Johannesburg - Ford Motor Company of Southern African (Ford SA) plans to invest more than R1.5 billion to expand operations for its next generation compact pickup truck and Puma diesel engine, it said on Wednesday.
The investment will commence in 2009 and be split between its assembly plant in Silverton, Pretoria and engine facility in Struandale, Port Elizabeth. Production of the new diesel engine is scheduled to begin in 2010, followed by production of the new pickup in 2011.
Ford said its current production landscape will change to enhance South Africa's significance as a strategic export base for vehicles, engines and components for Ford Motor Company.
Plans call for the Silverton, Waltloo plant to transition from its current production, to a high-volume, flexible single platform line that will accommodate the new pickup.
Total annual capacity at its Silverton plant will grow to 110 000 units, with approximately three-quarters of the vehicles being produced for export, primarily to markets in Africa and Europe.
The Struandale engine plant will increase annual production for its next-generation, turbocharged common-rail Puma diesel engine and components to approximately 180 000 units, with the majority being exported.
"Winning this investment is a major achievement for everyone at FMCSA, as well as our partners in government, Numsa, and our local suppliers, and highlights our strategic position within the future global footprint of Ford Motor Company," explained Hal Feder, president and chief executive officer of Ford SA.
"It also underscores Ford's ongoing commitment to expanding our operations in South Africa."
As part of the investment, Ford SA said it planned to continue working with the South African government to accelerate and enhance human resources training and development of the auto industry's current and future workforce to ensure they possessed the necessary skills required to support the launch.
Both Ford and the South African government recently reconfirmed their full commitment to future growth and development of the country's vehicle manufacturing and associated industries.
This included an agreement of strategic objectives to develop worker skills, improve supply base capabilities, and accelerate the transformation of black economic empowerment.
"It's critical for the South African government to continue to support initiatives that help foster a strong and globally competitive auto industry - one that is prepared to capitalise on future opportunities and realise the potential for growth and success," said Feder.
He added that Ford SA would also continue to work closely with the National Union of Mine Metalworkers of SA to ensure there is total alignment and commitment to deliver the cost competitiveness and world-class quality and safety standards that had attracted this investment.
The transition of Ford SA operations over the next few years would have no immediate impact on the workforce size, which currently totals nearly 4 500 employees between its two manufacturing facilities.
However, Ford SA expected to hire up to 500 additional employees by the time the realigned production kicks off in 2011.
Local suppliers to FMCSA stand to benefit from the expanded capacity, as increased local content would be sourced to meet increased production and output.
Ford SA currently achieves about 35 percent local content, which will improve to more than 60 percent when production begins. Working with roughly 110 different South African suppliers, annual spending on local components would increase from an estimated R441 million each year to about R2.9 billion, the company said.