automotive

By Mandla Mpangase As 2024 draws to a close the Tshwane Automotive Special Economic Zone has much to celebrate, according to board chair Lionel October. “This is a project that is a shining example of the three government shareholders doing everything that was asked of them,” he adds. “When we asked the City of Tshwane for land, they gave us land. When we asked the Department of Trade, Industry and Competition to provide support for the Special Economic Zone’s top structures they did so to the tune of over R2-billion. The Gauteng government also played their role in providing bulk infrastructure, also at a cost of almost R2-billion.” Their drive and determination saw TASEZ rise from the dusty highveld in 2020 to becoming a fully-functioning, technologically innovative automotive manufacturing hub within two years. “The development happened in a record time,” October points out. During the construction phase 5 000 jobs were created, with 40% going to small, medium and micro enterprises in the neighbouring townships of Eersterust, Mamelodi and Nellmapius – “another record achievement”. In addition, a further 3 200 permanent jobs were created. TASEZ focuses on its priorities of job creation through aggressive infrastructure development, growing small, medium and micro enterprises, inclusion and accelerating economic reforms to unlock investment and growth. “People ask why government places such an emphasis on the automotive industry,” the chair notes, adding that it is an industry that requires highly skilled workers, and with that comes better wages. The South African automotive sector is one of the most visible sectors in receiving foreign investments and contributes significantly to the growth of the economy. It is an industry that generates millions both nationally and for the City of Tshwane. The automotive manufacturing industry contributes 4.3% to the annual gross domestic product and provides direct employment for 110 000 people. But it also goes beyond the initial investments provided by the original equipment and component manufactures, but the ongoing generation of money that grows the local economy. In addition, the automotive manufacturing industry represents the medium technology sector, removing workers from a low wage, unskilled future to the middle income. However, there is now a pressing need to up the ante with the development of new energy vehicles and the rapid progress of technology. “We need to transition into a high technology, high income economy.” And TASEZ is well placed to perform that role, with the establishment of a training academy as part of its Phase 2 developments. “We will have our own campus where we hope to train between one thousand to two thousand young people each year. “Furthermore, we will be working with the Industrial Development Corporation to create a stream of black industrialists in the automotive manufacturing industry,” October says. TASEZ is also exploring investment opportunities related to the manufacturing of NEVs. “It is important that we do so,” October adds. “We have about 10 to 15 years left for petrol vehicles, and we at TASEZ need to be at the centre of the new developments. “The fact that Gauteng is a major automotive market gives us a competitive advantage.”  

By Mandla Mpangase Africa’s first automotive city, the Tshwane Automotive Special Economic Zone (TASEZ), is set to play a leading business engineering role in training a sklled workforce for a new automotive environment that will embrace new energy vehicles (NEVs) and cutting-edge technologies. A number of countries, including South Africa, have announced pledges to achieve net zero emissions over the coming decades. South Africa has set itself the task of zero net emissions by 2050, bringing global energy-related carbon dioxide emissions to net zero by that time to give the planet an even chance of limiting the global temperature rise to 1.5 °C. Many of the country’s automotive export markets have set stringent targets over the next decade and the original equipment manufacturers (OEMs) are gearing up for the change. Research by Deloitte, Automotive Pathways to Decarbonisation, notes that “by 2050, automakers are expected to reduce CO₂ emissions by 90%”. It goes on to note that “to reach these aggressive targets, however, the entire value chain will need to be decarbonised”. TASEZ has also set itself the bold mission of being a key contributor to creating new businesses, ensuring stable affordable energy supplies, and enabling robust economic growth. Pathway for SEZs TASEZ has proactively set out a cost-effective and economically productive pathway for special economic zones (SEZs) in Africa that will yield results for a clean, dynamic and resilient energy economy, dominated by renewables like solar, waste to energy, and hydrogen instead of fossil fuels. These initiatives will enhance productivity and competitiveness for the automotive manufacturing sector, contributing to South Africa’s socio-economic development through creating jobs and transforming the industrial landscape of the SEZs, says TASEZ CEO Dr Bheka Zulu. Deloitte suggests OEMS and component producers adopt circular business models and transition clean energy in both production plants and usage by prioritising sustainability when extracting and processing basic materials, producing vehicles and their parts, and decommissioning vehicles at their end-of-life. “The sector will need to eliminate traditional sector boundaries, involve suppliers and customers in the solution, and foster strong cross-sectoral collaboration.” This is where TASEZ is well-equipped to play a significant transformative role as an SEZ. Its strength is in building strong strategic partnerships, supporting current and potential automotive manufacturing tenants in creating green facilities that incorporate the latest technologies, and helping to train a workforce familiar with future trends within the industry. Based in Silverton, Pretoria, TASEZ sits adjacent to the Ford Motor Company of Southern Africa and provides infrastructure, just in time, just in sequencing, and bespoke services to a range of component investors. A relatively new entrant into the automotive manufacturing space, TASEZ gained traction when Ford announced it would be investing US$1-billion in upgrading its facilities in South Africa to increase its production from 160 000 vehicles a year to 200 000. The Ford Frame plant and 10 other component manufacturers began moving into the TASEZ space in 2020 to make this a reality – against a very tight deadline of some 18 months. The first Ford Next Generation Ranger came off the production line in November 2022. TASEZ strategic goals With that specific target met, TASEZ could expand its focus more broadly to the strategic goals of helping grow the economy and transform the South African automotive industry, as spelt out in the South African Automotive Master Plan; creating awareness and support for the development and growth of the automotive SEZ; attracting automotive and related industries and tenants into the SEZ; and supporting socio-economic empowerment within the surrounding communities. As a new development, focus was also on creating a zone that embraced the United Nations Sustainable Development Goals in helping end poverty, supporting green energy, and the transfer of skills to those previously excluded from the economic sectors. Phase 1 saw TASEZ creating 5 071 construction jobs (with 18% going to women, 60% going to youth, and 0.86% going to people with disabilities), 3 244 permanent jobs within the automotive manufacturing sector (with women representing 32%, youth 65.47%, and people with disabilities 0.83%), and 10 000 supply chain jobs. In addition, TASEZ provided small, medium and micro enterprises (SMMEs) with R1.7-billion in contracts. “South Africa sets a great store on the SMME sector as a driver of economic development and growth,” Dr Zulu notes. The National Development Plan 2030 (NDP) has set a target of 24 million people in employment by 2030, which 21.6 million would be in SMMEs. TASEZ’s Phase 1 development saw 3 244 permanent jobs in the automotive manufacturing sector created, with a further 5 071 jobs in construction. SMME procurement spend totalled R1.7-billion. New developmental phase As TASEZ begins to develop Phase 2, it is worth noting the importance of SEZs to South Africa’s industrialisation: SEZs are intended to attract foreign and local direct investment through offering various incentives; to enhance the country’s export capacity by providing a conducive environment to produce competitively priced goods; and to generate employment opportunities, particularly where there is high unemployment. TASEZ is well aware of the ever-evolving landscape of the automotive manufacturing industry, with NEVs just around the corner, the necessity to embrace Fourth Industrial Revolution skills in manufacturing, and a keen awareness of the need to ensure that everything is done sustainably, with a built-in resilience. Phase 2 sees TASEZ focusing on becoming a Centre of Excellence for current and future skills programmes, entrepreneurial incubation programmes and high-tech education programmes based on the needs of both the automotive manufacturing industry and the surrounding communities. TASEZ Training Academy “Youth development is a key component of our business case,” says Dr Zulu. Achieving net zero by 2050 cannot be achieved without the sustained support, behavioural changes and participation from citizens, particularly in advanced economies,” he adds. “The TASEZ Training Academy will develop high-tech youth empowering initiatives such as Carbon Capture, Utilisation and Storage (CCUS) programmes which will contributes to the transition to net zero in multiple ways. These will include tackling emissions from existing energy assets, providing solutions in some of the sectors where emissions are hardest to reduce, thereby

On this Mandela Day Dr Bheka Zulu, the CEO of the Tshwane Automotive Special Economic Zone (TASEZ), reflects on the legacy left by Tata Nelson Mandela in building a South Africa that truly reaches its full potential. Today, 18 July, we make time to reflect on the profound impact Nelson Mandela had on our country, and indeed, the world. His wise words flowed in many directions, sharing his experiences, teaching his philosophies, and touching wide and diverse topics. But none of these words were more important that those regarding the youth of this country. Speaking at a rededication of a school in the Eastern Cape in 1995, Madiba said: “Our children are the rock on which our future will be built, our greatest asset as a nation. They will be the leaders of our country, the creators of our national wealth, those who care for and protect our people. “But if they are to take on this great responsibility, the rich potential in every child must be developed into the skills and the knowledge that our society needs. Education is the key to that process. It is also a door which opens from every village and city onto our larger society and indeed onto the whole world.” It is heartbreaking to look at the challenges facing the youth right now; with low economic growth, high unemployment, and lingering poverty and inequality. That South Africa’s economy has been constrained is nothing new, with the Reserve Bank’s growth expectations for 2024 and 2025 sitting at 1.2% and 1.3% respectively. These rates are not nearly enough to help the country grow jobs and create business opportunities for small, medium and micro enterprises (SMMEs). The statistics are harsh, with young South Africans bearing the brunt of these issues. Unemployment among the youth – people between the ages of 15 and 34 – totalled 4.9 million in the first quarter of 2023, according to figures released by Statistics South Africa in May. The youth unemployment rate sits at 46,5%. According to Statistics South Africa (Stats SA) “South Africa, like many countries globally, grapples with the challenge of youth unemployment. This is supported by statistics indicating a 45,5% unemployment rate among young individuals (aged 15-34 years), in contrast to the national average of 32,9% in the first quarter of 2024.” The automotive industry plays a strategic role in growing South Africa’s economy. In 2021 it contributed 4.3% to South Africa’s GDP, with the export of vehicles and automotive components reaching a record R207.5 billion – equating to 12.5% of South Africa’s total exports. Becoming globally competitive and transformed But much more is expected from the sector. The South African Automotive Masterplan’s (SAAM’s) vision is to create “a globally competitive and transformed industry that actively contributes to the sustainable development of South Africa’s productive economy, creating prosperity for industry stakeholders and broader society”. Targets set include: It is against this background that TASEZ needs to stand up and play its part in growing the automotive industry alongside helping young South Africans develop the skills and experience they need to gain work in the ever-evolving sector. To quote Mandela, from a President’s Budget Debate in Parliament in 1996: “Jobs, jobs and jobs are the dividing line in many families between a decent life and a wretched existence. They are, to many, the difference between self-esteem and helplessness.” Beyond job creation, the establishment of SMMEs across the country is critical; driving growth, providing employment opportunities, and opening new markets. South Africa sets a great store on the SMME sector as a driver of economic development and growth. In the National Development Plan 2030, SMMEs are identified as having the potential to contribute between 60% to 80% to the country’s gross domestic product growth and employ 90% of the workforce. The NPD, which has set a target of 24 million people in employment by 2030. Of that, 21.6 million people would be in SMMEs. Youth development is a key component of TASEZ’s business case, with our SEZ helping boost the economies of our neighbouring communities of Eersterust, Mamelodi and Nelmapius, providing job opportunities and training programmes for young South Africans and emerging SMMEs. TASEZ’s Phase 1 development saw 3 244 permanent jobs in the automotive manufacturing sector created, with a further 5 071 jobs in construction. SMME procurement spend totalled R1.7-billion. As the SEZ continues to grow, more job will arise, along with SMME procurement opportunities. In addition, TASEZ is planning to create an automotive incubation programme and focus on skills development in support of Tier 1 and Tier 2 suppliers along with expanding the hub and creating 3 000 new jobs. What we need to be aware of is that these are not merely numbers and statistics to us – each job created or project supported represents real families and community members living secure lives with dignity and self-respect. Picking up the baton from Madiba, we know that we have to be daringly ambitious and resolutely committed to contributing our South Africa’s growth, expanding beyond our borders to impacting regional and African development.