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Auto Production in South Africa and Components Manufacturing in Gauteng Province A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Mashilo, Alex Mohubetswane Working Paper Auto production in South Africa and components manufacturing in Gauteng Province Global Labour University Working Paper, No. 58 Provided in Cooperation with: The Global Labour University (GLU) Suggested Citation: Mashilo, Alex Mohubetswane (2019) : Auto production in South Africa and components manufacturing in Gauteng Province, Global Labour University Working Paper, No. 58, International Labour Organization (ILO), Geneva This Version is available at: http://hdl.handle.net/10419/206728 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Working Paper No. 58 SEPTEMBER 2019 AUTO PRODUCTION IN SOUTH AFRICA AND COMPONENTS MANUFACTURING IN GAUTENG PROVINCE Alex Mohubetswane Mashilo GLOBAL LABOUR UNIVERSITY The Global Labour University (GLU) www.global-labour-university.org is an international network of universities, trade unions, research institutes, think tanks and the International Labour Organisation that ! develops and implements university post graduate programmes on labour and globalization for trade unionists and other labour experts; ! undertakes joint research and organizes international discussion fora on global labour issues; ! publishes textbooks, research and discussion papers on labour and globalization issues. Editorial Board Patrick Belser (International Labour Organisation) Hansjörg Herr (Berlin School of Economics and Law, Germany) Frank Hoffer (Action, Collaboration, Transformation) Seeraj Mohamed (University of the Witwatersrand, South Africa) Rafael Peels (International Labour Organisation) Archana Prasad (Jawaharlal Nehru University, India) Helen Schwenken (University of Osnabrück, Germany) Michael Watt (International Labour Organisation) Marcelo Weishaupt Proni (Universidade Estadual de Campinas, Brazil) Contact Address Hochschule für Wirtschaft und Recht Berlin IMB - Prof. Hansjörg Herr Badensche Str. 52 D-10825 Berlin E-mail: [email protected] http://www.global-labour-university.org Layout: Harald Kröck ! ! ! ! ! ! ! AUTO PRODUCTION IN SOUTH ! ! ! ! AFRICA AND COMPONENTS ! ! ! ! MANUFACTURING IN GAUTENG ! ! ! PROVINCE ! ! ! ! ! ! ! ! ! ! Alex Mohubetswane Mashilo ! ! ! ! ! ! ! ! ! ! ! ! ! ! We thank the Hans-Böckler Foundation which supported this publication. The paper is part ! of the project “Global value chains, economic and social upgrading” at the Berlin School of ! Economics and Law. ! ! ! ! ! The responsibility for opinions expressed in the GLU working papers rests solely with their authors, ! and publication does not constitute an endorsement by the International Labour Office of the ! ! opinions expressed in them. ! ! GLU | Economic and Social Upgrading in Auto Global Value Chains in South Africa Copyright © International Labour Organization 2019 First published 2019 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. ISSN: 1866-0541 (print) ; 2194-7465 (PDF) The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. Information on ILO publications and digital products can be found at: www.ilo.org/publns. Printed in Switzerland II GLU | Economic and Social Upgrading in Auto Global Value Chains in South Africa ABSTRACT This paper presents an exposition of the state, contribution and performance of automotive Global Value Chains in South Africa with a focus on manufacturing. The research process followed was greatly supported by years of working experience in the industry. A survey was conducted to look at the state of social upgrading. This was followed by in-depth interviews focusing on firm-level economic upgrading. Extensive document analysis was conducted. Despite being an important part of the process, economic upgrading does not always produce social upgrading. Component manufacturing enterprises are sandwiched between downward market pressures exerted by original equipment manufacturers on the one hand and their employees who are pushing social upgrading improvements on the other. Their conditions are inferior compared to those of their counterparts in the vehicle assembly sector. A lacklustre economic upgrading response by their employers to market pressures produces loss of volume or supply contracts, or a failure to secure new original equipment components and supplier parts manufacturing contracts, among other possible consequences. This generates social downgrading for the workers first and foremost in the form of retrenchments. The creation of new jobs and sustenance of existing employment levels require increases in production volumes, supported by deepening and widening value addition, due to intensifying process upgrading involving automation and robotisation coupled with new and more efficient methods of work and production systems. III GLU | Economic and Social Upgrading in Auto Global Value Chains in South Africa TABLE OF CONTENTS ACRONYMS .......................................................................................................................... 1! INTRODUCTION .................................................................................................................. 2! 1.! METHODOLOGY ........................................................................................................ 2! 1.1! Decent work survey ............................................................................................ 2! 1.2! Economic upgrading .......................................................................................... 4! 1.3! Limitations ............................................................................................................. 5! 2.! AUTOMOTIVE PRODUCTION DEVELOPMENT, OPERATING ENVIRONMENT AND INDUSTRY-LEVEL ECONOMIC UPGRADING CONTEXT ............................................................................................................... 7! 2.1! Automotive production industrial policy ................................................... 7! 2.2! Significance of the automotive industry in South Africa ...................... 9! 2.3! Production output, domestic market, imports and exports .............. 12! 2.4! Value of exports ................................................................................................. 15! 2.5! Investment and employment ....................................................................... 18! 2.6! Original Equipment components imports and exports and manufacturing value addition ................................................................. 21! 2.7! Output per worker ............................................................................................ 23! 2.8! Profit ....................................................................................................................... 25! 3.! THE STATE OF SOCIAL UPGRADING IN THE COMPONENTS MANUFACTURING SECTOR .......................................................................... 28! 3.1! Survey demographics .....................................................................................
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