Ford to invest R1.5 billion in SA

The investment is to commence next year and will entail the production of a next generation pick-up truck at Silverton, Pretoria and engine manufacturing at Struandale, Port Elizabeth.

Production of the new diesel engine is scheduled to begin in 2010, followed by production of the new pickup in 2011.

The investment will increase total annual capacity at the Silverton plant to 110,000 units, with approximately three-quarters of the vehicles being produced for export, primarily to markets in Africa and Europe.

The Struandale Engine Plant will increase annual production of its turbocharged common-rail Puma diesel engine and components to approximately 180,000 units, with the majority being exported.

"Winning this investment is a major achievement for everyone at FMCSA, as well as our partners in government, NUMSA, and our local suppliers, and highlights our strategic position within the future global footprint of Ford Motor Company," says Hal Feder, president and CEO of FMCSA.

He said it also underscores Ford's ongoing commitment to expanding its operations in South Africa.

Ford would be working closely with Government and bodies such as NUMSA to ensure total alignment and commitment to product quality, training and the creation of new job opportunities.

Although the transition of FMCSA operations over the next few years will have no immediate impact on the size of its workforce (which currently totals nearly 4,500 employees between its two manufacturing facilities), FMCSA expects to hire up to 500 additional employees by the time the realigned production kicks off in 2011.

Local suppliers to FMCSA stand to benefit from the expanded capacity, as increased local content will be sourced to meet increased production and output.

FMCSA currently uses about 35% local content, which will improve to more than 60% when production begins.

Working with roughly 110 different South African suppliers, annual spending on local components will increase from an estimated R441 million a year to approximately R2.9 billion.

"The magnitude of this project is indicative of how South Africa can benefit from having a globally competitive auto industry. In addition to the direct implications to FMCSA, this investment will have a multiplier effect with indirect job creation for local suppliers, and overall economic benefits from increased demand of locally produced content," said Feder.

FMCSA, which is a wholly-owned subsidiary of Ford Motor Company, first set up operations in South Africa in 1923.