1. Employment Levels And Trends

The number of persons employed by the South African new vehicle manufacturing industry – comprising the major new vehicle manufacturers and specialist commercial vehicle and bus manufacturers – during the fourth quarter of 2011 may be set out as follows:

Industry Total

Last pay week October, 2011 29 150
Last pay week November, 2011 28 200
Last pay week December, 2011 28 147

Industry employment levels reflect employees on the payroll of vehicle manufacturers.

Compared to the 28 623 positions at the end of September 2011, aggregate industry employment declined by 476 jobs during the fourth quarter of 2011 to 28 147 jobs – a reduction of 1.7 per cent.

The decline in Industry headcount was due primarily to a major manufacturer, during the last two months of 2011, reducing the number of temporary employees.

Employment at all the other major plants remained stable during the quarter. The average monthly Industry employment number for 2011 was 28 292.

2. Number Of Shifts

A single production shift remains the norm. Some manufacturers operate double shifts in selected areas such as machining, press shops, paint shop operations and body shop.

3. Availability And Price Trends Of Components And Raw Materials
3.1 Components Imported Components

In a number of instances, the availability and supply of imported original equipment components, during the fourth quarter of 2011 was severely impacted by the Thailand suppliers’ shutdown as a result of floods.

The disruption caused by the events in Japan during March 2011, compounded more recently by the severe flooding in Thailand, will result in multinational automotive corporations reviewing the design of their respective supply chains, especially in relation to risk.

Local Components

During the fourth quarter of 2011, the flooding in Thailand affected the supply of imported subcomponents and also impacted on the availability and supply of a number of locally produced components.

Ongoing relentless focus on global cost competitiveness and general cost reduction targets continues to pressurise suppliers. Above inflation wage settlements, coupled with sharply higher electricity price increases, continues to add significant risk to suppliers’ competitiveness.

3.2 Raw Materials

Imported Materials

The availability of imported raw materials, where applicable, remained satisfactory. Pricing trends remain a function of exchange rate movements and commodity prices. Increases in prices of steel and natural rubber are anticipated.

Local Materials

Local raw material price movements were impacted by higher commodity prices. The breakdown of the Arcelor Mittal Newcastle furnace caused severe pressure on the supply of forged steels. Local production had to be supported with imported steels. The Newcastle furnace is expected to be in full operation by February 2012.

4. Utilisation Of Production Capacity

On an annualised basis, Industry average capacity utilisation levels showed improvement in 2011 relative to previous years. Fourth quarter capacity utilisation in the car manufacturing sector remained close to record levels.

5. New Investment/Investment Approvals: 2011 Actual And 2012 Projection

NAAMSA reports the industry’s aggregate capital expenditure on an annual basis.

The aggregate projected data for 2012 is based on Capital Expenditure details supplied by the seven major vehicle manufacturers and one truck producer. The projected increase in capital expenditure during 2012 is related in a large part to Automotive
Production and Development Programme (APDP) Investment projects.

6. Business Conditions And Performance Indicators

2011 fourth quarter aggregate industry new car sales at 100 611 units recorded an improvement of 13 741 units or 15.8 per cent compared to the 86 870 new cars sold during the corresponding quarter of 2010. Aggregate industry commercial vehicle sales during the fourth quarter of 2011 at 46 405 units recorded an increase of 5 473 units or a gain of 13.4 per cent compared to 40 932 units sold during the corresponding quarter of 2010.

All sectors registered strong growth compared to the corresponding quarter of 2010. However, fourth quarter sales were mixed in relation to the Industry’s third quarter performance.

Brief comment on the outlook for 2012

On balance, 2011 turned out to be a year of relatively solid growth. Industry trading conditions however remained intensely competitive with over 60 brands and close on 2200 model derivatives, in the new car and light commercial vehicle sectors, competing for consumer’s franchise. In the event aggregate sales for
2011 at 572 241 vehicles registered an improvement of 79 334 units or 16.1 per cent relative to the 492 907 units recorded for 2010.

Export sales also performed relatively well during 2011. However, 2011 Industry vehicle exports of 272 457 units remain below the original projections for the year of exports of over 300 000 vehicles. Nevertheless, the 2011 exports represented the second highest annual export figure on record and reflected an increase of 32 992 export vehicles or an increase of 13.8 per cent on the aggregate export number of 239 465 units in 2010.

New vehicle sales during 2012 would remain a function of the performance of the domestic economy. On the assumption that the South African economy would grow, in real terms, by about 2.7 per cent and taking account of the prevailing historic low interest rates, improved vehicle affordability, new model introductions and easier access for consumers to vehicle financing, as well as continued strong demand by the car rental Industry ‐ NAAMSA’s projection for 2012 translated into an expected improvement of about 7.5 per cent in domestic sales volumes for the year.

Export sales would remain a function of the performance and direction of global markets. Vehicle exports into Europe were likely to soften as a result of the recession and debt crisis in the Eurozone, however, projected higher exports to African countries and factoring in the contribution of the Ford global compact vehicle new export programme – should enable the Industry to record growth. 2012 aggregate exports were estimated to reach about 301 000 vehicles compared to the 272 457 vehicles exported in 2011. The standard attached schedule reflects latest projections of industry sales, production, exports and imports.

Nico Vermuelen

The incentivised programme allows Ford to motivate its dealer network staff and reward them for their performance and achievements during 2011. The competition yields one overall DOTY winner and six additional category winners as well as runner-up prizes.

“We would like to congratulate all of this year’s award recipients and thank them for their continued hard work and dedication” says Dean Stoneley Vice President: Marketing, Sales and Service. “In particular we would like to single out B&M Bredasdorp for emerging as the top dealer of the year, from a pool of exceptional performers.”

Dealers were divided into six performance categories (A, B, C, D, E and F) based on market share and sales volumes. They were then assessed on their performance in a number of different areas including sales and marketing, customer service, portrayal of the brand, dealer standards, penetration of Ford Financial Service offerings and training and development.

Congratulations to the following winners and runners-up:

• B&M Bredasdorp– Overall Winner
• Human Auto Group – Group Winner
• Lazarus Motor Company, Centurion – Winner Group A
• Eagle Corner, Bramley – Runner-up Group A
• Ritchie Auto, Richards Bay – Winner Group B
• Nelspruit Mazda Nelspruit – Runner-up Group B
• Ben Morgenrood, Randfontein – Winner Group C
• Casseys Auto, Springs – Runner-up Group C
• Fed Auto, Newcastle – Winner Group D
• Porters Auto, Kroonstad – Runner-up Group D
• Supreme Auto, Vryburg – Winner Group E
• Ritchie Auto, Standerton – Runner-up Group E
• B&M Bredasdorp – Winner Group F
• Dries Auto, Harrismith – Runner-up Group F

“We are extremely proud of our winning dealerships for achieving outstanding results during 2011. The market continues to be faced with many challenges making hard work, creativity and exceptional customer service more important than ever. We are confident that in 2012 the dealer network will once again raise the bar and rise to the task at hand,” concludes Stoneley.

Preparing for the necessary earth works, and then commencement of construction, the TruckStore team is kicking-off with an official ground-breaking ceremony on site – Highway Business Park Centurion. TruckStore is a first for Mercedes-Benz South Africa and will soon become one of the largest used-vehicle dealers for commercial vehicles – vans, trucks, buses and trailers.

TruckStore sells vehicles of all brands, body configurations and ages. Conveniently situated off the N1, on 30 000m2 of prime real-estate, the facility will have ample parking for large vehicles and is well-situated in Gauteng, between the two major airports (OR Tambo and Lanseria) for the convenience of it’s clients.

TruckStore is one of the largest used commercial dealer networks in Europe and will now officially be launched to the Southern African marked by the middle of 2012. In the Daimler Group, TruckStore is responsible for the professional, international used truck business, involving trucks of all brands and ages, and with all body types.

TruckStore in Europe is growing constantly and already has 30 locations in 14 European countries and has a rolling stock of around 4 000 vehicles, selling more than 20 000 vehicles annually. TruckStore is a Daimler initiative, which began operations in 2002. This proven model concept has been adapted to suit the Southern African market.

TruckStore also accepts commercial vehicles of any vehicle type or brand in part exchange. The condition of every vehicle is thoroughly checked and assessed on the basis of uniform standards. Vehicles are then subdivided into the product categories gold, silver and bronze. This ensures that every vehicle delivers what is promised.
TruckStore will also have a dedicated reconditioning centre based at Zandfontein, which will also serve as the national return centre for our Finance House – Mercedes-Benz Financial Services. The preparation of the used commercial vehicles by dedicated technicians and service staff to bring these used commercial vehicles up to set standards, will be undertaken at the Zandfontein facility, ensuring that these vehicles meet TruckStore benchmark standards.

As part of the Mercedes-Benz South Africa commercial vehicle value chain, TruckStore customers will benefit from a range of services specifically for used commercial vehicles, such as finance, insurance and warranties. This TruckStore initiative will ensure significant growth in the used commercial vehicle segments and the close collaboration with the MBSA dealer network will be strengthened.

The TruckStore website at www.truckstore.co.za recently went live with full details for customers to familiarise themselves with the new and exciting TruckStore concept. Once the TruckStore facility is officially opened the website will be upgraded to an internet platform that will enable used- commercial vehicles customers to find their ideal vehicle even faster – a vehicle suited to their needs – thanks to easy navigation functions. The new functionality will be user-friendly with its clearly structured sections, simple controls and optimised contact functions. In addition to the new design, users will also benefit from a photographic gallery of the used commercial vehicles together with full specifications.

Construction work on the R20 million office building, which will house offices and display facilities, will commence shortly and is expected to be officially opened by mid-2012. Following numerous geometric tests, it was identified that the ground works require a significant amount of preparation due to the dolomite in the area.

A fair amount of excavation will take place – 15 000 cubic metres, which equates to 1 500 truck loads of earth – the area will be compacted and the earth returned to the site. Following these earthworks, construction will commence. The builders will be laying around 1.25 million paving blocks to complete the professional display area.
Consideration has been taken into the design of the building, which will be functional and environmentally friendly. Certain eco friendly measures will be put in place to retain the rainwater for irrigation and solar geysers are to be installed to minimise electricity costs.

“Since 1999 this plant has been responsible for production for important export markets such as the USA, Canada, Japan, Singapore and Australasia to name but a few. In 2009 – when the economic crisis reached its peak – we decided to invest R2.2 billion to increase production capacity here in South Africa in order to produce the new BMW 3 Series Sedan. This was the clearest statement we could make at the time,” said Frank-Peter Arndt, Member of the BMW AG Board of Management responsible for production at Rosslyn.

Speaking at an event to commemorate the official start of production of the new model, Mr. Arndt, who is also Chairman of BMW South Africa, explained that while this investment safeguarded around 2,500 jobs in the middle of the recession it will ultimately lead to significant increases in production, export and employment in the years to come.

“In 1973, Plant Rosslyn became the first BMW production facility to be established outside of Germany,” Mr. Arndt pointed out, “so it is fitting that, almost forty years later, production of this new model signals the beginning of a new era of innovation, passion and commitment for the BMW Group in South Africa.

“Even though the global economic outlook remains uncertain, we remain true to our commitment to this production location. By the end of this year, we plan to introduce a third shift. This will significantly increase the installed production capacity above 90,000 units. It will more than double BMW 3 Series exports from South Africa. And it will create 600 new jobs here at Plant Rosslyn. This is again a strong signal – for our staff, our suppliers and South Africa as an industrial location,” said Arndt.

As series production of the new BMW 3 Series Sedan got under way, the Minister of Economic Development, Mr. Ebrahim Patel also spoke before a large gathering of employees at the BMW plant in Rosslyn. The production launch of the sixth-generation BMW 3 Series marks the start of a new era at the Rosslyn plant. The investments have flowed, among other areas, into innovative production equipment and state-of-the-art manufacturing technologies.

Latest-generation robots are at work in the body shop and paintshop. For the production of the BMW 3 Series, the old, low-rise body shop had to be completely refurbished to make way for a completely new Body-in-White facility. At the same time, numerous new robots were installed taking the total number of robots from 99 with the previous vehicle to 149 with the new car. In addition, latest-generation laser robots and advanced bonding robots are being used.

This modern, low-temperature process is now being used on the BMW 3 Series for around twice as many operations compared to its predecessor, in part replacing conventional spot welding. The innovative technique significantly improves sealing and corrosion prevention. The stiffer body of the new BMW 3 Series offers significantly enhanced driving dynamics, comfort and safety, even though it is up to 45 kilograms lighter than its predecessor.

In the paintshop, new robot facilities have also been installed for seam sealing, flange sealing and undersealing. There is also a new foaming machine for firewall sound insulation. This feeds the sound-insulating material into the cavity, where it is foamed. The result is significantly improved sound insulation between the engine compartment and the passenger cell, making for a noticeable enhancement of interior comfort.

In the assembly shop, meanwhile, standardised modular product and process architectures ensure high productivity and variability. The production process of the new BMW 3 Series systematically applies the BMW Group strategy of multi-version production on the same main assembly line. In other words, different variants of a model series are simultaneously built on the same production line. With these innovative production processes, new manufacturing facilities and cutting-edge technologies, the Rosslyn plant sets exemplary standards for sustainable and eco-friendly production.

With the new BMW 3 Series, BMW has succeeded in implementing production processes that dramatically reduce non-recyclable waste and the generation of solid waste, wastewater and emissions, as well as cutting noise and vibration to a minimum.

Through such highly efficient resource management, the Rosslyn plant has already accomplished a great deal by implementing sustainable measures throughout the value chain. In the last five years alone, Plant Rosslyn has reduced resources utilised in production considerably. The production process now uses 25 percent less energy, 50 percent less water and 50 percent less waste, all while producing 25 percent less carbon emissions per car produced.

When combined with the energy reductions made at the BMW Group’s South African head-office in Midrand this amounts to more than R50-million in energy savings since 2006. However, the company believes it can still do more and has investigated the technical and economic feasibility of supplying Plant Rosslyn solely by means of renewable energy, or in combination with the existing power supply.

Following the outcomes of this investigation, the BMW Group announced late last year that it will partner with the City of Tshwane on a waste-to-energy project. The project is similar to a landfill gas programme which is responsible for providing BMW Plant Spartanburg in South Carolina, USA with around half of its energy requirements.

Methane gas – converted from unusable organic waste at a landfill site in Onderstepoort – will be piped approximately eight kilometers to BMW Plant Rosslyn. Depending on the quantity supplied, the gas will be used to either produce electricity via gas generators or supplement the usage of natural gas in the production process, a resource which contributes approximately 50 per cent to the company’s energy consumption.

Initial indications are that there is enough green waste at the site to cater for approximately 40 per cent of Plant Rosslyn’s gas requirements.

Production at BMW Plant Rosslyn goes all the way back to 1968, when Praetor Monteerders began assembling cars, utilising BMW engines and drive-trains fitted to Hans Glas sheet metal pressed and shipped from Dingolfing in Germany at Plant Rosslyn.

In 1973, BMW AG took over full shareholding and established BMW Group South Africa (Pty) Ltd with BMW Plant Rosslyn becoming the BMW Group’s first manufacturing facility outside of Germany. Since then the BMW Group has been a major investor in South Africa and its people, with BMW Plant Rosslyn moving from a limited vehicle-production Plant that merely assembled vehicles with a few customisation possibilities for the local market, to a world-class Plant capable of producing highly customised cars for customers across the globe.

Just since 1994, the BMW Group has invested more than R10-billion in the production facility in Rosslyn and has led the industry in a number of respects in terms of production and export. For example, the BMW Group was the first OEM to adjust its production model to capitalise on exports, before the finalisation of the Motor Industry Development Plan or MIDP in 1999. Similarly, the BMW Group was the first OEM to announce a new investment in South Africa before the finalisation of this plan’s replacement, the APDP in 2009.

During this period, Plant Rosslyn’s production of the BMW 3 Series and the BMW Group’s investment in South Africa has increased substantially with each new generation as well. This is especially true after the introduction of a fully-fledged export programme in 1999:

With the third generation BMW 3 Series (E36), Plant Rosslyn produced around 92,000 units from 1994 to 1998 or around 19,000 cars per year.

The fourth generation BMW 3 Series (E46) was built between 1998 and 2005 and Plant Rosslyn was responsible for approximately 269,000 units or around 38,500 cars per year.

The fifth generation BMW 3 Series (E90) ended production with around 342,000 units or around 49,000 cars per year, having been built from 2005 to 2012.

In fact, since 1999 the BMW Group has grown its overall production volume in South Africa by more than 220% while its production of cars for export markets has quadrupled.

In 2011, following a best-ever year for the MINI brand and the third-best year in history for the BMW brand, the BMW Group once again emerged as South Africa’s favourite premium car company for the second year in succession. In fact, one in every three premium vehicles sold in South Africa was from the BMW Group.

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Jaguar Bryanston scooped the Jaguar Dealer of the Year Award, while Land Rover N4 Witbank was named the Land Rover Dealer of the Year, the pair emerging as the company’s leading dealer franchises for 2011.

“Both Jaguar Bryanston and Land Rover N4 Witbank excelled in the stringent criteria we set down for all of our dealers,” said Kevin Flynn, Managing Director of Jaguar Land Rover South Africa and Sub Saharan Africa. “Our dealers are our primary point of contact with our customers and therefore it is imperative that they strive for the highest levels of service excellence in every sphere.”

Jaguar Bryanston also emerged as the Jaguar Top Sales Dealer of the Year as well as also scooping the award for Jaguar Top Service Customer Satisfaction Index Dealer of the Year for its consistency in customer service excellence.

Land Rover’s Top Sales Dealer title was awarded to Land Rover Sandton for its exceptional sales volumes during 2011 as well as the trophy for The Land Rover Top Service Customer Satisfaction Index Dealer of the Year. The award is presented to the dealer that consistently delivers excellent customer service. This is measured through the Tactix Programme, which is a daily Customer Satisfaction interview conducted by Conexus, a subsidiary of Synovate. Customer satisfaction scores are released on a monthly basis to dealers.

Daly Land Rover, Potchefstroom was named Land Rover’s Most Improved Dealer of the Year, demonstrating substantial growth and progress throughout 2011. Land Rover East Rand walked away with the Financial Services Dealer of the Year prize.

For the first time Jaguar Land Rover Sub Sahara Africa participated in the prestigious Dealer of the Year Awards event. Premier Auto Services, Zimbabwe took top honours as the Jaguar Importer of the Year, with Coscharis Motors, Nigeria the top Land Rover Importer of the Year. CMC Automobiles, Tanzania was named the Most Improved Importer of the Year for Sub Sahara Africa.

“I would like to congratulate all our award recipients for their exceptional efforts and thank them for their ongoing commitment and dedication to both the Jaguar and Land Rover brands. We strive to ensure all our customers receive a superlative ownership experience and this can only be achieved through the passion and hard work of everyone within our dealer network,” concludes Flynn.

Abu Dhabi Motors, the BMW Group’s long-standing importer for the region, has invested around AED 300 million (approximately 62 million euros) in the new 35 000 square-metre showroom over its three-year construction.

At the opening, Ian Robertson thanked investors and owners Sheikh Mohammed Bin Butti Al Hamid and Sheikh Saif Bin Mohammed Bin Butti Al-Hamid for their strong commitment to completing the new building. “The Middle East is an important region for the BMW Group. We sold more vehicles here in 2011 than ever before. There is tremendous future growth potential in many countries in this region and in the United Arab Emirates in particular,” said Robertson. He added, “The investment in this impressive and unique facility that makes the world’s biggest BMW Group showroom, is testament to the continued opportunities that lie ahead in Abu Dhabi and in the region.”

The expansive facility in Umm Al Nar houses separate showrooms and sales areas for the three premium automobile brands, BMW, MINI and Rolls-Royce Motor Cars, and for BMW motorcycles. More than 450 staff members will work at the facility. The new showroom will allow customers to view the brands’ entire model line-up in different colours and different option packages, with more than 70 automobiles and 10 motorcycles on permanent display. This will be complemented by an extensive range of newer pre-owned vehicles and a state-of-the-art service area equipped with the latest technology. The workshop will be able to perform maintenance on up to 120 vehicles simultaneously.

A further focus will be the facility’s extensive shopping and boutique area, which will sell a wide selection of BMW and MINI fashion items and other merchandise, as well as original parts and accessories. Film fans will not be disappointed either – there is a private cinema that can also host exclusive new-vehicle presentations for special occasions. A café, a Formula One racing simulator and a children’s play area make the perfect customer service offering complete.

After being missing in action for two years, ever since the World Cup soccer ended, with civil engineering turnover dropping 40% in 2010 and barely lifting off the floor last year, it would seem the nation is being prepared to get another adrenaline boost in what remains of this decade through infrastructure construction and other accompanying efforts.

The winning of the World Cup Soccer bid in 2004 unleashed a wave of focused infrastructure commitment. Across much of the public sector the carrot was held high. If the nation was going to be a successful host, much was needed to be done.

This resulted in many major infrastructure projects being launched in close wave-like proximity by mid-decade. The operational term was ‘bunching’. It turned out the private sector was after all quite capable (as steadfastly predicted) of meeting this increased workload but many public sector entities experienced capacity problems in sustaining the pace.

In too many instances it turned out to have been too much of an effort, with not enough public means to sustain the challenging pace. As projects were completed, there was too little follow-through. A period of consolidation followed. But with the economy struggling, political promises not being met and many infrastructure pressures mounting, political focus appears to have finally been regained.

The earlier indigestion has sufficiently receded for a new effort to be possible?

Thus we find in recent months apparently a renewed focus on infrastructure needs and the imperative of launching another wave of major projects to strengthen the longer term growth performance of the country and thereby reinforce political continuity.

This practical push follows an extended period of policy conceptualisation, in which petty bickering was a major feature. Looking back, one can see the shrill demands from the fringes for nationalisation being denied and the push from the Left for a New Growth Path being eventually subsumed in a counter-push from the Centre for its Vision 2030, a common sense based approach offered up by the National Planning Commission.

This synthesis seems to be close to complete, with the “new-new” policy emphasis offering a clearer picture of greater state intervention in the economy across a wide spectrum of initiatives.

There is a wish for more import-substitution and export-beneficiation to push industrialisation, with a greater regional use of export-zones, a greater emphasis on resource nationalism to gain greater state rents, a massive infrastructure effort to debottleneck export capacity the old-fashioned way and for private finance to fund most of it (about which presumably more in this week’s budget as institutional means are invited to get mobilised).

The entire effort isn’t without its contradictions.

From the moment the new political dispensation took hold in 1994, the new government’s main choice was for power maximisation, given the historic backdrop and the non-negotiable determination to secure the long-term future in her own image, leading to cadre deployment on such an overwhelming scale that over the intervening years it prevented growth maximisation due mainly to a mismatching of skill and talent in the economy.

This focus hasn’t apparently changed much (if it hasn’t intensified). Power maximisation remains the main objective even if alongside it there remains the outspoken wish for growth maximisation to address poverty and inequality, except that the latter has struggled to be achieved, given the many supply side handicaps put in its way (as if it was some Sea Biscuit capable of still outperforming even against the greatest odds).

Instead of growth maximisation flowing naturally from the country’s resource deployment, the pace at times had to be forced despite debilitating weaknesses, not unlike a budding Olympic athlete following the wrong diet and lifestyle, yet forcing herself from time to time to compensate through extraordinary effort and focus (though with no results guaranteed).

Despite woeful education results, mounting supply side bottlenecks in electricity, rail, municipal and water capacity, underperforming exports relative to EM peers, with the public sector struggling to meet its targets as too many of its cadres favour operational over capex budgets, and the private sector intimidated as much by awesome global risks as the many domestic political agendas, the economy has nevertheless struggled onwards, achieving modest growth of 3%, maintaining financial stability and even achieving some structural change through very limited employment expansion.

Be that as it may. The objective of power maximisation isn’t going to go away, while need for performance and social delivery continues to mount. And thus again the wish for yet another redoubled effort, another wave of focused trying, as the country attempts to boost its performance in the coming decade, with important leadership decisions ahead.

Certain import-substitution efforts in public procurement linked to long-term energy and rail transport investment makes an awful lot of sense. There are natural economies of scale, the technologies aren’t beyond us, there are long lead times, was done before for decades to great effect (prior to 1985) and why it took so long to restart these efforts is anybody’s guess.

Export beneficiation is more challenging, for the state seems to know more than private market interests as to how to channel the fruits of our endeavours, and possibly willing to spend extra on incentives to steer such efforts. But whether this will amount to genuine value-added maximisation, when taking all costs into consideration, remains to be seen.

The same applies to increased resource nationalism, where the state appears to want to increase its rent from the natural resource endowment, but hopefully without causing private participants to withdraw, or becoming unwilling to participate in future.

More promising is to focus anew on debottlenecking our now very tight infrastructure constraints in order to get a much greater traditional export effort going. Presumably this is in addition to the existing R800bn three-year public infrastructure budget (mainly incorporating Eskom power station, municipal, provincial and existing rail and road efforts).

We were told in the State of the Nation speech earlier this month that there will be major rail, road and water/dam efforts in the east, north and west of the country over the next five to seven years that look like being additional efforts.

To this picture we can quietly also add the next wave of Eskom commitments beyond its current two coal-fired power stations and private electricity efforts, which will be in a class of their own in the 2020s (some coal-based, much of it presumably nuclear, along with renewable).

But where’s the money going to come from?

Presumably not from an increased tax burden (unless you want to add increased disincentive to insult in hobbling the economy yet further), while saving on operational budgets is likely to be vigorously resisted by the many cadres so preoccupied. That leaves institutional means, provided it doesn’t become an invitation for higher tax burdens by refusing to pay market finance charges and thereby impose a social-minded contribution. This brings other contradictions to the fore.

We would apparently love to be like China, another developmental state, which has organised its affairs in such a way that it has access to unlimited pools of citizen savings at minimal costs, as citizens are starved of consumption alternatives while the absence of social safety nets forces them into desperate levels of saving, with alternative personal investment capabilities carefully limited, leaving only low-return cash deposits.

Such a feature marking true developmental states doesn’t apply to us, and neither does the notion that unions will be tame or non-existing and public sector bureaucrats proving superior in allocating investment funds and running industrial projects. It just doesn’t describe our many complex realities. Yet this apparently may not prevent anyone from trying.

This week will show whether our capital market will be pushed into action, tapped by public corporations and government issuing a lot more debt and on what terms.

The political will seems to be gearing up for another big infrastructure push and it will be interesting to see the time tables unfold, and business, markets and public taking time to absorb the magnitude and adjust their thinking.

It would seem 2013-2016 could see a major industrial effort underway, which if it materialises would rub off on the private sector, encouraging it to extend its planning horizons and gearing to meet the opportunities on offer, in the process upping the growth rate yet further and creating more employment opportunities which would also bolster household incomes and consumption (and government tax coffers).

Still missing in action for some time is likely to be household credit-based consumption as the new credit culture will take some years fully vesting. This should limit household consumption growth to its pace of the recovery to date. This would free available resource space in the economy for the public and private investment effort and export catch-up.

So there is promise beyond 2012 as the country gears up for yet another wave of focused effort. It now remains to be seen just how focused we will get this time.

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The local motor industry has made steady gains in recovering from the turmoil caused by the economic disruptions of 2008-2009. Going back two years, the improvement in figures released during 2010 confirmed that there was a turnaround, a fact that has been reinforced by further improved results in 2011.

Vehicle sales saw strong growth over 2011 spurred by an improvement in global economic conditions. Total volumes for new vehicle sales in South Africa saw an improvement of 15,9 per cent for 2011. This was assisted by a low interest rate environment and higher levels of disposable income.

Units sold for the month of December 2011 were down from the previous month to 43 790. This was substantially lower than sales in November which were reported at 49 498. However this is to be expected because of the festive season and shifting spending patterns. Exports for the 2011 exceeded 2010. Sales for January 2012 were up to about 42 000, an increase of 7 per cent over January 2011.

Total vehicle exports were up 11,9 per cent year-on-year but were lower month-on-month in December. It is expected that exports to Europe will continue to decline with the prediction of a return to recession in many of the markets South Africa does business in. The developing world still provides a healthy market and it is likely that more focus will be placed on these countries by the world’s vehicle manufacturers to sustain sales.

In addition to finished vehicles, a substantial volume of components are exported on an annual basis. Again, the bulk of these are sent to Europe. There has however been substantial demand from the United States, Australia and the Far East for locally manufactured parts which should help maintain growth in this sector. Year-on-year growth in 2011 should show substantial improvement and level out over 2012.

South Africa’s healthy motor industry is helped in part by the Motor Vehicle Program instituted by government to stimulate investment in the vehicle manufacturing industry. Improved efficiencies and a continuing focus of skills improvement have also enabled the sector to continue its rapid expansion.

A concern is the inability of smaller firms to make use of the developed logistics chains currently in place. Government has made it a priority to target this high growth sector to position the country as an African automotive hub. Foreign companies will continue to invest in order to take advantage of the growing African market, a market which has recently been receiving much interest.

The motor vehicle manufacturing sector in South Africa will be one of the main drivers of the economy in the future and significant growth can be expected from this sector.

Being the oldest of the battery technologies in commercial use today, it’s easy to understand why lead acid batteries are considered “old fashioned”. However, the contrary is true. Every year this industry announces advancements in active material formulations, alloy types or manufacturing processes.

A lot has happened since the first lead acid battery was developed in the 19th century. Their size has decreased, their cost has dropped, and their performance and life increased multifold. The car batteries manufactured twenty years ago would not last in today’s cars, despite the fact that they were much larger then.

New battery types such as nickel-cadmium, sodium metal chloride, nickel metal-hydrate and lithium ion have emerged. All of these have found applications, some less universal than others. Yet, the lead acid battery is still the most widely used, the most proven and the best understood. It is also the most recycled battery in South Africa, and therefore environmentally friendly.

The way forward for electric vehicles

The first battery powered electric cars were developed around 1840. Following Gaston Planté’s development of the rechargeable lead acid battery in 1865, battery powered electric vehicles flourished. A hundred years ago, all the milk trucks in London were battery driven.

So battery driven electric vehicles are not new. Most forklifts operating in warehouses and cold rooms today are battery driven, as are most golf carts. Even the locomotives pulling ore trains in underground mines, and the scoops that load coal in collieries use batteries.

The use of batteries to power electric vehicles is commonplace. The exception has been the automotive industry. Advances over time in internal combustion engines (IC’s), the discovery of crude oil, the proliferation of highways and lifestyle changes resulted in IC vehicles becoming commonplace.

However, clean environmental practices are now demanding reduced carbon emissions from our cars. And while the concept of 100 per cent electric cars for general use is still some time away, lead acid batteries offer a carbon reduction solution.

Hybrid drives

Rather than a completely battery or IC powered vehicle, the trend is toward hybrid vehicles. These comprise smaller IC engines with batteries to assist.

In these applications, the IC engine will switch off when the car stops at a traffic light – in the time it takes a traffic light to change, an IC engine can produce a volume of carbon-monoxide the size of a large room. Then, when the accelerator is depressed, the battery will restart the engine and the car will drive off. During acceleration, the generator previously used to charge the battery will act as a battery powered motor and assist the engine. When the brakes are applied, the generator will act as a charger, using the braking energy to recharge the battery.

The duty required of a battery for this application has therefore changed from simply starting the engine, to regular discharge and recharge. Energy will therefore be moved in and out of the battery on a regular basis. This is known as cycling.

The development of hybrid vehicles therefore necessitates a battery capable of both starting and cycling duty. The spillproof Raylite Ultimate battery with AGM technology, manufactured by First National Battery, is the solution. This revolutionary battery technology has been specially developed for Start/Stop vehicles.

For the same size as the conventional battery, this technology delivers up to 30 per cent more current – ideal for demanding starting applications – plus three times the cycle life compared to a conventional battery. It is designed to actively assist the engine in accelerating, decelerating and minimizing inactive idling, thus reducing fuel consumption and exhaust emissions. The battery design also incorporates high resistance to vibration, which is essential in large diesel-powered vehicles.

While this development was driven by the automotive industry, it also has many applications in the industrial sector.

A battery for each application

The high cycling performance that AGM technology offers longer battery life for solar power systems, where cycle life is important. Before the South African energy crisis a few years back, most reserve power systems required batteries capable of a high discharge rate and a long float life. Today users are looking for batteries with these features, plus frequent discharge capability to match the higher incidence of power failures.

Other applications include home inverters and golf carts. This technology has been used with great success in millions of miners’ cap-lamp batteries, where the battery is cycled on a daily basis.