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Motor Industry Skills of the Future

Motor Industry Skills of the Future. 15 February 2018. merSETA Interchamber Conference, Johannesburg. Introduction. 1. Project overview. 2. Disruptive changes to the global automotive industry. 3. The South African Automotive Master Plan (SAAM).

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Motor Industry Skills of the Future

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  1. Motor Industry Skills of the Future 15 February 2018 merSETAInterchamber Conference, Johannesburg

  2. Introduction 1. Project overview 2. Disruptive changes to the global automotive industry 3. The South African Automotive Master Plan (SAAM) 4. Domestic implications on occupations and skills requirements 5. Next steps: Stakeholder engagement process Appendices

  3. 1. Project overview

  4. Project overview • Primary research question: INVESTIGATE THE RELEVANCY OF OCCUPATIONS AND SKILLS FOR THE MOTOR INDUSTRY • Related questions: • How will South Africa respond to the challenges presented by disruptive technological changes in global automotive value chains? • What skills development is needed and available for people to adapt and remain relevant to these changes? • How to align SA’s automotive manufacturing policy framework to respond to these challenges to 2035 through the South African Automotive Master Plan (SAAM)?

  5. Project overview Global Value Chain shifts (technology, players and geographies) SAAM supports SA’s position in the global value chains Skills implications Job types Job categories How do we address these implications?

  6. Methodology • Two areas of study: • Tier-1 component manufacturers for OEM’s (B&M Analysts) • Automotive dealer and distribution establishments of approved franchised OEM motor vehicle, bus, truck and tractors service centres and repairers (MIBCO) • Methodology • Secondary Research: • Desktop research • Analysis of internal and external resources. • Focus Groups: • Workshops to be held in Johannesburg, Port Elizabeth and Durban • Determining what skills are needed for these existing occupations and what new skills will be required • Determining the skills development resources required to skill people sufficiently to fulfil these occupations • Quantitative primary research: • Preparation of a questionnaire, guided by desktop research and focus group output • Consultation and follow up with organisations to obtain data • Compilation of data per research group • Presentation and interpretation of data as part of the consolidated research report (23rd March).

  7. 2. Disruptive changes to the global automotive industry

  8. A number of technological trends are set to disrupt the global auto industry 1 2 3 4 5 6 7

  9. The “Smiling Curve” of value addition Valueaddition After sales service Branding and sales Assembly Manufacturing R&D Stage of production • Value addition is increasingly located in the areas of R&D and after sales service, which concentrates value in the hands of OEMs and service sectors. SA’s current space, at bottom of curve, will be further challenged as the GVC pressures drive down value addition opportunities in manufacturing and assembly.

  10. 3. The South African Automotive Master Plan (SAAM)

  11. Background to the South African Automotive Master Plan (SAAM) • The local automotive industry is a marginal player globally, contributing only 0.65% of global vehicle output. • Production output of 600,000 units in 2016. • Local content levels within South African vehicles declining to 38% in 2015, from 47% in 2012 • Despite manufacturing output contracting to only 13.2% of GDP in 2016 from 23.6% in 1990 (World Development Indicators), the automotive industry’s comparative resilience, its established foundations, direct employment (approximately 112,000 jobs), export contribution, and its recognized technology multipliers, have positioned it as a core, strategic industrial sector within the South African economy. • Motor Industry Development Programme (MIDP) from 1995 to 2012, • Automotive Production Development Programme (APDP), which was introduced in 2013, and which is presently set to run until 2020. • Government also introduced the Automotive Investment Scheme (AIS) that provides cash grant support for greenfield and brownfield investments of up to 35% of the total investment amount.

  12. The SAAM’s 2035 vision, objectives, and strategic implementation pillars A globally competitive and transformed industry that actively contributes to the sustainable development of South Africa’s productive economy, creating prosperity for industry stakeholders and broader society 2035 vision 1 6 2 5 4 3 Supporting institutional environment (including monitoring and evaluation) Enabling policy post-2020

  13. Summary of SAAM objectives and estimated impact on South African automotive industry

  14. How does the SAAM respond to technological & skills development needs to 2035? TEECHNOLOGY SKILLS

  15. 4. Domestic implications on occupations and skills requirements

  16. What is the existing employment profile across various sub-sectors? Most employees are production workers (68% average). Lowest skill profile are vulnerable to GVC disruptors and diminishing local value addition. Second highest employment categories per sector. Are these categories prepared for GVC disruption? Lowest employment categories per sector. Are these categories at risk of disappearing altogether? Source: BMA benchmark database (sample of 82 automotive supplier firms), 2016

  17. What are the implications of GVC disruptors on management capabilities in SA? Soft Skills Technical Skills ASCCI Skills Development Framework* TEMPLATE GVC disruptors *Source: Automotive Supply Chain Competitiveness Initiative (ASCCI) High Level Skills Framework (2017)

  18. What are the implications of GVC disruptors on professional capabilities in SA? Soft Skills Technical Skills ASCCI Skills Development Framework* TEMPLATE GVC disruptors *Source: Automotive Supply Chain Competitiveness Initiative (ASCCI) High Level Skills Framework (2017)

  19. What are the implications of GVC disruptors on supervisor capabilities in SA? Soft Skills Technical Skills ASCCI Skills Development Framework* TEMPLATE GVC disruptors *Source: Automotive Supply Chain Competitiveness Initiative (ASCCI) High Level Skills Framework (2017)

  20. What are the implications of GVC disruptors on artisan capabilities in SA? Soft Skills Technical Skills ASCCI Skills Development Framework* TEMPLATE GVC disruptors *Source: Automotive Supply Chain Competitiveness Initiative (ASCCI) High Level Skills Framework (2017)

  21. What are the implications of GVC disruptors on production capabilities in SA? Soft Skills Technical Skills ASCCI Skills Development Framework* TEMPLATE GVC disruptors *Source: Automotive Supply Chain Competitiveness Initiative (ASCCI) High Level Skills Framework (2017)

  22. 5. Next steps: Stakeholder engagement process

  23. Stakeholders feedback will be solicited at several industry workshops • Focus group workshops will be conducted in Johannesburg, Durban and Port Elizabeth as follows: • Johannesburg: 19 February 2018 • x2 component manufacturers (facilitated by BMA), • Automotive dealer and distribution establishments (facilitated by MIBCO) • Port Elizabeth: 22 February 2018 • x1 component manufacturers (facilitated by BMA) • Durban: 27 February 2018 • x1 component manufacturers (facilitated by BMA) • Interview with OEM Automotive Body Repair establishments: • Approved Repairer - x6 (facilitated by MIBCO) • Automotive dealer and distribution establishments - x3 (facilitated by MIBCO) • Two research groups: • Tier 1 component manufacturers (facilitated by BMA); • Automotive dealer and distribution establishments (facilitated by MIBCO).

  24. References • Barnes, J.: “GVC disruptors and the South African automotive industry” Durban Automotive Cluster Executive Development Programme (workshop); B and M Analysts, 2017 • Barnes, J. & Black, A.: “Developing a South African automotive Masterplan to 2035 in the context of Global Value Chain drivers: Lessons for second tier automotive economies,” paper prepared for the GERPISA Colloquium, Paris, France, 14-16 June 2017 • High Level Skills Framework, Automotive Supply Chain Competitiveness Initiative (ASCCI), 2017 • White, J. & Ellis, S.: “Supplier skills needs assessment and leadership needs analysis project”, Automotive Supply Chain Competitiveness Initiative (ASCCI), 2017

  25. Appendices

  26. The SAAM would enable local automotive industry to substantially increase its contribution to the SA economy to 2035, with production, local content & employment growing significantly Source: Barnes, J. & Black, A.: “Developing a South African automotive Masterplan to 2035 in the context of Global Value Chain drivers: Lessons for second tier automotive economies” (2017)

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