Automotive industry survival assurance
A FIRST-HAND assurance that the government was prepared to “go the extra mile” to ensure the survival of the motor industry was given yesterday by a deputy minister during a visit to the Eastern Cape.
But Deputy Trade and Industry Minister Elizabeth Thabethe also stressed that the government was looking at other “distressed” industries – particularly mining – in coming up with rescue plans.
She was speaking on the sidelines of a function at the Eastcape Training Centre in Struandale, where she presented computers to the top three schools as part of the “technogirl” entrepreneurial awards project.
“With regard to the automotive sector, we are on top of the situation and the plans (presented by an industry task team) are being discussed in terms of a cabinet mandate,” Thabethe said.
“We are really trying to assist the sectors in distress in terms of our policies, which are good, but we realise we have to go the extra mile to help at present.”
Thabethe said ideas presented by the task team representing manufacturers, suppliers and dealers were receiving “priority” attention, but declined to be drawn on the outcome or timetable of any intervention.
Meanwhile, it was reported earlier yesterday that the motor industry team, led by the trade and industry department, is considering a three-pronged rescue plan. It includes tax adjustments to stimulate demand for cars, Business Day reported.
The formation of the motor industry team is part of a general initiative undertaken by the National Economic Development and Labour Council (Nedlac) to assist industries severely affected by the economic downturn.
Motor industry players were not prepared to discuss the details of the plan, which is expected to be finalised by month-end, but it is understood that the rescue package will have three components, the newspaper reported.
One is the provision of bridging finance from the Industrial Development Corporation (IDC), with industry sources continuing to stress that the finance would not be a bail-out, but loans that have to be repaid.
The second element of the package would be to tap into existing government skills development programme budgets for on-the-job training to minimise retrenchments. Additional funds from the Unemployment Insurance Fund (UIF) could also be allocated to help workers already retrenched, the newspaper said.
The third component could be incentives to stimulate demand, including so-called scrapping allowances, tax incentives, or temporary rebates for trade-ins to stimulate demand.
The scrapping allowance concept has been advocated particularly by National Association of Automobile Manufacturers (Naamsa) president David Powels, who is managing director of Volkswagen in Uitenhage.
In the latest figures provided by industry suppliers, National Association of Automotive Component and Allied Manufacturers director Roger Pitot said at the weekend that component production was down 35% from last year.
This had resulted in 8000 jobs having been lost in the supply sector, he said.
Sourced via weekendpost.co.za
