A possible lack of middle management skills could hamper automotive manufacturers’ efforts to become mass producers on a global scale, says Econometrix analyst Tony Twine.
A possible lack of middle management skills could hamper automotive manufacturers’ efforts to become mass producers on a global scale, says Econometrix analyst Tony Twine.
According to , South Africa’s automotive base was fast approaching its design capacity of about 500 000 vehicles a year, “bringing the sector to a crossroads”.
“It (the South African motor industry) could remain a batch producer with production below optimum levels or SA could take the next leap to become a mass producer, competitive on a world scale,” Twine was quoted as saying on Thursday.
To evolve from a batch to mass producer of vehicles and components, South Africa would need to increase production four-fold to about two-million vehicles a year. As local demand is not expected to rise much in the coming years, about 75 per cent of these units would be exported, Twine argued.
“South Africa has much to offer foreign companies such as ample land, benefits through the government support programmes and the preferential treatment SA-made products receive under programmes such as America’s African Growth and Opportunity Act and the free trade area with the European Union,” he said.
The country has sufficient middle management skills at present, Twine added, “but these are becoming stretched and could pose a significant problem if the automotive sector were to become a mass producer.
“We have top-level skills and these could be augmented readily. At the bottom level SA almost has a surplus of skills,” notes Twine. “But middle management skills could become a problem early during that quantum leap to mass production.”
In the current economic environment, meanwhile, being a batch producer is beneficial. “With the global automotive market still sloshing around in spare capacity, South Africa’s only redeeming factor is the fact that we’re a batch producer,” said Twine.
“Being a batch producer can be very lucrative. The mass production plants, particularly component plants, do not have the flexibility to change orders quickly,” he added.
But how hard will the global economic downturn affect the South African car and component manufacturers in the long run?
German manufacturers Volkswagen, BMW and DaimlerChrysler started integrating their SA operations into their global supply network in about 1996. “So with the average life of a model at about seven years, we’re safe until about 2004,” says Twine.
“We’ll probably just get our noses past the worst of the major cyclical downturn in industrialised countries, before we start losing too much volume,” Twine told .
