Ford South Africa will be creating 1 200 new jobs in the country by adding a third shift at its assembly plant in Silverton this month for the production of the Ford Ranger pickup.
This follows the Ford Motor Company last year announcing an investment of R1.8 billion to modernise and expand the Silverton plant.
Ford SA MD Neale Hill said on Wednesday the plant will, from the second half of next year, be assembling both the next generation Ford Ranger and the Volkswagen Amarok.
Hill said the launch of the VW Amarok will happen simultaneously with the launch of the new Ford Ranger “or shortly thereafter”.
“I can’t tell you anything about the [VW] product other than we will be building the VW Amarok in the plant for both domestic and export purposes.
“We [Ford Ranger] are significantly the bulk of the volume that will be assembled at the Silverton plant,” he said.
Hill said he does not know anything about the specifications or body style of the VW Amarok to be assembled in the Silverton plant.
“The deal was done at Ford and Volkswagen corporate level and, because of the anti-competitive requirements, we keep very clear firewalls and divides between us,” he said.
Tim Day, the plant manager of the Ford Silverton Assembly Plant, said it is currently preparing for the introduction of the third shift, which will be the first time the plant has used a third shift since the fourth quarter of 2019.
“It will create about 1 200 new jobs over the next four weeks. Of that, about 750 are direct new jobs and 440 are new jobs at indirect groups, such as internal suppliers in the supply chain,” he said.
Day said many of the new employees have worked for Ford SA previously for short periods.
He said the new direct jobs will increase the number of Ford SA employees from 4 200 to about 5 000 while the introduction of the third shift will create about 10 000 jobs in the supply chain.
Day said the investment will enable 24-hour production five days a week, with 720 units produced per day.
Day said the investment has also increased the production capacity of the plant for the current Ranger, with production ramping up to 200 000 units a year as part of the investment in next generation Ranger production in 2022.
Ockert Berry, vice president of operations at Ford SA, said the increased installed capacity at the plant is almost double the 110 000 units the plant was capable of producing when production of the current Ranger pickup began in 2011, and is a significant increase from the 168 000 units prior to the commencement of the latest investment.
Day added that the plant produced its 500 000th Ranger for export at the beginning of this month.
The Ranger is exported to more than 100 markets globally.
Hill said the plant has undergone a remarkable transformation and Ford SA is looking towards “a phenomenal step forward in quality for our customers”.
He said pickups accounted for 20.3% or one in five new vehicles sold in South Africa in 2020, with the Ranger securing a 24.4% share of the pickup market.
Pickup sales in the year to end-August 2021 have increased slightly to 21% of total sales while Ranger’s market share has remained at 24%.
He said the new vehicle market has shown resilience during the Covid-19 lockdowns: new vehicle sales totalled about 384 000 in 2020 and current projections for this year are “in the region of 480 000 units, which is a 25% growth on a year-on-year basis”.
However, he warned about vehicle availability challenges because the Covid-19 third wave is “starting to make its presence felt” in South East Asia and particularly Malaysia, one source country of semiconductors for the global automotive industry.
Read: VW CEO fears semiconductors will be in short supply for years
“This is becoming a concern for the automotive industry. We are looking at a fourth quarter that potentially is going to see supply disruptions in terms of access to vehicles.
“We are sitting in a situation where our dealers are desperate for stock,” he said.
“Across the industry, a lot of the different brands are suffering with availability challenges. This is something that is going to continue into 2022.”
Retail sales ‘mostly recovered’
Absa group chief economist Jeff Gable said the overall economy is only 2% smaller than before the pandemic and retail sales have mostly recovered, with many parts of the economy not far off pre-Covid-19 levels.
He said new vehicle sales have been growing very strongly while, at Absa, home loans and vehicle finance both “look pretty firm”.
Gable said it is hard to reconcile these strong performances with South Africa’s official new record unemployment rate of 34.5%.
However, he said the job losses have been most striking in what’s classified as low skilled jobs.
“Before Covid-19, South Africa had just over 12.5 million people in the formal sector in what are classified as low skilled jobs. Now it’s barely more than 11 million – 1.5 million jobs have disappeared in that space,” he said.
By contrast, Gable said the situation is “dramatically different” for skilled labour, with the number remaining stable at 3.75 million jobs.
“For those parts of the economy that face off that consumer group – most banks, most vehicle manufacturers, most house sales – the pressure that we have seen is much less.
“Highly skilled individuals have managed to keep their jobs en masse.
Consumer spending outlook
“Vehicle sales may not be where they were pre-Covid but they are not far off, which is impressive in part because you think people will be a little more cautious,” he said.
Gable said the spending by the more highly skilled group has been supported by low interest rates.
He said inflation has peaked and Absa’s expectation is that interest rates will rise in South Africa but will rise very slowly from very low levels.
Gable said this suggests the support that exists in the economy, particularly for big ticket items, is likely to continue.
“From Absa’s side, we anticipate maybe two or three interest rate hikes next year.
“But two or three hikes probably isn’t going to sink the boat either with regard to people’s bond and vehicle payments.”