presentation to portfolio committee on trade and industry
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Presentation to Portfolio Committee on Trade and Industry. Friday, 5 th March 2010. Stewart Jennings - CEO PG Group - NAACAM President - Chairman of the Manufacturing Circle. Motor Industry Key Factors. - PowerPoint PPT PresentationTRANSCRIPT
Presentation to Portfolio Committee on Trade and Industry
Friday, 5th March 2010
Stewart Jennings - CEO PG Group
- NAACAM President
- Chairman of the Manufacturing Circle
1. What is important to the motor industry is the number of cars produced in SA, not the total sales volumes.
2. High local content to create jobs. We should adopt the Thailand model, not the Australian.
3. Put more pressure on OEM’s to localise and create jobs.
4. Take active measures against countries that provided subsidized exports to SA and are costing the country jobs.
Motor Industry Key Factors
Source : NAAMSA
Total Domestic Vehicle Production
0
50000
100000
150000
200000
250000
300000
350000
400000
1994 1996 1998 2000 2002 2004 2006 2008 2010
Total Domestic Production
Down 31% on
2008
Car Imports - % of market
0.00%
20.00%
40.00%
60.00%
80.00%
2006 2007 2008 2009 Dec-09 Jan-10
Car Imports % of market
Source : NAACAM
Total Motor Industry Employment
OEM's 34 000Component Industry 62 000Total 96 000
Decline in employment 24 000 (20%)
Australian local passenger motor vehicle share
Source : FAPM
1. The IPAP document is welcomed as it does touch many of the pertinent issues.
• The alignment of macro and micro economic policy• Strategic subsidized financing for manufacturing• Leveraging public procurement• Nurturing chosen sectors
2. The importance at this very moment is quick job creation. We all acknowledge the structural inadequacies of our economy and in particular:
• Education• Skills shortages
3. Need a supercharge boost to get job creation going and there are only three ways to do this:
• Need desperately a competitive currency• Reduce interest rates to stimulate consumer spending • Embark on a skilled immigration strategy
4. The current strong Rand has placed the export sector, and particularly the automotive components sector under much more stress than at the start of the recession.
• The Rand strength has nothing to do with SA economic fundamentals. The weakness in Western currencies, coupled to the aggressive subsidized policies of other developing economies is decimating our jobs in SA.
• The continued Rand strength is causing RIGHT NOW further retrenchments, and companies are currently making the decision to withdraw from exports.
IPAP needs a competitive currency
SA Unemployment is the Biggest ConcernEmerging Markets Comparative Levels….
0
5
10
15
20
25
Sout
h Af
rica
Turk
ey
Rus
sia
Braz
il
Chi
na
Mex
ico
Sing
apor
e
Thai
land
%
Q1,2009
Source : Pan-African
60s 70s 80s 90s 00s 10s
04/03/10
11
12
13
14
15
16
17
18
19
20
manufacturing as % of GDP
Source : RMB
Gross Fixed Capital Formation Driven by the Private Sector
Source: SARB
Conclusion: IPAP is an excellent document, but needs time to be implemented. What we need now is action to create jobs, and prevent more and more social insurrection. The only way you can do this is through a competitive currency. It helps:
– Manufacturing – Agriculture Industry– Tourism– Small businesses which feed on medium and large businesses
All are job creators. The service industry is saturated and at its full potential. We need the sectors mentioned above to grow rapidly.
Manufacturing cannot thrive at the current Rand level, facing the cost escalations on electricity against a backdrop of appreciating currency. All we are doing is “licking the lips of our international competitors”, that see our market as juicy and it results in more and more unemployment in our country.
Thus the currency is affecting our manufacturing sector both from an import inducement point of view and is retarding our exports