South Africa’s automotive industry perhaps may not at the moment be in significant trouble, nonetheless its present state of affairs will not be sustainable and is accompanied by a widening skills gap and intense international competition continuing to be vital challenges.
A short while ago, a roundtable discussion around the skills needs and competitiveness of the sector took place with an essential emphasis on enumerating all the elements that the sector will need to make improvements to to maintain the nation’s position within the international industry.
Among the list of key points in Brand South Africa’s mandate is to assess the country’s competitiveness across a variety of fields on a regular basis, and to accomplish that Brand South Africa makes use of various indices that assist to put issues into perspective.
If you can’t monitor it you can’t measure it.
Champions of industry
South Africa at present has eight of the biggest vehicle assembly plants in the world, and the sector employs somewhere around 300 000 individuals of a variety of skills sets and expertise. The vast majority of plants of international brands including BMW, VW and Mercedes-Benz are located in and around Gauteng and the Eastern Cape. The lower production expenses associated with manufacturing in South Africa have been the leading drawcard for multinationals over the years.
Barlow Manilal, CEO of the Automotive Industry Development Centre (AIDC) which is mandated by the government to assist, uplift and sustain the standard of the nation’s competitiveness in the global field – referred to the warning signs that South Africa needs to pay attention to to be able to continue to be relevant.
“The automotive industry is export oriented,” he said, “while some of our competitors are wealthier than us, and do not have the social issues that we have to deal with as a country.”
The AIDC’s vision for the year 2020 is to double local content, with regards to the value of vehicles produced at the assembly plants, by 35% to 70%. Current production output per annum is 600 000 units, and this need to increase to 1.2-million units if the country does not want to be overtaken by its competitors.
“A large part of that vision relates to the training we have to instill in the sector,” said Manilal, adding the fact that it is not about the number of individuals who acquire this training, but whether or not it is applicable to the requirements of the sector.
At the moment China has an engineer for every 130 people in its population, in comparison to South Africa which has one for every 3 166. This indicates a discrepancy in the training sector, in particular for disciplines that demand technical skills such as mathematics and science.
Right now there are at the very least 50 000 technical vacancies in South Africa which simply cannot be filled, due to the fact that there are insufficient people who have the minimum educational requirements.
Despite the fact that Further Education and Training colleges (FETs) have the capacity to graduate a large number of skilled students as artisans annually by way of a variety of programmes, the issue continues to be that these individuals are not easily absorbed by the industry.
They are simply not certified with industry standards and / or struggle to compete with their university counterparts who have the ability to offer not simply artisan-level skills, but can also apply understanding of maths and science to their daily job requirements.
In an attempt to obtain industry an understanding of what is wrong with the existing South African situation, Brand South Africa invited the executive director of Tata Automobile Corporation South Africa, Sudhir Babshet. He concurs to the incontrovertible fact that the situation in South Africa requires immediate attention, and provided a means to fix it, stating that the main objective of the country’s education system in general ought to be focused on primary education, where pupils can be inspired and moulded in fields that they are naturally good in.
This would, in turn, decrease the university dropout rates that the country experiences for the reason that children would have valued their skills from a young age and grown up understanding what they have to offer their country.
“Education forms the basis of the problem of skills shortages in this country.”
Dr Thokozani Simelane, Chief research specialist for the Africa Institute of South Africa, attributed the current state of affairs to some extent on a weakness in the government’s initiatives to integrate its skills development strategies.
“You have one programme that should be speaking to another, as they will be serving complimentary purposes, but neither is aware of the other’s mandate and how it can benefit its own ideals.”
Discussing the threats that the global automotive industry is experiencing, Manilal alluded to an article in the financial daily Business Report, which described the recent closure of a Ford van factory in the UK, with a potential loss of 2 000 jobs in the process .
“This for me is a red flag for our local industry,” he stated, “because it means that if it can happen in the UK, it probably can happen anywhere in the world.”
This triggered a discussion on where South Africa’s export prospects ought to lie, considering the small, gradual adjustments to the global landscape, participants at the same time discussed possible solutions to the problem.
Simelane pointed out that South Africa continues to be a lucrative marketplace for used vehicles, which he pointed out, are imported from abroad.
“We have to move away from being the dumping ground for these units,” he said. As the world progresses towards more environment-friendly technology in vehicle manufacturing, such as the electric car, South Africa faces the risk of being on the receiving end of what will then be unwanted stock of these used cars.
“This will mean that we will fall behind, once more, in terms of advancing towards this technology.”
Innovation is the only way South Africa will attain the successes of the countries that lead industries throughout the world.
Turning the situation around
To change the sector’s skills problem, a number of suggestions and proposals were put forward.
Manilal called for a proactive approach by FET colleges in order to absorb students into the industry and make the process less complicated.
“Colleges must take accountability for penetrating the industry,” he said, “and should set up alumni programmes where they monitor the progress of former students and whether their skills are actually being used.”
The AIDC is embarking on an eight-year plan that also includes an academy. They are going to target rural schools, teaching pupils on the subject of the automotive industry from school level, to ensure that they don’t only become familiar about the sector when they leave college.
He also called for the private sector to establish projects to adopt and sponsor schools and to help impart the essential skills from a young age. This could possibly be incentivised by tax rebates from the government.
Simelane, on the flip side, mentioned that the input-output ratio for FETs requires budget changes.
“We should rather take funds from the budget of organisations like the National Youth Development Agency and redistribute these to the FET-oriented industry to enable it to absorb artisans.”
With regards to the national level, Manilal asserted that the government should consider looking into an accreditation system for schools across all grades, including primary level. By doing this a sustainable record of which schools perform better in which areas, and under which circumstances will be created.