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SOUTH AFRICA: Ford unit has big expansion plans

By just-auto.com editorial team | 30 January 2008

Ford Motor Company of Southern Africa (FMCSA) on Wednesday announced plans to invest more than R1.5bn to expand operations for the production of its next-generation compact pickup truck and Puma diesel engine.

The investment will commence in 2009 and be split between the assembly plant in Silverton, Pretoria and engine facility in Struandale, Port Elizabeth. Production of the new diesel engine is scheduled to begin in 2010, followed by the new pickup in 2011.

"The investment and new manufacturing contract will boost FMCSA's current production to South Africa's significance as a strategic export base for Ford vehicles, engines and components," FMCSA said in a statement.

Plans call for the Silverton, Waltloo plant to change from its current layout to a high-volume, flexible single platform line that will accommodate the new pickup.

The investment will increase total annual capacity at the Silverton plant to 110,000 units, with approximately 75% produced for export, primarily to markets in Africa and Europe.

The Struandale engine plant will increase annual production for its next-generation, turbocharged common-rail Puma diesel engine and components to approximately 180,000 units, with the majority being exported.

"Winning this investment is a major achievement for everyone at FMCSA, as well as our partners in government, NUMSA, and our local suppliers, and highlights our strategic position within the future global footprint of Ford," said Hal Feder, president and CEO of FMCSA.

"It also underscores Ford's ongoing commitment to expanding our operations in South Africa."

As part of the investment, FMSCA plans to continue working with the South African government to accelerate and enhance worker training and development of the auto industry's current and future workforce to ensure they possess the necessary skills required to support the launch.

Both Ford and the government recently reconfirmed their full commitment to future growth and development of the South African vehicle manufacturing and associated industries.

This included an agreement of strategic objectives to develop worker skills, improve supply base capabilities, and accelerate the transformation of black economic empowerment.

"It's critical for the South African government to continue to support initiatives that help foster a strong and globally competitive auto industry - one that is prepared to capitalise on future opportunities and realise the potential for growth and success," added Feder.

"We'll also continue to work closely with NUMSA to ensure there is total alignment and commitment to deliver the cost competitiveness and world-class quality and safety standards that have attracted this investment."

The changes to FMCSA operations over the next few years will have no immediate impact on the workforce size, which currently totals nearly 4,500 employees between its two manufacturing facilities.

However, FMCSA expects to hire up to 500 additional employees by the time the realigned production kicks off in 2011.

Local suppliers to FMCSA stand to benefit from the expanded capacity, as increased local content will be sourced to meet increased production and output. FMCSA currently achieves about 35% local content, which will improve to more than 60% when production begins.

Working with roughly 110 different South African suppliers, annual spending on local components will increase from an estimated R441m each year to approximately R2.9bn.

"The magnitude of this project is indicative of how South Africa can benefit from having a globally competitive auto industry. In addition to the direct implications to FMCSA, this investment will have a multiplier effect with indirect job creation for local suppliers, and overall economic benefits from increased demand of locally produced content," said Feder.

FMCSA is a wholly-owned subsidiary of Detroit-based Ford Motor Company, and first set up operations in South Africa in 1923.

For a time during the apartheid era in South Africa, the operation was transferred to a locally-owned operation called SAMCOR, which built and distributed both Ford and Mazda vehicles, but control returned to Ford in the 1990s after apartheid was abolished and President Mandela came to power.