initiatives
- Transformation, Corporate and Social Initiatives and Industrial Relations
- Skills Development and Training
Ultimately, every intervention plays its part in working towards a better life for the citizens of Gauteng; and securing Gauteng’s position as an investment destination of choice with a formidable value proposition that satisfies both the private and public sector.
With all of these initiatives, there is a central and painstaking question that we must respond to. How do we ensure the recovery of various sectors of the economy, including the automotive sector, in a manner that does not compromise our imperatives to inclusively grow the economy and create jobs?
In other words, how do we effectively help you to realize your profit margins and remain competitive whilst at the same time ensuring that these imperatives are not pursued to the detriment of workers and the poor? This is one of the burning questions that I would like to discuss with you.
I am aware that most of you are given sleepless nightsabout theglobal competitiveness of the industry in this country.I am also conversant with the fact thatwe are competing in a global arena and a playing field in which South Africa does not have the upper hand. The key therefore lies in our ability to fundamentally change the tune – be holistic and futuristic in our thinking.
This session is the right platform that you, as industry players, must utilize to inform government of your needs, apprehensions and frustrations.
We have seen the positive results that can be achieved when the private sector and government work together to the mutual benefit of each party. We therefore encourage partnerships, in fact we seek closer relationships and more dialogue with the private sector, hence the importance this stakeholder engagement.
We hope that arising out of the deliberations here and future engagements will be some concrete steps on ways to strengthen our automotive sector, sustain and create new jobs and take our growth levels to new heights.
Thank you.
1
[1]