FORD SOUTH AFRICA: Global Auto Business Eyes SA Opportunities

South Africa’s government has promised to deliver massive foreign direct investment to drive employment opportunities, commercial activity, and ultimately GDP growth in a promising economy which has waned for almost a decade. President Ramaphosa was on the charm offensive in 2018, managing to drive huge increases in inflows and bring FDI to its highest level in five years. But, the subsequent years have thrown up unprecedented challenges and investment has slowed. In 2020, Ramaphosa urged African leaders to come together to attract investment to the continent as the African Continental Free Trade Area agreement came into play. And in 2021, he promised international investors that the country was committed to rooting out corruption while solving crippling power issues.

Many companies listened, and big names including Microsoft, Johnson & Johnson, and Ford committed spend in South Africa.

Ford’s venture is an important coup for the country which boasts a thriving automotive industry that contributes a major GDP component.

The company announced in February 2021 that it would spend R15.8 billion upgrading its Silverton Assembly Plant in Tshwane. The goal of this investment is to boost production capability and capacity, while creating new jobs. Excitement followed with this announcement marking the largest investment by Ford in its 99 years in South Africa – one of the largest investments in the history of the country’s auto industry. Highlighting the scale and importance of the investment, the Ford Silverton Assembly Plant said it would expect to generate revenues of more than 1.1% of South Africa’s GDP.

The expansion allows for an extra 32,000 vehicles to roll off the plant, and drives production of the all-new Ford Ranger and VW pickups. From Tshwane, the Ford Ranger will head for 100 global markets and will also hit South African roads. 1200 direct new jobs will be created, along with 10,000 across the value chain and supplier network, including in companies like ElectroMechanica where innovation is plentiful.

SILVERTON UPGRADES

“This investment will further modernise our South African operations, helping them to play an even more important role in the turnaround and growth of our global automotive operations, as well as our strategic alliance with Volkswagen,” said Dianne Craig, President, Ford’s International Markets Group. “Ranger is one of our highest volume, most successful global vehicles. This investment will equip our team with the tools and facilities to deliver the best Ford Ranger ever, in higher numbers and with superior quality.”

At the Silverton Plant, a new body shop with the latest robotic technology and a new high-tech stamping plant have been installed onsite to allow for streamlining of the integrated manufacturing process. Thorough upgrades were also made to the box line, paint shop, and final assembly to improve vehicle flow within the plant. The container and vehicle yards were also expanded.

“The extensive upgrades and new state-of-the-art manufacturing technologies will drive efficiencies across our entire South Africa operation – from sequenced delivery of parts direct to the assembly line, to increased vehicle production line speeds and precision of assembly to ensure the world-class quality that our customers expect,” said Andrea Cavallaro, director of Operations, Ford’s International Markets Group.

This investment is furthered by ongoing upgrades and enhancements across the Ford South Africa ecosystem, including wholly owned facilities as well as supplier sites. Ockert Berry, Vice President, Operations, for Ford Motor Company of Southern Africa said that the economic impact of the company’s projects is invaluable.

“As part of our extensive investment in the Silverton plant, we also are building a new Ford-owned and operated chassis line in the Tshwane Automotive Special Economic Zone (TASEZ) for this new vehicle programme.

“Having this new line and our major component suppliers located adjacent to the Silverton plant in the TASEZ is key to expanding our production capacity, as parts will be sequenced directly onto the assembly line. This will significantly reduce logistics costs and complexity, improve efficiency and allow us to build more Rangers for our customers,” he said.

Managing Director, Neale Hill added: “Ford’s investment in our South Africa manufacturing operations underscores our ongoing commitment to deliver ever-better vehicles to our customers in South Africa and around the world, while providing opportunities for our own employees, new team members and our communities.”

PROJECT BLUE OVAL

The Silverton site, located east of Pretoria, received significant investment just 12 months earlier when Ford announced it would embark on a solar energy project, designed to take the entire manufacturing operation off the Eskom grid – one of the first Ford plants globally to achieve such status.

“Our aim is to achieve ‘Island Mode’,” says Cavallaro “taking the Silverton Assembly Plant completely off the grid, becoming entirely energy self-sufficient and carbon neutral by 2024.”

Labelled Project Blue Oval, this plan – in collaboration with SolarAfrica – when complete, will see the company’s site covered in 31,000 locally sourced solar panels. The installation provides 13.5MW of green energy and has been estimated at R135 million.

“Ford Motor Company has launched clear objectives to address climate change, which compel us to change our behaviour in profound and lasting ways,” said Cavallaro of this visionary approach to challenging power issues in South Africa head on. “As stated in our 2020 Sustainability Report, Ford is the only full-line automaker in the US committed to doing its part to reduce CO₂ emissions in line with the Paris Climate Agreement, and we are working towards stronger vehicle greenhouse standards to reduce our impact on the environment.

“An integral part of building high-quality vehicles in an environmentally and socially responsible way is reducing the impact of our operations and supply chains through world-class facilities, innovative manufacturing processes and the most sustainable materials,” he adds. “Renewable energy is at the centre of this focused plan to reduce and ultimately eliminate our reliance on fossil fuels while lowering and offsetting the production of CO₂ emissions.”

Globally, Ford has the goal of carbon neutrality by 2050 and aims for 100% locally-sourced renewable energy as a benchmark by 2035. Project Blue Oval is a key demonstration for what is possible around the world, and regional Ford divisions are watching on closely.

Ockert Berry is excited and proud of what is going to be achieved in South Africa. “Our goal by 2024,” he says “is to have the Silverton plant completely energy self-sufficient and 100% carbon neutral, using an integrated renewable and co-generation energy mix comprising solar PV, biomass, biogas and biosyngas for all our electricity, gas and heating requirements. We will also be introducing 100% water recycling, and all non-fermentable waste will be repurposed through a pyrolysis system to produce syngas.

“This is a bold and pioneering step that will transform our business, helping us make an important contribution to reduce our impact on the environment,” Berry adds. “It will also make our Silverton Assembly Plant both more efficient and more cost-competitive.”

David Sonnenberg, Chief Technical Officer of SolarAfrica and Project Blue Oval provided further context on the Ford decision. “As we are all too well aware, South Africa is currently faced with a crippling energy crisis, coupled with the ongoing threat of load shedding, ever-increasing electricity tariffs, municipal shortage of capacity, demand charges on power, and the erratic quality of this power delivery with regard to spikes and dips,” he says. “For a global manufacturing operation such as Ford’s Silverton Assembly Plant, these challenges make running a facility of this scale efficiently exceptionally difficult – both in terms of the availability of reliable energy, and escalating costs.

“An added challenge is that most of South Africa’s electricity is generated through fossil fuels, and specifically from coal-fired power stations. The high level of greenhouse gases generated exacerbates the environmental damage and resulting climate change.

“Along with Ford, we share the vision of a zero-emission future, and we welcome Ford’s enthusiasm and passion in launching the solar energy project, and working towards the broader green initiatives in the future.”

David McDonald, MD of SolarAfrica reiterated importance and excitement of being involved in such a project. “We are delighted and proud to have been selected as the solar provider for this pioneering project, and developing what will be one of the largest solar carports in the world,” he said. “It has been a pleasure working with such a progressive team, and Ford’s commitment to reducing its carbon footprint and willingness to adopt change has been refreshing.”

RANGER & EVEREST

Away from major investments that will alter the company’s future, Ford has been busy on the ground in South Africa, launching its new Ford Approved used car retail model. 94 dealerships with 1800 vehicles listed for sale are being marketed through a new website, delivered with a comprehensive 160-point presales checking process, and a 12 month roadside assistance package. With the pandemic putting pressure on spending ability, the Ford Approved programme has been extremely useful for those in the market for cheaper options with great quality. The company says that Ford Approved customers will receive the same level of quality and professionalism that they would get when buying a new car.

In the SUV market, the Ranger and the Ranger Raptor were joined in South Africa by the brand-new Ford Everest this year. The exciting new model is reportedly being touted as a serious competitor to segment leader, the Toyota Fortuner. With new styling, which seems to be linked to the design of the world-famous Ford F-150, the Everest also boasts a brand-new infotainment system. It will be driven by 2.0 and 3.0 diesel engines, and a 2.3 EcoBoost in limited markets.

The Ranger Raptor has been launched with much fanfare as those looking for power have been satisfied. A 3.0 twin turbo petrol V6 delivers an 85% increase in power model-on-model. Petrol heads will explain that this power boost brings Ford Focus ST acceleration levels to the double-cab bakkie market, appeasing those who criticised the Raptor for lack of overtaking capability at cruising speed.

With new models, new capabilities, new facilities, and new customers coming to the market, now is a great time for Ford in South Africa as it vies for top spot with the other big name international automakers. Fortunately for the Blue Oval, rivals are not investing in the country in the long-term the same was it is. With localisation, sustainability, and quality at the centre of its plans, Ford is proving what can be achieved by a multinational in Africa when real investments are made.