NAACAM Show 2019
It is with pleasure that I share a few thoughts with you in my first year as NAACAM president. 2019 does indeed hold out to be a year of crucial importance for both our sector and the South African economy in general.
Being an election year, it’s obvious that there will be the usual frenzy of commentary and speculation that accompanies such, as in any robust democracy. However, it’s likely that economic stability and growth promotion will continue to be the mandate of whichever administration is installed. At a country level the consensus view is that GDP growth for the year is likely to hover around the 1.0 percent range, but the current antagonistic global trade trends are expected to impact on commodity prices, of which SA is a net exporter.
On a sectoral level, it has become increasingly apparent that the outlook for component manufacturers is on the up. From a domestic sales perspective our colleagues at NAAMSA predict a flattish domestic sales market trending around 2018 levels, but expect production growth to be driven through increases in the export as well as medium and heavy commercial vehicle sector. They have reported that with the improvement in exports, domestic production of motor vehicles in South Africa increased from 601 178 vehicles produced in 2017 to about 610 000 vehicles in 2018. An improvement in industry vehicle production of about 8.0% is projected for 2019 to reach approximately 657 500 units.
Another positive influencing factor for component manufacturing was the recent finalisation and announcement of the post 2020 package of support to the industry. Under the framework of the SA Automotive Masterplan 2035, the industry has the long-term certainty essential for business planning and it is our view that component manufacturers should proactively prepare themselves for a growth-oriented trajectory. Without getting into detail, the conversion of what was previously purely an incentive for vehicle assembly, to one that strongly emphasizes localisation is a shift in how assemblers will view domestic sourcing. Similarly, the increased reward levels linked to duty credits for value addition will benefit component manufacturers. This will kick start economic activity in the value chain and help unlock some of the opportunities around transformation and employment, both important factors in SA’s economic outlook. The role of NAACAM in securing the revised incentive conditions cannot be overstated, and is the greatest indicator of the association’s position as the influencing voice of SA-based component manufacturers.
A crucial role will be played by NAACAM in the coming wage negotiation process. 2019 is a year of sector bargaining and as previously, we request members to allow the mandated team to handle the process through the set structures. Whilst these years always have their own challenges, the appointed team will manage all processes responsibly, and please be on the lookout for regular updates from the NAACAM office.
Having noted that policy has shifted favourably towards component manufacturers, it can be expected that socio-economic deliverables will increase. The push for greater transformation in our sector is ongoing and unavoidable. If not already doing so, manufacturing members need to urgently get to grips with their individual company status and requirements, and make use of the many resources available through NAACAM or its base of specialist service providers. Black supplier development will continue to be a big focus area and NAACAM members, especially T1s, are going to come under pressure from OEMs to localise themselves and bring in black suppliers right down the value chain. There should not be any ‘holy cows’ when it comes to what can and cannot be sourced locally, as the OEMs are also having to transform their thinking in this respect.
Part of NAACAM’s mandate from its leadership has been to evolve itself into an association that meets the needs of a modern, value adding, sector representative body. In the past year you would have begun receiving quarterly sector updates, linked to a specially developed local value add index. This useful management information tool gives analysis on sales, employment, localisation, empowerment and investment. I trust this will be the kind of knowledge-adding service that the association will continue to build its offerings around. Please engage with the NAACAM team should you have any particular ideas or needs that NAACAM may assist with.
2019 will see the delivery of the second iteration of the NAACAM Show being held at Durban’s ICC from 12-14 March. This year’s version has been enhanced after having taken on board feedback received out of the 2017 event and participants can look forward to a more interactive experience, in line with trends being seen at global comparator events. Besides highlighting the localisation and transformation opportunities in our sector, this year will see significant emphasis on the African industrialisation dynamic. As before, the big sector stakeholders, including OEMs and relevant authorities, will be participating and it’s really up to the NAACAM manufacturing base to put its best foot forward and showcase what our value chain is about. I look forward to interacting with you there.
Wishing you a successful year ahead.
2019 is going to be a crucial year for South Africans, and the economy in which we operate. With both a general election and the triennial wage bargaining process looming, it’s obvious that businesses in the automotive sector will hope to see as much operating stability as possible. Politically, the likely outcome of having the current President continue in his role, having taking over early last year, would be suitable in terms of ensuring the necessary policy continuity and economic momentum remains in place.
The past year saw a momentous shift in policy used to support automotive manufacturing in SA, and component companies were largely the beneficiaries. The role of NAACAM and its leadership in positioning such an outcome out of the SA Automotive Masterplan process, should not be understated. That level of involvement in key decision-making platforms will continue to benefit companies operating in this space.
Recognition of NAACAM’s role as the authoritative voice of local component manufacturers, becomes amplified as one sees the increased public interest in our sector around both current successes and challenges, as well as the potential for catalytic economic change. The running of the second iteration of the NAACAM Show in March this year, is a practical way of supporting this and members are urged to participate and contribute to showing why this sector is deserving of its prominence in SA’s manufacturing landscape.
NAACAM continues in its drive to position itself as a deliverer of value to its members and stakeholders, and the recent engagement to manage the affairs of the South African Tyre Manufacturers Conference shows the extent to which the association is broadening its reach and positively influencing diverse parts of the automotive value chain. Such an arrangement will also bring to bear synergies as we move into a common work space and new address after more than a decade at Kaymac House. Members are encouraged to visit us and find ways of maximising the services offered at our offices in Woodmead, Johannesburg.
Complementing the physical address change, is the upgrading of our digital presence. Members will be pleasantly surprised by the updated and refreshed website and, more importantly, should look forward to the launch of the NAACAM app at the NAACAM Show.
The work delivered by NAACAM is done under the guidance of a band of dedicated office bearers, industry leaders in their own right, and the significant time and eff ort they devote to NAACAM and its members is a tribute to their commitment to the success of the sector. These eff orts are much appreciated. At an office level Bev Watts, Lynn Galbraith, Nomsa Malinga, Menzi Nkonyane, Carlo Baldocchi (SATMC Tyre Sector Manager) and I are ably supported by contracted experts in specialised fields such as skills, PR, trade and industrial relations. Such expertise is retained to assist members with the necessary guidance in these specialised fields. Please be in contact with any queries where we may assist.
I wish your business and staff all the best in 2019, and commit NAACAM to a path of long-term development in representing your interests, as arguably the most value adding grouping of companies in SA’s automotive manufacturing sector.