The recently launched South African Automotive Masterplan (SAAM) bodes well for companies operating in the metals and engineering (M&E) sector, National Association of Automotive Component & Allied Manufacturers, Executive Director Renai Moothilal said at the Southern African Metals and Engineering Indaba.

“The New Materplan is very likely to have a positive impact on the M&E sector provided companies operating in the sector put competitive measures in place to take advantage of the opportunities provided by the plan,” Mr Moothilal said this afternoon.

He said given the fact that the SAAM places local content at the centre of any future support for the industry, with government having set a target of raising local content from less than 40% currently to 60% by 2035, the M&E sector, which is a supplier to the automotive industry, can expect positive outcomes.

“There will be a role for the whole sector to play. Component manufacturing is currently dominated by multinational manufacturers. This will change going forward. These companies will be compelled to contribute towards the growth of smaller local manufacturers by sourcing certain components from them, thus making them part of the value chain.

The outlook is, therefore, positive. Yes there will be challenges but there are companies in the M&E sector who are doing well inspite of the current challenges facing the economy because they have adopted a positive mindeset and invested in skills development, etc. More companies need to adopt a positive, growth oriented mindset and most importantly ensure they enhance their competitivenes,” Mr Moothilal said.

In addition to the local content, the SAAM, adopted by Cabinet in November last year also aims to double employment in the sector to 224 000 jobs by 2035, from 112 00 currently, and position South Africa to produce 1% of global vehicle production, or 1.4-million vehicles.

Speaking on the same panel, SEIFSA Chief Economist Michael Ade said policy has a role to play in ensuring that the plan does benefit the domestic M&E sector.

“Active support for pro-South Africa approach to industrilalisation within the World Trade Organisation rules should characterise trade policy to provide an immediate boost to align busineses in both the metals and engineering and automotive industries,” said Dr Ade.

He said empirical evidence shows that the M&E cluster benefifted from previous and existing auto industrial policies namely the Motor Industry Development Plan and the Automotive Production and Development Programme.

“Prevailing evidence also points to continuous benefits post 2020 and during the Materpan years; there is, however, a need for consistent policy support to maximise the existing symbiotic relationship between the M&E sector and the auto industry.

In conclusion Dr Ade said targeted, conducive and enabling policies should aim at improving reciprocal domestic demand in both industries.