Dave Coffey, NAACAM President                  

There is little doubt that the South African economy will experience a difficult 2016 with a GDP growth of potentially less than 1.0% and with further interest rate hikes expected. New vehicle sales registered a decline of 6.9% in January 2016 compared to last year with total passenger car and commercial vehicle sales expected to decline by 9% and up to 5%, respectively, for the full year of 2016. This decline was against an already depressed 2015, where light vehicle sales were 4,2% lower than in 2014.

On a more positive note, a substantial increase in new vehicle exports took place in 2015 (up 20% from the prior year) and more growth is expected to materialise from March 2016 onwards with projections of a 12 % year on year increase. It is thus important to be part of these export vehicle programmes as well as other direct component export programmes, particularly in light of the weaker rand.

Our main objective, as NAACAM, is to represent our members’ interests and to influence the environment in which we operate in such a way that it facilitates the positive growth of our members’ businesses. We are a lobby organisation that needs to interact effectively at all levels with government, NAAMSA, Numsa and other regulatory bodies, like the Motor Industry Ombudsman, in order to positively impact on policy determination and regulatory matters. We are the credible voice of the automotive component industry in South Africa and we do have a significant influence on determining our own future. In order to attend to key matters, we deploy working groups which are headed up by NAACAM Executive Committee members.

As there is much happening in 2016 that will influence our industry and our businesses, it is important that I share our 2016 priority projects along with the leaders of these projects, as you may want to be involved in some in way shaping your/our future. I therefore encourage you to participate, even if it is to engage with the project leader to share your ideas, or to attend the regional NAACAM meetings where your input would be well received.

APDP Post 2020:  As component manufacturers we were disappointed with the outcome of the review tabled on 6 November 2015; we did however understand the dynamics of how the final proposal was reached by the dti and this will certainly inform our approach to the Post 2020 review which we believe will be largely completed this year. The visit last year to Thailand by industry and senior dti representatives was an eye opener and lessons learnt from their successive Master Plans for the automotive sector could influence longer term government policy here in South Africa.

There are two unresolved issues regarding the changes to the present APDP, namely the quantum of the VAA given to OEMs at annual volumes between 10,000 and 50,000 and exactly what is meant by the statement “The qualification for component suppliers to earn APDP benefits will be tightened in order to avoid these being earned on non-core automotive products and priority afforded to those products that add value in the value chain”. We have assurance from ITAC that NAACAM will be involved in these determinations over the next few months. The working group to deal with the post-2020 strategy has already met twice since December 2015.  The APDP project leader is Ken Manners.

BBBEE: The dti has made it clear to our industry that they would consider deviations within an automotive sector code but would not change the general BBBEE codes as they stand and that government incentives would, at some point in the future, be informed by the BBBEE performance of the auto industry as a whole, as well as by individual companies. As NAACAM, we believe that an auto sector charter is the best way forward and await a decision by NAAMSA as to whether they will support this. In the meantime I encourage our members to do what is required, as difficult as it may be, to ensure compliance against the new codes.  

In addition you are aware that a recent AIS note from the dti introduced a requirement for immediate BBBEE compliance to submit claims against approved projects, and to submit a plan to become compliant by March 2017 in order to participate in the AIS benefits on any new projects. NAACAM has responded formally to the dti (NAAMSA has supported our view) and asked that a more realistic timeframe be adopted for compliance on new projects while claims against existing approvals be honoured.  The BBBEE Project leader is Gary Keen.

Wage negotiations:  Our industry cannot afford any labour disruption in 2016 as the world is watching. Our wage negotiating team under the leadership of Ugo Frigerio will certainly be faced with a challenging task when one considers the economic and political environment. Furthermore, the longer-term positioning and possible additional flexibility of component manufacturers currently falling within Chapter III of MIBCO will be reviewed

ASCCI: The Automotive Supply Chain Competitiveness Initiative was established in December 2013 to coordinate and align supply chain development activities in the SA automotive industry. The overall objective was to increase the supplier manufacturing value add (MVA) in support of producing ‘1.2million’ vehicles, enabling local supply chain capabilities, increasing local content and advancing transformation; current ASCCI initiatives correctly focus on supplier competitiveness and deeper localisation. The ASCCI Exco comprises four supplier representatives (who are NAACAM Exco members), the Executive Directors of NAACAM and NAAMSA, the OEM Purchasing Council Chair and Vice-Chair, the dti and Numsa. The NAACAM ASCCI project leader is Alex Holmes ably assisted by Andy Dealtry, Andrea Moz and Andrew Turner, all of whom are members of the ASCCI Exco; our wide representation facilitates regional input back into the ASCCI Exco.

The NAACAM Show: we believe that the current automotive component shows in South Africa are not attracting the right level of component supplier participation and are not adding the right level of value to our members in the OE supply chain, nor to the industry as a whole. We have recently therefore released a tender for an events management company to organise a world class automotive component show for NAACAM, which will be hosted in April 2017. The intention is not to endorse other component shows in order to ensure our event receives the appropriate focus and attention. The project leader is Dave Coffey.

Executive Director NAACAM: Roger Pitot will remain as the Advisor to NAACAM until  mid-2016; we are searching for a full-time Executive Director to replace Roger.  The project leader is Dave Coffey.

MIOSA: Motor Industry Ombudsman of South Africa.  NAACAM Vice-President Ken Manners has effectively negotiated a reduced MIOSA fee for our members that do not supply directly to the consumer; details have been communicated to members and NAACAM will continue to liaise with MIOSA for levies in future years.

In addition to the above projects we will continue to formally object to matters that make no business sense and that will impact negatively on our members. For example, NAACAM made a formal presentation to NERSA to oppose the proposed additional 15% Eskom tariff increase and we have opposed the Carbon tax. Our membership of BUSA allows us to participate in a wide variety of discussions on various matters of interest to our sector, including trade, labour and legislative issues.

We will also continue to support the CCIG in order to find a balanced solution for PGM beneficiation for catalytic converter production and to ensure the longer-term success of this important sector.

Finally, we also acknowledge that we need to increase NAACAM’s public profile to ensure that our voice is effectively heard and that all industry stakeholders appreciate the employment leverage that the component sector offers, should deeper localisation take place at the OEM’s or the Tier 1 suppliers, as the components sector employs almost three times as many people as the vehicle assemblers do.

What I have noted above will all impact on our businesses; one has a choice to watch the game or to get involved. I encourage you to participate in whatever form you chose so that we make the difference that creates the environment in which our businesses can succeed.

NAACAM would not be the success it is without the dedicated team of Helena Marx and Bev Watts who have ably managed the office, even in the absence of a full-time Executive Director following the retirement of Robert Houdet due to ill health. We have been fortunate to retain the part-time services of former Director Roger Pitot until we find a replacement for Robert.

My thanks to all the National Executive Committee members for the time they spend attending to NAACAM’s affairs, and this includes the office bearers in the five regions and I join them in wishing your company a successful 2016.

Dave Coffey