STUDY on the RETENTION and CREATION of EMPLOYMENT in the SOUTH AFRICAN AUTOMOTIVE MANUFACTURING INDUSTRY Final Deliverable
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A SUTDY COMMISSIONED BY FRIDGE (FUND FOR RESEARCH INTO INDUSTRIAL DEVELOPMENT, GROWTH AND EQUITY) STUDY ON THE RETENTION AND CREATION OF EMPLOYMENT IN THE SOUTH AFRICAN AUTOMOTIVE MANUFACTURING INDUSTRY Final Deliverable Submitted by BCS Africa 8/14/2014 STUDY ON THE RETENTION AND CREATION OF EMPLOYMENT IN THE SOUTH AFRICAN AUTOMOTIVE MANUFACTURING INDUSTRY 1. CONTENTS 1. CONTENTS ............................................................................................................................ 2 2. LIST OF FIGURES ................................................................................................................... 5 3. LIST OF TABLES ................................................................................................................... 10 4. LIST OF ABBREVIATIONS .................................................................................................... 12 5. INTRODUCTION .................................................................................................................. 14 5.1. BACKGROUND ....................................................................................................... 14 5.2. OBJECTIVES ............................................................................................................ 15 5.3. SCOPE .................................................................................................................... 16 5.4. METHODOLOGY ..................................................................................................... 17 5.5. RESEARCH LIMITATIONS ........................................................................................ 18 6. EXECUTIVE SUMMARY ....................................................................................................... 21 6.1. OVERVIEW ............................................................................................................. 21 6.2. RELATIONSHIP BETWEEN ECONOMY AND eMPLOYMENT ................................... 22 6.3. SUPPLY SIDE COSTS ............................................................................................... 22 6.4. HUMAN RESOURCES AND LABOUR RELATIONS .................................................... 23 6.5. OPERATIONAL TRENDS .......................................................................................... 24 6.6. PRODUCTION GROWTH FOR OEMS ...................................................................... 24 6.7. PRODUCTION GROWTH FOR COMPONENT MANUFACTURERS ............................ 25 6.8. POLICY IMPACT ...................................................................................................... 26 6.9. POLICY TARGETS AND OBJECTIVES ........................................................................ 27 6.10. EMPLOYMENT TRENDS .......................................................................................... 28 6.11. RECOMMENDATIONS ............................................................................................ 29 7. OVERVIEW OF THE INTERNATIONAL AUTOMOTIVE INDUSTRY ........................................ 36 7.1. PRODUCTION AND SALES CONTRIBUTION ............................................................ 36 7.2. GLOBAL AUTOMOTIVE INDUSTRY TRENDS AND MEGATRENDS ........................... 44 7.3. GLOBAL OEM / SUPPLIER RELATIONSHIPS ............................................................ 50 8. OVERVIEW OF THE SOUTH AFRICAN AUTOMOTIVE INDUSTRY ........................................ 56 8.1. MAJOR ROLE PlAYERS ............................................................................................ 56 8.2. VEHICLE PRODUCTION .......................................................................................... 57 8.3. THE MIDP AND THE APDP ..................................................................................... 58 Page | 2 STUDY ON THE RETENTION AND CREATION OF EMPLOYMENT IN THE SOUTH AFRICAN AUTOMOTIVE MANUFACTURING INDUSTRY 8.4. AUTOMOTIVE PRODUCTION, SALES AND ECONOMIC CONTRIBUTION ................ 75 9. INDUSTRY QUANTIFICATION AND SEGMENTATION .......................................................... 91 9.1. INDUSTRY QUANTIFICATION ................................................................................. 91 9.2. CENSUS STRUCTURE .............................................................................................. 92 9.3. CENSUS BIAS .......................................................................................................... 93 9.4. RANDOM SAMPLING; UNDERCOVERAGE AND NON-RESPONSE .......................... 93 10. DRIVERS AND INHIBITORS OF EMPLOYMENT GROWTH.................................................... 96 10.1. THE IMPACT OF THE EXCHANGE RATE, NEW VEHICLE PRICING AND THE MARKET ON EMPLOYMENT .............................................................................................................. 96 10.2. THE CHANGING RELATIONSHIP BETWEEN THE EXCHANGE RATE, THE ECONOMY AND THE NEW VEHICLE MARKETS POST 2010 ................................................................ 100 10.3. MARKET FORCES .................................................................................................. 106 10.4. OPERATIONAL ...................................................................................................... 111 10.5. POLICY.................................................................................................................. 118 10.6. GOVERNMENT PROCUREMENT POLICIES ........................................................... 122 10.7. IMPACT OF BENEFICIAL TRADE AGREEMENTS .................................................... 122 10.8. IDENTIFICATION OF KEY AREAS OF CHANGE TO FACILITATE GROWTH .............. 122 10.9. BEST PRACTICE ANALYSIS .................................................................................... 129 11. EMPLOYMENT TRENDS IN THE SOUTH AFRICAN AUTOMOTIVE INDUSTRY .................... 135 11.1. OVERALL EMPLOYMENT TRENDS ........................................................................ 135 11.2. TRENDS IN LEVELS OF EMPLOYMENT INTENSITY ................................................ 136 11.3. TYPES OF EMPLOYMENT ..................................................................................... 143 12. MODELING OF FUTURE EMPLOYMENT TRENDS.............................................................. 146 12.1. MARKET FORECASTING OVERVIEW ..................................................................... 146 12.2. MODEL STRUCTURE AND METHODOLOGY ......................................................... 146 12.3. SCENARIOS........................................................................................................... 150 12.4. SCENARIO ANALYSIS ............................................................................................ 168 12.5. EMPLOYMENT VOLATILITY .................................................................................. 170 13. ANALYSIS OF THE APDP ................................................................................................... 174 13.1. QUALITATIVE ANALYSIS OF THE POTENTIAL MARKET IMPACT OF THE APDP .... 174 14. CONCLUSIONS .................................................................................................................. 175 14.1. OVERVIEW ........................................................................................................... 175 Page | 3 STUDY ON THE RETENTION AND CREATION OF EMPLOYMENT IN THE SOUTH AFRICAN AUTOMOTIVE MANUFACTURING INDUSTRY 14.2. RELATIONSHIP BETWEEN ECONOMY AND eMPLOYMENT ................................. 176 14.3. SUPPLY SIDE COSTS ............................................................................................. 176 14.4. HUMAN RESOURCES and LABOUR RELATIONS ................................................... 177 14.5. OPERATIONAL TRENDS ........................................................................................ 178 14.6. PRODUCTION GROWTH FOR OEMS .................................................................... 178 14.7. PRODUCTION GROWTH FOR COMPONENT MANUFACTURERS .......................... 179 14.8. POLICY IMPACT .................................................................................................... 180 14.9. POLICY TARGETS and OBJECTIVES ....................................................................... 181 15. RECOMMENDATIONS ...................................................................................................... 184 15.1. INDUSTRY ENGAGEMENT .................................................................................... 184 15.2. BARGAINING COUNCILS AND LABOUR RELATIONS ............................................. 184 15.3. TARGETS .............................................................................................................. 185 15.4. NICHE PRODUCTION INCENTIVES ........................................................................ 186 15.5. POLICY ENHANCEMENTS ..................................................................................... 186 15.6. ONE HYMN SHEET ............................................................................................... 187 15.7. ECONOMIC POLICY .............................................................................................. 188 15.8. OPERATIONAL and ORGANISATIONAL CHANGE ................................................. 189 16. BIBLIOGRAPHY ................................................................................................................. 190 17. APPENDIX 1- EMPLOYMENT SEGMENTATION