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Toyota injects R4.28bn into SA’s economy

Will create more than 1 500 jobs, including 500 at its Durban plant where workers are currently on strike.

Toyota South Africa Motors (TSAM) is investing R4.28 billion in South Africa between October last year and this year, including R2.43 billion for the production of a new passenger model at its manufacturing plant in Prospecton near Durban.

TSAM president and chief executive Andrew Kirby said on Thursday that with the investment in the new model, Toyota will be purchasing components from local suppliers to the value of R2.85 billion a year.

“That will have a direct impact on our economy and create an additional 1 500 jobs – 500 jobs in our production facility and 1 000 in our direct suppliers.”

The announcement at a Toyota ‘state of the motor industry’ event coincided with Kirby confirming that TSAM has had industrial action and a work stoppage at its Prospecton plant for five-and-a-half days since last Wednesday.

Illegal strike

Kirby said some individuals who have been pursuing “their own individual political ideals” have embarked on industrial action, which is an unprotected and illegal strike.

He said it related to the non-payment of a bonus where a target was not met, but these individuals did not even raise a grievance before going on strike.

“Unfortunately they are not listening to the management or to the union leadership. Together we are working to try and resolve that issue and I’m fairly sure we will shortly be back to full production,” he said.

Kirby added that the work stoppage has not had any impact on Toyota’s customers or deliveries, because TSAM came into the new year with a little bit of stock.

Corolla comes to the end of the road

He said the new passenger model will replace the Corolla production line, which is due to end in 2020 and will, for the first time in Africa, include the production of a Toyota Hybrid Synergy Drive vehicle.

Other elements of the total investment programme involve the expenditure of:

  • R455 million to increase local content on the HiAce Ses’fikile, with a further R91 million specifically to increase the volume of the HiAce production line from 14 000 to 18 000 units a year, creating 270 new jobs;
  • R20 million in its Hilux semi-knocked-down (SKD) assembly operation;
  • R365 million to double the size of its parts warehouse in Atlas in Kempton Park; and
  • R928 million in facility upgrades for new models and environmental investments.

Kirby said the investment to increase local content in the Ses’fikile is quite large considering the volume, but TSAM is trying to protect the future pricing of the vehicle because they are so exposed to the exchange rate.

“If we don’t find ways to localise the content, our costs are going to just keep climbing.”

He added: “The HiAce is such strategic important component for us to keep the wheels of the economy moving. Most commuters use taxis so we needed to find a way where we could try and help the economy by creating some more employment by purchasing locally.”

African exports

Kirby said the investment in the SKD assembly operation is related to exports – since August last year – of SKD kits to Kenya, adding that the company is hoping to partner with further countries this year to support industrialisation in Africa.

He said the investment to expand the size of its parts warehouse to 80 000m2 under roof will make it the largest automotive parts warehouse in the southern hemisphere.

Global parts hub

Kirby said this expansion is related to the future volume forecast and the warehouse becoming more of a global parts hub supporting parts sales in Africa.

He stressed that these investments are being made against the backdrop of the finalisation of phase two of the Automotive Production and Development Programme (APDP), which will come into effect in January 2021 and last until 2035, creating some policy certainty for the auto industry.

Kirby said the risk for TSAM in making these investments is that it needs to take a five- to ten-year horizon. 

He said the total new vehicle market declined by 2.8% to about 536 000 units last year compared with 2018.

Excluding the blip in 2017, the market has been in perpetual decline since 2013 and is now 25% smaller than the 2006 peak of 714 316 units, he said.

Ettienne le Roux, chief economist at RMB, said the decline in the market is easy to explain and has been caused by disposable household income growing at below the inflation rate and the tax burden on the income and wealth of consumers increasing to a record high of about 20% last year.

Kirby expects a further decline in new vehicle sales this year of 4% to about 515 000 units.

Thabi Leoka, an investment specialist and member of the Presidential Economic Advisory Council, commended TSAM for showing its commitment to the South African economy by creating jobs when almost every sector seems to be shedding jobs.

Leoka said two years ago President Cyril Ramaphosa went on a very ambitious investment drive to attract $100 billion in new investments in South Africa in the next five years and so far about R662 billion has been raised.

“We have, under very difficult economic conditions, been surprisingly successful in attracting investment,” she said.

“We have also had a number of South African companies and sectors that have pledged and are investing into the futures.

“There is investment coming into South Africa but I think it should be more.”

Leoka shared an incident where she had informed Ramaphosa that South Africa is like a beautiful house with bickering parents and children screaming and the house is internally dirty.

“It looks like a murder scene and you are going out to the world wanting to invite investors to come and eat in chaos,” she said. “I think we need to focus on cleaning the house first and then they [investors] will come. I think that is the strategy we need to follow.”

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There is so much to be made! Thank you for investing in our dynamic nation! South Africa is a blessed country and these returns will be multiplied. Great article Roy and please keep spreading the positivity! Our countrymen must support their own and be proud of where we are from. God has placed us here to serve and we must be proud that we are born in the best country in the world! We must make sure that it gets better and better as individuals and not rely on government to do everything!

R4.28 billion spend in the economy creates goods and services worth around R25.6 billion i.e. the multiplying effect of money.

Walmart employs 1.5 million people world wide, google only employs 12000 people world wide.

Did you know that about 63% of all statistics are made up?

PS: Google employs around 100k employees

No unions = more jobs = economic growth.

Unions don’t protect the right of their workers – they are just there to enrich the union leaders…

Good news, this is what we need.
Govt and unions please don’t mess this one up, thanks.

here is an idea: just let Toyota run the country. Get rid of the incompetents in power and let these guys do it. Why are we stuck with the losers we have?

“Why are we stuck with the losers we have?” … It’s quite simple: they were voted in by the majority … and will continue to be voted in until their level of sophistication in world affairs and education rises to the levels of First World countries.

Offcourse they’re gonna mess it up!

They invest money to create jobs and now they’re dealing with a strike.eish.

Literally happening the same week that SA decides to throw another 3.5bn into the SAA black hole.

Smart move, considering that the metro rail system has imploded and has been replaced with the HiAce Ses’fikile. What’s that old saying? It’s an ill wind that blows no-one any good.

But the long term consequences of a more expensive taxi commute instead of the cheaper rail fare is having huge impacts on strained blue-collar budgets, rush-hour congested commuter stress, not to mention inter-taxi association violence, pollution, road deaths and the cash-based taxi industry sliding under the tax radar.

Maybe we should welcome the Chinese with open arms so that they can build a fast, efficient national railway network as they have in China. We can fund it with wildlife exports for their Chinese Traditional Medicine industry.

But hey! That’s Africa!

Oh dear … here we go again. What on earth could be so objectionable about this comment that it has been ‘held for moderation’? the comment is about the economics of taxis vs rail.

COMMENT HELD FOR MODERATION
31 JANUARY 2020 @ 1:21 PM
Smart move, considering that the metro rail system has imploded and has been replaced with the HiAce Ses’fikile. What’s that old saying? It’s an ill wind that blows no-one any good.

But the long term consequences of a more expensive taxi commute instead of the cheaper rail fare is having huge impacts on strained blue-collar budgets, rush-hour congested commuter stress, not to mention inter-taxi association violence, pollution, road deaths and the cash-based taxi industry sliding under the tax radar.

Maybe we should welcome the Chinese with open arms so that they can build a fast, efficient national railway network as they have in China. We can fund it with wildlife exports for their Chinese Traditional Medicine industry.

But hey! That’s Africa!

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