Ford’s plans to accelerate auto exports from SA threatened by rail, land and power constraints

Politicians enthusiastically enjoying their recent visit to the Ford factory (Pic from the dtic)

By John Fraser

A discussion between auto executives and a political delegation in Pretoria this week has revealed the serious obstacles that lie in the path of US auto giant Ford’s hopes to ramp up its vehicle exports from its Silverton assembly complex in Pretoria East.

Port bottlenecks at Durban mean that plans are underway to see whether a high-capacity rail link can instead be provided for Ford’s vehicle exports to and through Port Elizabeth.

Meanwhile, electricity capacity needs to be boosted to enable the expansion of the neighbouring Tshwane Auto Special Economic Zone (TASEZ), which is due to take place fairly soon.

A third worry is securing enough land for expanding the SEZ, with the meeting being told that land is a “quite serious” constraint.

The consultation/site visit on Tuesday involved Deputy Department of Trade, Industry and Competition (dtic) minister Fikile Majola and Gauteng MEC Parks Tau.

A dtic official explained that the department has approved funding for the TASEZ of R3.1bn, with R2.6bn disbursed to date.

Ford’s Ockert Berry said the company is projecting a rise in assembly, heading for up to 200 000 vehicles a year, with many for export.

Export volumes will increase from 2015’s levels by 184%. 

He warned that Durban is congested, so Ford is looking to PE as well.

He said the flow would reach 32 trains a day if they go through PE, needing 1270 additional wagons.

However, this is not finalised yet.

A TASEZ official said that work on the SEZ project has passed the 50% mark, but more land will be needed if there is to be much more expansion. The City of Tshwane would need to appropriate it or buy it.

All construction of the current phase of the SEZ will be completed by the end of March.

He said the TASEZ has received R3.15 bn from dtic and is asking for an additional R256m.

Dept Minister Majola, who mumbled through his remarks and was frequently inaudible, said he hopes that President Ramaphosa will make a visit to the Ford plant and the SEZ.

“We are an advance team,” he muttered into his mask.

“Some SEZs were designated years ago, and nothing is happening. Here we have a success story. It has been a very important learning curve in the construction of SEZs.”

MEC Tau, who took off his mask and was thus more audible, confirmed concerns about getting vehicles from inland Gauteng to the coast.

“We need to look at capacity to get cars to the port, and we are dependent on rail. Transnet seem to be making progress, but I have not heard of a contingency plan,” he warned  

“You ramp up production on the basis of what you are able to move, so this issue of maximising potential to export needs attention.

“We may have the elevate the rail corridor initiative to the national cabinet – to look at the role Treasury and the DTIC will need to play. It is a critical contributor to production capacity.”

Energy supply will also be a constraint to expansion, and the meeting was told that officials have spoken on this to the CEO of Eskom.  

“We must look at alternatives. We are awaiting an Eskom update,” said one speaker.

The dtic did send out a media release later. It confirms the interest in expanding exports through Port Elizabeth.

Here is a link to it (enjoy!):

http://www.thedtic.gov.za/up-to-r2-5-billion-spent-by-the-dtic-to-support-the-development-of-the-tshwane-automotive-sez/

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