The impact of reduced local content percentages in the motor industry

Thesis (MBA)--Stellenbosch University, 2004. === ENGLISH ABSTRACT: South Africa is currently facing serious socia economic challenges. The AIDS pandemic and wide scale unemployment exacerbates the social dichotomy that is a legacy of the apartheid era. Currently, 50% of the population lives below...

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Bibliographic Details
Main Author: Osman, Faranah
Other Authors: Von Leipzig, K.
Format: Others
Language:en_ZA
Published: Stellenbosch : Stellenbosch University 2012
Subjects:
Online Access:http://hdl.handle.net/10019.1/50157
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Summary:Thesis (MBA)--Stellenbosch University, 2004. === ENGLISH ABSTRACT: South Africa is currently facing serious socia economic challenges. The AIDS pandemic and wide scale unemployment exacerbates the social dichotomy that is a legacy of the apartheid era. Currently, 50% of the population lives below the poverty line. According to the Growth, Employment and Redistribution policy (GEAR), it would take an accelerated growth rate of more than 6% to enable the socioeconomic challenges to be addressed. The automotive industry is one of the largest manufacturing sectors in the South African economy. In 2002 the industry's overall contribution to GDP was in the order of 6,4%. Due to the size of the industry and the contribution to GDP, the industry has been identified as an arena for sustainable growth. The automotive industry has been extensively transformed from an inwardly focussed entity to an industry that is globally competitive. The Motor Industry development plan has been the driving force behind the restructure initiative. The MIDP was responsible for reforms across the board, including the abolishment of a prescribed local content requirement which poses the challenge to the component sector, of how to overcome the limited local demand for components. The MIDP, through its system of reforms, has assisted in allowing industry role players to successfully penetrate world markets. The component secror is no exception. Assessing the future of the global industry, Mercer Management Consulting predicts that the industry as a whole will invest €2 trillion in capital spending over the next 11 years and the annual automotive production will climb from ±57 million units to about 76 million units in 2015 with an annual growth rate of 2.6%. (Dannenberg & Kleinhans, 2004:88) The study predicts a shift in .focus within the industry such that automotive manufacturers will place emphasis on brand-specific elements while their component manufacturers are predicted to become a growth engine and carry the major portion of the capital investment in their new role as "little automakers" (Dannenberg & Kleinhans, 2004:90). The Mercer study indicates that there is definitely the capacity for growth in the automotive industry specifically the component sector. Various factors are key to the success of global market penetration Le. an innovative and cost effective product, adherence to quality and environmental standards, flexibility of production etc one trait that is notable is the fact that the majority of successful exporters have formed strategic alliances with multinational companies, thus making their penetration of global markets easier. For the South African component manufacturers to capitalize on the future prospects that will become available there needs to be a restructure and transformatlon initiative that addresses the need for development and collaboration. The current reality is that there exists a small number of large enterprises with the majority of component manufacturers being small and medium enterprises, working autonomously. Government as well as many local and international role players have demonstrated their support of the manufacturing sector by providing development and financing avenues. If the sector is to be successful, it is imperative for component manufacturers to take the initiative, pursue finance and development options and create a synergistic network of world-class suppliers who adopt the most up to date technologies to produce high quality, cost effective global market offerings. === AFRIKAANSE OPSOMMING: Suid-Afrika staar tans ernstige sosio-ekonomiese uitdagings in die gesig. Die VIGS pandemie en grootskaalse werkloosheid vererger die maatskaplike diskrepansie, 'n oorblyfsel van die Apartheid era. Tans lewe 50% van die bevolking onder die broodlyn. Volgens GEAR (die Groei, Indiensneming en Herverdeling beleid) sal dit 'n versnelde groeikoers van meer as 6% verg om die sosio-ekonomiese uitdagings aan te spreek. Die motorindustrie is een van die grootste vervaardigingsektore in die Suid- Afrikaanse ekonomie. In 2002 was dié industrie se totale bydrae tot die BBP in die omgewing van 6.4%. As gevolg van die grootte van die industrie en sy bydrae tot die BBP is dié nywerheid geïdentifiseer op die gebied van volhoubare groei. In die motorindustrie was daar reeds grootskaalse omskakeling vanaf 'n binnewaartsgefokusde entiteit na 'n globaal kompeterende nywerheid. Die Motorindustrie Ontwikkellingsplan (MIDP) was die dryfveer agter hierdie herstrukturerings inisiatief. Die MIDP was verantwoordelik vir hervormings oor die spektrum heen, insluitende die afskaffing van voorgeskrewe plaaslike inhoud beperkings wat 'n uitdaging was vir die onderdele sektor, of maniere om die beperkte aanvraag na plaaslike komponente te oorkom. Die MIDP het deur sy stelsel van hervormings plaaslike nywerheidsrolspelers gehelp om die wêreldmagte suksesvol binne te dring. Die onderdelesektor is geen uitsondering nie. In 'n vooruitskatting van die globale industrie, voorspel Mercer Management Consulting dat die totale nywerheid €2 triljoen in kapitaalbelegging oor die volgende 11 jaar sal spandeer en dat die jaarlikse motorproduksie sal toeneem vanaf. 57 miljoen eenhede na ongeveer 76 miljoen eenhede in 2015 met 'n jaarlikse groeikoers van 2.6%. (Dannenberg & Kleinhans, 2004:88) Die studie voorsien 'n verskuiwing van fokus in die industrie waarvolgens motorvervaardigers klem sal plaas op handelsnaam-spesifieke elemente terwyl dit voorspel word dat hul onderdeelvervaardigers die groei-enjin sal word en die grootste deel van die kapitale belegging sal dra in hulle nuwe rol as "klein motorvervaardigers" (Dannenberg & Kleinhans, 2004:90). Die Mercer studie toon dat daar definitief kapasiteit is vir groei in die motorvervaardigingsindustrie, spesifiek die onderdelesektor. Verskeie faktore is die sleutel tot sukses vir die binnedringing van die globale markte, met ander woorde 'n innoverende en koste-effektiewe produk wat voldoen aan die kwaliteits- en omgewings-standaarde, produksie buigbaarheid, ensovoorts. Een opvallende karaktertrek is die feit dat die meerderheid van suksesvolle uitvoerders strategiese bande gesmee het met multinasionale maatskappye wat hul indringing van die globale markte vergemaklik. Vir die Suid-Afrikaanse onderdeelvervaardigers om te kapitaliseer op toekomstige geleenthede, moet daar 'n heropbou- en transformasie inisiatief wees wat die vraag na ontwikkeling en samewerking aanspreek. Die huidige realiteit is dat daar 'n klein hoeveelheid groot maatskappye is teenoor die meerderheid onderdeelvervaardigers van klein tot meduim grootte maatkappye wat outonoom funksioneer. Die regering sowel as talle plaaslike en internasionale rolspelers het hulle ondersteuning vir die vervaardigings-sektor uitgespreek deur die verskaffing van ontwikkelings- en finansiële bystand. Vir die sektor om sukses te behaal, is dit belangrik vir die onderdeelvervaardigers om inisiatief aan die dag te lê, finansiële en ontwikkelingsopsies op te weeg en die stigting van 'n medewerkende netwerk van wêreldgehalte verskaffers wat die mees moderne tegnologie inspan om hoë kwaliteit, koste effektiewe, globale markaanbiedings daar te stel.