Naacam has welcomed the recent news about GMSA's R18-billion contract to manufacture the Hummer H3 as good news for local component suppliers.

Naacam has welcomed the recent news about GMSA's R18-billion contract to manufacture the Hummer H3 as good news for local component suppliers.

The local subsidiary of General Motors was recently awarded the contract to manufacture the 4X4 H3 in South Africa. The National Association of Automotive Component and Allied Manufacturers (Naacam) said this indicates the multinational's confidence in the South African motor industry, while providing a great opportunity for local suppliers.

Dave Coffey, president of Naacam, said: "Even though South African component manufacturers face tough competition when global vehicle manufacturers are awarding production contracts, the strength of the supply chain with local suppliers has become more competitive and providing world-class products works in our favour."

The GMSA plant in Struandale will be the only site outside of the US where the Hummer H3 will be built. The contract to supply the vehicle in both right- and left-hand drive for local and export markets will run until 2012. It is estimated that about 450 jobs will be created.

Planning director for GMSA Ian Nicholls said that by three or four years, when production was fully ramped up, the plant would be producing about 10 000 H3s per annum. This will constitute about 10 per cent of South Africa's total vehicle exports and signal good news for the local supplier network.

"While a significant proportion of the parts for the H3 will be sourced from international locations, we shall be looking to source a portion of the parts from local suppliers," Nicholls said. "Our objective is to, over time, grow the local supplier base and create additional jobs at supplier companies."

Original Equipment Manufacturers (OEMs) are increasingly focusing on South Africa as a vehicle production base, Coffey said. He added though that this would not be feasible without a competitive local component manufacturing segment.

"OEM's gearing for export has resulted in larger local volume production and a growing local automotive market. This has stimulated South African component manufacturers to pursue new opportunities and in cases suppliers are venturing into manufacturing components that have never been produced here before, such as airbags," says Coffey.

"South African manufacturing capabilities extend to a range of specialised parts and companies are investing in production capabilities to keep pace with international technology and standards."

"Increased local sourcing will be beneficial for the industry overall and ensure that local components manufacturers can reap the rewards of major OEM investment in the country," said Coffey.

Robert Socia, president and managing director of GMSA, said more than R900 million had been invested in the South African operation since the manufacturer's return to the country last year. He added that a further R16 million was currently being invested in a new parts warehouse.

"General Motors is aiming to continue to grow share through year-end and will be launching the Astra GTC, Opel Tigra, a range of Opel Commercial Vehicles and the new Chevy Spark. The H3 export contract, valued at R18 billion, is the next important step in our growth plan for South Africa," Socia said.