Volkswagen of South Africa's confidence in the Eastern Cape region was reaffirmed by Managing Director Andreas Tostmann at a Roof Wetting ceremony for the manufacturer's new Paint Shop yesterday.
Mr Tostmann called the building "a symbol of our confidence in the future of the automotive industry in South Africa, the Eastern Cape and in particular, the future of our Company here in Uitenhage".
"The R750-million investment in the new Paint Shop represents an investment in a process and not necessarily a new product. To justify an investment in a process, you have to be confident about the future.
"We have gone on record stating that we believe by 2010, the industry in South Africa will retail over a million vehicles. Of these million vehicles, we estimate that approximately 800 000 could be manufactured in South Africa, if the business environment gives us the confidence and certainty to do so. In order to cope with this exponential growth, we have to invest in the future," he added.
Using the year 2000 as the base for comparison, the motor industry in South Africa has shown dramatic growth. Industry capacity utilisation levels have grown from around 65% in 2000 to 85% at the end of 2005.
The annual industry's capital expenditure has more than doubled over the same period to R3,5-billion in 2005.
Another key element illustrating the South African motor industry's growth pattern is export sales with 100% growth over the past five years.
Total domestic production over the period has grown by 32%.
With this growth, it is not surprising that the industry has created 3 744 new jobs since the beginning of 2004, 1 300 of which have been created by Volkswagen of South Africa.
The automotive industry now accounts for 7,1% of the South African gross domestic product, which is 0.8% more than the mining sector.
Mr Tostmann continued: "Without the Motor Industry Development Programme (MIDP), growth of this magnitude would not have been possible. The MIDP has unquestionably been the catalyst behind the growth of both the domestic and export aspects of the industry and helped in the past to protect the industry. For the future, the industry doesn't need protection. The industry, and that means the manufacturers with their supplier base, need some assistance in compensating for the cost disadvantages of producing cars in South Africa.
"The future shape of the MIDP, together with other business parameters, must set the scene, which is the role of government.
"Modern products for the local and the export markets with modern, efficient, state-of-the-art processes, are the task for the industry. Under these circumstances and with a million vehicle market in 2010, we are well on the way to becoming a player in the global automotive industry.
"We are confident that within this MIDP review process, a solution will be found to further encourage investment by the industry.
"This will also mean that we at Volkswagen of South Africa can continue with our growth strategy which is based on the significant growth over the recent years."
Volkswagen of South Africa has increased its production volume by 36% in two years, with production of more than 120 000 vehicles in 2006.
Over the past six years, Volkswagen of South Africa has invested in excess of R3-billion in plant, machinery and facilities to enable growth. Over the next two years, the company will invest a further billion rand in plant, facilities and new product introductions.
"To give you some idea," Mr Tostmann explained, "We plan to bring four totally new products into the market in South Africa in the next three years for both local and export markets. To enable this aggressive plan and become globally competitive, we have to have the right facilities and infrastructure within our plant, most importantly, well trained and highly skilled people. We invest over R40-million per annum in the development of our people."
The R750-million new Paint Shop - a project that has rapidly changed the Uitenhage skyline - is the largest building currently under construction in the Eastern Cape.
It has a surface area of 45 000 square metres which equates to seven soccer fields or to the size of the Sandton Convention Centre.
18 000 cubic metres of concrete have been used in the construction process. This volume of concrete would enable the construction of a 65km wall between Johannesburg and Pretoria 1,8m high and 15cm thick. 2950 tons of reinforced steel have gone into the construction.
"Everything is on schedule for the technical equipment and machinery to be installed inside the building," said Mr Tostmann.
The new Paint Shop will provide greatly improved flexibility - the ability to paint a wide variety of car shapes and sizes. It will offer the most advanced application systems, materials, environment control and energy recovery systems to be found anywhere in the world.
Mr Tostmann continued: "In a vehicle manufacturing facility such as we have in Uitenhage, the Paint Shop is at the heart of the manufacturing process. Without painted bodies on schedule, with the required quality of finish, we do not have a business. The output from the Paint Shop dictates the rate at which we can build cars. Therefore, this investment is literally like putting a new heart into our plant in Uitenhage. A heart, we believe, that will give renewed energy and life to our productivity and enable Volkswagen of South Africa to capture future domestic and export growth opportunities."
The new Paint Shop will be fully operational in the first quarter of 2007.
